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24 Cards in this Set
- Front
- Back
- 3rd side (hint)
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ABSORPTION COSTING
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a method of inventory costing in which all variable manufacturing costs and all fixed manufacturing costs are included as inventoriable costs.
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That is: inventory "absorbs" all manufacturing costs.
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DIRECT COSTING
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a method of inventory costing in which all variable manufacturing costs (direct and indirect) are included as inventoriable costs. All FIXED manufacturing costs are excluded from inventoriable costs and are instead treated as costs of the period in which they are incurred.
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Another name for variable costing:
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DOWNWARD DEMAND SPIRAL
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(for a company) it is the the continuing reduction in the demand for its products that occurs when competitor prices are not met; as demand drops further, higher and higher unit costs result in greater reluctance to meet competitors' prices.
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MASTER-BUDGET CAPACITY UTILIZATION
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the level of capacity utilization that managers expect for the current budget period, which is typically one year.
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NORMAL CAPACITY UTILIZATION
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the level of capacity utilization that satisfies average customer demand over a period (say, two or three years) that includes seasonal, cyclical, and trend factors.
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PRACTICAL CAPACITY
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the level of capacity that reduces theoretical capacity by considering unavoidable operating interruptions, such as scheduled maintenance time, shutdowns for holidays, and so on.
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THEORETICAL CAPACITY
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the level of capacity (constraint or upper limit) based on producing at full efficiency all the time.
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SUPER-VARIABLE COSTING
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a method of inventory costing in which only direct material costs are included as inventoriable costs. All other costs are costs of the period in which they are incurred.
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another name for throughput costing
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THROUGH-PUT COSTING
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a method of inventory costing in which only direct material costs are included as inventoriable costs. All other costs are costs of the period in which they are incurred.
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another name for super-variable costing
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VARIABLE COSTING
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a method of inventory costing in which all variable manufacturing costs (direct and indirect) are included as inventoriable costs. All fixed manufacturing costs are excluded from inventoriable costs and are instead treated as costs of the period in which they are incurred.
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another name for direct costing
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EQUIVALENT UNITS
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a derived amount of output units that (1) takes the quantity of each input (factor of production) in units completed and in incomplete units of work in process and (2) converts the quantity of input into the amount of completed output units that could be produced with that quantity of input.
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these type of units are calculated separately for each input (such as direct materials and conversion costs). Moreover, every completed unit, by definition, is comprised of one equivalent unit of each input required to make it.
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FIRST-IN, FIRST-OUT (FIFO) PROCESS-COSTING METHOD
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(1) assigns the cost of the previous accounting period's equivalent units in beginning work-in-process inventory to the first units completed and transferred out of the process; and (2) assigns the cost of equivalent units worked on during the current period first to complete beginning inventory, next to start and complete new units, and finally in ending work-in-process inventory. This method assumes that the earliest equivalent units in work in process are completed first.
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I DON'T UNDERSTAND THIS ONE.
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HYBRID-COSTING SYSTEM
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this system blends characteristics from both job-costing and process-costing systems.
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OPERATION
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A standardized method or technique that is performed repetitively, often on different materials, resulting in different finished goods. Multiple operations are usually conducted within a department.
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OPERATION-COSTING SYSTEM
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a hybrid-costing system applied to batches of similar, but not identical, products. Each batch of products is often a variation of a single design, and it proceeds through a sequence of operations. Within each operation, all product units are treated exactly alike, using identical amounts of the operation's resources. A key point is that each batch does not necessarily move through the same operations as other batches. Batches are also called production runs.
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PREVIOUS-DEPARTMENT COSTS
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costs incurred in previous departments that are carried forward as the product's cost when it moves to a subsequent process in the production cycle.
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Also called Transferred-in costs
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TRANSFERRED-IN COSTS
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costs incurred in previous departments that are carried forward as the product's cost when it moves to a subsequent process in the production cycle.
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Also called Previous-department costs
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WEIGHTED-AVERAGE PROCESS-COSTING METHOD
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this method calculates cost per equivalent unit of all 'work done to date' (regardless of the accounting period in which it was done) and assigns this cost to equivalent units completed and transferred out of the process and to equivalent units in ending work-in-process inventory.
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The weighted-average cost is the total of all costs entering the Work in Process account (whether they are from beginning work in process or from work started during the current period) divided by total equivalent units of work done to date.
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ABNORMAL SPOILAGE
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Spoilage that is not inherent in a particular production process and would not arise under efficient operating conditions.
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INSPECTION POINT
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The stage of the production process at which products are examined to determine whether they are acceptable or unacceptable units.
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NORMAL SPOILAGE
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Spoilage inherent in a particular production process. In particular, it arises even when the process is operated in an efficient manner. The costs of normal spoilage are typically included as a component of the costs of good units manufactured because good units cannot be made without also making some units that are spoiled.
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REWORK
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Units of production that do not meet the specifications required by customers but which are subsequently repaired and sold as good finished units. For ex. defective units of products (such as pagers, computers, and telephones) detected during or after the production process but before units are shipped to customers can sometimes be reworked and sold as good products.
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SCRAP
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A residual material that results from manufacturing a product. It has low sales value compared with the total sales value of the product. Examples are short lengths from woodworking operations, edges from plastic molding operations, and frayed cloth and end cuts from suit-making operations.
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SPOILAGE
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Units of production -- whether fully or partially completed -- that do not meet the specifications required by customers for good units and that are discarded or sold at reduced prices.
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