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37 Cards in this Set

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All executive, organizational, and clerical costs associated with the general management of an organization rather than with manufacturing, marketing, or selling.
Administrative Costs
A common cost is incurred to support a number of cost objects but cannot be traced to them individually. For example, the wage cost of the pilot of a 747 airliner is a common cost of all the passengers on the aircraft. Without the pilot, there would be no flight and no passengers. But no part of the pilot's wage is caused by any one passenger taking the flight.
Common costs
Direct labor cost plus manufacturing overhead cost.
Conversion cost
The way in which a cost reacts to changes in the level of activity.
Cost behavior
Anything for which cost data are desired. Examples are products, product lines, customers, jobs, and organizational subunits such as departments or divisions of a company.
Cost object
The manufacturing costs associated with the goods that were finished during the period.
Cost of goods manufactured
A difference in cost between two alternatives.
Differential cost
The difference in revenue between two alternatives.
Differential revenue
A cost that can be easily and conveniently traced to a specified cost object.
Direct cost
Factory labor costs that can be easily traced to individual units of product.
Direct labor
Materials that become an integral part of a finished product and whose costs can be conveniently traced to it.
Direct materials
Units of product that have been completed but not yet sold to customers.
Finished goods
A cost that remains constant, in total, regardless of changes in the level of activity within the relevant range. If it is expressed on a per unit basis, it varies inversely with the level of activity.
Fixed cost
A cost that cannot be easily and conviently traced to a specified cost object.
Indirect cost
The labor cost of janitors, supervisors, materials handlers, and other factory workers that cannot be conveniently traced directly to particular products.
Indirect labor
Small items of materials such as glue and nails. These items may become an integral part of a finished product, but their costs cannot be easily or conveniently traced to it.
Indirect materials
All costs associated with with manufacturing except direct materials and direct labor
Manufacturing Overhead
All costs necessary to secure the customer orders and get the finished product or service into the hands of the customer.
Marketing or Selling costs
The potential benefit that is given up when one alternative is selected over another.
Opportunity cost
Costs that are taken directly to the income statement as expenses in the period in which they are incurred or accrued.
Period costs
Direct materials cost plus direct labor cost.
Prime cost
All costs that are involved in the purchase or manufacture of goods. In the case of manufactured goods, these costs consist of direct materials, direct labor, and manufacturing overhead. (same as inventoriable costs)
Product Costs
Any materials that go into the final product.
Raw materials
The range of activity within which assumptions about variable and fixed costs behavior are valid.
Relevant range
A schedule showing the direct materials, direct labor, and manufacturing overhead costs incurred for a period and that are assigned to Work in Process and completed goods.
Schedule of cost of goods manufactured
Any cost that has already been incurred and that cannot be changed by any decision made now or in the future.
Sunk cost
A cost that varies, in total, in direct proportion to changes in the level of activity. A variable cost is constant per unit.
Variable cost
Costs that are incurred to identify defective products before the products are shipped to customers.
Appraisal costs
Costs that incurred when a product or service that is defective is delivered to a customer.
External failure costs
Costs that are incurred as a result of identifying defective products before they are shipped to customers.
Internal failure costs
Quality control requirements issued by the International Organization for Standardization that relate to products sold in European countries.
ISO 9000 standards
Costs that are incurred to keep defects from occuring.
Prevention costs
Small groups of employees that meet on a regular basis to discuss ways of improving quality.
Quality circles
Costs that are incurred to prevent defective products from falling into the hands of customers or that are incurred as a result of defective units.
Quality cost
A report that details prevention costs, appraisal costs, and the costs of internal and external failures.
Quality cost report
The degree to which a product or service meets or exceeds its design specifications and is free of defects or other problems that mar its appearance or degrade its performance
Quality of conformance
A charting technique used to monitor the quality of work being done in a workstation for the purpose of immediately correcting any problems.
Statistical process control