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25 Cards in this Set
- Front
- Back
- 3rd side (hint)
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What are the four purposes of cost classification? |
1.) Assigning costs to cost objects. 2.) Accounting for costs in manufacturing companies. 3.) Preparing external financial statements. 4.) Predicting cost behavior in response to changes in activity. |
There are four of them. |
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What is a cost object? |
Anything for which cost data is desired. |
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What is direct cost? |
A cost that can easily and conveniently be traced to a specified cost object. |
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What is Indirect Cost? |
A cost that cannot be easily and conveniently traced to a specified cost object. |
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What are the types of manufacturing costs? |
Raw materials, Direct materials, Indirect materials, Direct labor, Indirect labor, and Manufacturing Overhead. |
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What are Raw Materials? |
Materials used to produce the final product. |
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Direct Materials |
Materials that become a part of the finished product and whose costs can be directly traced to the finished product. |
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Indirect Materials |
Materials that become a part of the finished product but whose costs cannot be traced easily or directly to the finished product. |
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Direct Labor |
Labor costs that can be easily and directly traced to the finished product of the finished good. |
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Indirect Labor |
Labor costs that contribute to the production of a finished good but cannot be traced directly to it. |
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Manufacturing Overhead |
All other manufacturing costs; the indirect costs of production. |
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What are Product Costs? |
-All costs involved in acquiring or making a product. -Initially assigned to an inventory account then becomes cost of goods sold when it is sold. -Treated as an expense in the period in which the product is sold. |
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What are Period Costs? |
-All costs that are not product costs. -Expensed in the period in which they are incurred. -Include: -Selling Expense -Administrative Expense |
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What are Selling Expenses? |
Costs incurred to secured customer orders & get the product to the customer. |
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What are Administrative Expenses? |
Costs associated with the general management of the company. |
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What are Variable Costs? |
The cost varies, in total, in direct proportion to changes in the level of activity. -The per unit costs remain constant. |
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What are Fixed Costs? |
A cost that remains constant, in total, regardless of changes in the level of activity. -Per unit cost can change with the level of activity. |
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What are Fixed Costs? |
A cost that remains constant, in total, regardless of changes in the level of activity. -Per unit cost can change with the level of activity. |
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What are mixed costs? |
Contains both variable and fixed cost elements. |
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What are Fixed Costs? |
A cost that remains constant, in total, regardless of changes in the level of activity. -Per unit cost can change with the level of activity. |
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What are mixed costs? |
Contains both variable and fixed cost elements. |
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What if differential cost? |
A difference in costs between any two alternatives. -Can be fixed or variable. |
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What are Opportunity Costs? |
The potential benefit that is given up when one alternative is selected over another. |
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What are Opportunity Costs? |
The potential benefit that is given up when one alternative is selected over another. |
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What are Sunk Costs? |
A cost that had already been incurred and that cannot be changed by any decision made now or in the future. |
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