Acc 210 Chapters 4 (Jsu)

Front 1

Cost Management Systems

Back 1

A collection of tools and techniques that identifies how management's decisions affect costs.

Front 2

Cost

Back 2

sacrifice or giving up of resources for a particular purpose.

Front 3

Cost Object (or Cost Objective)

Back 3

anything for which managers want a separate measurement of costs (e.g., a product, a department, a sales region, a program, or something else for which decisions are made).

Front 4

Direct Costs

Back 4

identified specifically and exclusively with a given cost objective in an economically feasible way (tracing).

Front 5

Indirect Costs

Back 5

not identified specifically and exclusively with a given cost objective in an economically feasible way.

Front 6

Cost allocation

Back 6

to assign indirect costs to cost objects.

Front 7

cost-allocation base

Back 7

some measure of input or output that determines the amount of cost to be allocated to a particular cost object.

Front 8

Unallocated Costs

Back 8

costs that an accounting system records but does not allocate to any cost object (e.g., research and development, process design, legal expenses, accounting, information services, and executive salaries).

Front 9

Direct-Materials Costs

Back 9

the acquisition costs of all materials that are physically identified as a part of the manufactured goods and that may be traced to the manufactured goods in an economically feasible way.

Front 10

Direct-Labor Costs

Back 10

the wages of all labor that can be traced specifically and exclusively to the manufactured goods in an economically feasible way.

Front 11

Indirect Production Costs (Indirect Manufacturing Costs, Factory Overhead, Factory Burden or Manufacturing Overhead)

Back 11

include all costs other than direct material or direct labor that are associated with the manufacturing process (e.g., power, supplies, indirect labor, supervisory salaries, property taxes, rent, insurance, and depreciation).

Front 12

Product Costs

Back 12

costs (e.g., direct materials, direct labor, and factory overhead) initially identified with goods produced or purchased for resale (i.e., inventory) and become expenses (i.e., cost of goods sold) only when the inventory is sold.

Front 13

Period Costs

Back 13

costs (e.g., selling and general administration expenses) that are deducted as expenses during the current period without going through the inventory stage.

Front 14

Direct-Materials Inventory

Back 14

materials on hand and awaiting use in the production process.

Front 15

Work-In-Process Inventory

Back 15

goods undergoing the production process but not yet fully completed. Costs include appropriate amounts of the three major manufacturing costs (i.e., direct material, direct labor, and factory overhead).

Front 16

Finished-Goods Inventory

Back 16

goods fully completed but not yet sold.

Front 17

traditional costing systems

Back 17

those that do not accumulate or report costs of activities or processes.

Front 18

Activity-Based Accounting (ABA) or Activity-Based Costing (ABC)

Back 18

systems first accumulate overhead costs for each of the activities of an organization, and then assign the costs of activities to the products, services, or other cost objects that caused that activity.

Front 19

Cost Drivers

Back 19

identified for each activity to establish a cause-effect relationship between an activity and a cost object.

Front 20

cost pool

Back 20

a group of individual costs that is allocated to cost objectives using a single cost driver.

Front 21

Activity-based management (ABM)

Back 21

using the output of an activity-based cost accounting system to aid strategic decision making and to improve operational control of an organization.

Front 22

value-added cost

Back 22

the necessary cost of an activity that a company cannot eliminate without affecting a product’s value to the customer

Front 23

nonvalue-added cost

Back 23

unnecessary costs that a company tries to minimize and eliminate without affecting a product’s value to the customer

Front 24

benchmarking

Back 24

the continuous process of comparing products, services, and activities to the best industry standards.