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21 Cards in this Set
- Front
- Back
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cost object |
anything for which we want to calculate a cost, a product line, or service, or a process for which cost info is measured and accumulated |
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manufacturing |
activities and processes that convert raw materials into finished goods |
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raw materials |
the basic materials and parts used in the manufacturing process |
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Direct Materials |
raw materials that can be physically and directly associated with the finished product during the manufacturing process |
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indirect materials |
1. do not physically become part of the finished product or 2. cannot be easily traced because their physical association with the finished product is too small in terms of cost (sandpaper or glue) |
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direct labour |
the work of factory employees that can be physically and directly associated with converting raw materials into finished goods |
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indirect labour |
1. it is the work of factory employees that has no physical association with the finished product, or 2. it is work for which it is impractical to trace costs to the goods produced |
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Manufacturing overhead |
costs that are indirectly associated with the maintenance of the insurance, taxes, and maintenance on factory facilities |
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prime costs |
the sum of all direct materials and direct labour costs |
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period costs |
costs that are matched with the revenue of a specific time period rather than included as part of the cost of a saleable period |
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conversion costs |
the sum of all direct labour costs and MOH costs, which together are the costs of converting raw materials into a final product |
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product costs |
costs that are necessary and integral part of producing the finished product |
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cost behaviour analysis |
the study of how specific costs respond to changes in the level of business activity |
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activity index |
identifies the activity that causes changes in the behaviour of costs (variable, fixed, or mixed) |
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VC |
costs that vary in total directly and proportionally with changes in the activity level |
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FC |
costs that remain the same in total within the relevant range regardless of changes in activity level |
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relevant range |
the range that a company expects to operate in during a year |
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mixed costs |
costs have both FC and VC |
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high-low method |
uses the total costs incurred at the high and low levels of activity |
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total manufacturing costs |
the sum of direct materials, direct labour costs, and manufacturing overhead incurred |
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cost of goods manufactured schedule |
schedule that presents detailed data for direct materials and for manufacturing overhead |
