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16 Cards in this Set

  • Front
  • Back
direct materials
indirect materials
- (raw materials) can be physically and convieiently traced to a finished product
- glue, solder, etc. (Man. Overhead)
direct labor
indirect labor
- touch labor
- labor costs of janitors, supervisors, security guards, etc.
product costs
- all costs involved in aquireing and making a product.

(direct materials + direct labor + manufacturing overhead)
period costs
- all costs not included in product costs.
- sales commissions, office rent, advertizing, exacutive saleries...
- expensed on the income statement the period they are incurred.
equasion for inventory accounts
beginning balance + additions to inventory = ending balance + withdraws from inventory
cost of goods sold for merchandising acounts
COGS = Beg. Merchandise inv. + Purchases - Ending inventory
COGS for manufactureing company
COGS = Beg. Finished goods inv. + COGManufactured - Ending finished goods inventory
variable cost
cost that varies,in total, in direct proportion to changes in the level of activity. But cost is constant when expressed on a per unit basis.
fixed cost
fixed costs are not affected by changes in activity.
sunk cost
A cost that has already been incurred
schedule of cost of goods manufactured part 1 (direct materials & direct labor)
(direct material)
beg. raw materials inv.
add: purchases of raw material
raw materials avil. for use
deduct: ending raw mat. inv.
raw mat. used in production
add: direct labor
schedule of cost of goods manufactured part 2 (Manufacturing overhead)
insurence, factory
indirect labor
machine rental
utilities, factory
depreciation, factory
property taxes, factory
Total Man. Overhead Cost
schedule of cost of goods manufactured part 3 (COG manufactured)
Part 1 (dir. labor & material)
add: Part 2 (Man. OH)
Total Manufacturing cost
add: Beg. Work in prog. inv.
less: ending WOP inv.
Cost of Goods Manufactured
Differential costs
A differece in cost between any two alternative finacial decisions when weighing costs and benifits.
cost of goods sold
beg. finished goods inv.
add: COG manufactured
goods available for sale
Less: ending fin. goods inv.
income statement
less: COGS
Gross margin
less: selling expenses
less: admin expenses
Net operating income