Managerial Accounting Chapter Two Vocab

Front 1

All executive, organizational, and clerical costs associated with the general management of an organization rather than with manufacturing, marketing, or selling.

Back 1

Administrative Costs

Front 2

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.

Back 2

Common costs

Front 3

Direct labor cost plus manufacturing overhead cost.

Back 3

Conversion cost

Front 4

The way in which a cost reacts to changes in the level of activity.

Back 4

Cost behavior

Front 5

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.

Back 5

Cost object

Front 6

The manufacturing costs associated with the goods that were finished during the period.

Back 6

Cost of goods manufactured

Front 7

A difference in cost between two alternatives.

Back 7

Differential cost

Front 8

The difference in revenue between two alternatives.

Back 8

Differential revenue

Front 9

A cost that can be easily and conveniently traced to a specified cost object.

Back 9

Direct cost

Front 10

Factory labor costs that can be easily traced to individual units of product.

Back 10

Direct labor

Front 11

Materials that become an integral part of a finished product and whose costs can be conveniently traced to it.

Back 11

Direct materials

Front 12

Units of product that have been completed but not yet sold to customers.

Back 12

Finished goods

Front 13

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.

Back 13

Fixed cost

Front 14

A cost that cannot be easily and conviently traced to a specified cost object.

Back 14

Indirect cost

Front 15

The labor cost of janitors, supervisors, materials handlers, and other factory workers that cannot be conveniently traced directly to particular products.

Back 15

Indirect labor

Front 16

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.

Back 16

Indirect materials

Front 17

All costs associated with with manufacturing except direct materials and direct labor

Back 17

Manufacturing Overhead

Front 18

All costs necessary to secure the customer orders and get the finished product or service into the hands of the customer.

Back 18

Marketing or Selling costs

Front 19

The potential benefit that is given up when one alternative is selected over another.

Back 19

Opportunity cost

Front 20

Costs that are taken directly to the income statement as expenses in the period in which they are incurred or accrued.

Back 20

Period costs

Front 21

Direct materials cost plus direct labor cost.

Back 21

Prime cost

Front 22

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)

Back 22

Product Costs

Front 23

Any materials that go into the final product.

Back 23

Raw materials

Front 24

The range of activity within which assumptions about variable and fixed costs behavior are valid.

Back 24

Relevant range

Front 25

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.

Back 25

Schedule of cost of goods manufactured

Front 26

Any cost that has already been incurred and that cannot be changed by any decision made now or in the future.

Back 26

Sunk cost

Front 27

A cost that varies, in total, in direct proportion to changes in the level of activity. A variable cost is constant per unit.

Back 27

Variable cost

Front 28

Costs that are incurred to identify defective products before the products are shipped to customers.

Back 28

Appraisal costs

Front 29

Costs that incurred when a product or service that is defective is delivered to a customer.

Back 29

External failure costs

Front 30

Costs that are incurred as a result of identifying defective products before they are shipped to customers.

Back 30

Internal failure costs

Front 31

Quality control requirements issued by the International Organization for Standardization that relate to products sold in European countries.

Back 31

ISO 9000 standards

Front 32

Costs that are incurred to keep defects from occuring.

Back 32

Prevention costs

Front 33

Small groups of employees that meet on a regular basis to discuss ways of improving quality.

Back 33

Quality circles

Front 34

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.

Back 34

Quality cost

Front 35

A report that details prevention costs, appraisal costs, and the costs of internal and external failures.

Back 35

Quality cost report

Front 36

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

Back 36

Quality of conformance

Front 37

A charting technique used to monitor the quality of work being done in a workstation for the purpose of immediately correcting any problems.

Back 37

Statistical process control