acc108 - chap 2 Flashcards
The monetary measure of the amount of resources given up or used for some purpose
Cost
The monetary value of goods and services expended to obtain current or future benefits.
Cost
costs incurred to manufacture the product. These are recognized as expense when sold (COGS) and treated as asset when still unsold.
Product Costs
non-manufacturing costs that include selling, administrative, and research and development costs. These are recognized as expense in the period of incurrence.
Period Costs
includes all the costs incurred in the factory to convert raw materials into finished goods.
Manufacturing Costs
refers to all costs which are not incurred in transforming materials to finished goods.
Non-Manufacturing Costs
Materials and Labor
Direct Manufacturing Costs
Factory Overhead Costs.
Indirect Manufacturing Costs
costs related to the design and creation of new products.
Research and Development
refer to advertising and promotion costs
Marketing Costs
refer to delivery costs.
Distribution Costs
refer to the salaries, commissions, and other sales-related costs.
Selling Costs
refer to warranties and repair costs.
After-Sales Costs
refers to all other non-manufacturing costs not included above.
General and Administrative Costs
these are costs that will differ under alternative courses of action.
Relevant Costs
these are the differences in costs between any two alternative courses of actions.
Differential Costs
refer to increase in the costs from one alternative to another.
Incremental Costs
refer to decrease in the costs from one alternative to another.
Decremental Costs
refer to income or benefit given up when one alternative is selected over another.
Opportunity Costs
these are costs that were already incurred and cannot be changed by any decision made in the present or to be made in the future.
Sunk Costs
these are costs, that within the relevant range and time period under consideration, that the total amount varies directly to the change in activity level or cost driver, and per unit amount is constant.
Variable Costs
these are costs, that within the relevant range and time period under consideration, that the total amount remains unchanged, and the per unit amount varies inversely with the change in the cost driver.
Fixed Costs
are those costs that contain both fixed and variable costs elements.
Mixed Costs
refers to the method of analyzing mixed costs based on costs observed at both the high and low levels of activity within the relevant range.
High-Low Method
