BEC 1 - Topic 3 Flashcards
What is cost objects?
They are defined as resources or activities that serve for management decisions in
1) Product cost
2) Income determination
3) Efficiency
What is Prime cost?
Direct Material (DM) Direct Labor (DL)
What is Conversion Costs?
DL + O/H applied
When can product costs be expense?
Not expensed until product is sold - matching principle and inventoriable.
What is Product Costs?
DM + DL + Manufacturing Overhead
What are period costs?
They are expensed in the period in which they incurred and not inventoriable.
Selling, general and admin expenses and interest (financing expense)
What are direct costs?
They are easily traceable by product, department, geographic area.
What are indirect costs?
In the factory - product - manufacturing O/H
In the office- period - SG&A.
What are cost drivers?
Costs that have strong relationship to the incurrence of these costs with increase in activity.
What is traditional costing
O/H rate = Budgeted O/H Costs / Estimated Cost Driver
Applied O/H = Actual cost driver x Overhead rate
What kind of costing is used?
If custom cost object, job order costing is used.
If mass-produced homogeneous product, process costing is used
What is cost of goods manufactured?
Work in process inventory (Beginning) + Direct materials used + Direct labor + Manufacturing O/H - Work in process inventory (Ending) = Cost of goods manufactured
What of COGS?
Finished Goods inventory (Beginning) + Cost of goods manufactured - Finished goods inventory (Ending)
What is Inventory: Work in Process?
Beginning inventory of work in process + Raw Materials used + DL + O/H - Inventory transferred to finished goods
What is Inventory: Finished Goods?
Beginning Inventory + Inventory transferred from work in process - COGS.
