Ch 1 - 3 Definitions Flashcards
Direct Material
Raw materials whose costs can be easily traced to finished products. For example, the patty in a burger.
Direct Labor
Includes labor costs easily traceable to finished products. For example, the workers who make the burgers.
Manufacturing Overhead
All manufacturing costs incurred to operate a manufacturing facility except direct materials and direct labor. For example, supervisor, glue.
Indirect Materials
Small items of material such as glue and nails that may have played an important part of a finished product, but whose costs cannot be easily traced to it.
Indirect Labor
The labor costs such as janitors, supervisors, and other factory workers that cannot be easily traced to particular products.
Cost Driver
A factor, such as machine-hours, beds occupied, computer time, or flight-hours, that causes overhead costs.
Direct Cost
A cost easily traced to a specified cost object.
Fixed Cost
Cost that remains constant, in total, regardless of changes in the level of activity within the relevant range.
Indirect Cost
Cost that cannot be easily traced to a specified cost object.
Job Order Costing
A costing system used in situations where many different products, jobs ,or services are produced each period.
Mixed Cost
Cost with variable and fixed cost elements.
Period Cost
Costs taken directly to the income statement as expenses in the period incurred or accrued.
Prime Cost
Direct materials cost plus direct labor cost.
Relevant Range
The range of activity within which assumptions about variable and fixed cost behavior are valid.
Total Fixed Cost
The sum of all consistent, non-variable expenses a company must pay
