CH 3 vocab Flashcards
Define allocation basis
Same as cost driver
Define Allocation rate
The cost pool divided by the allocation volume
Define Capacity costs
The sum of variable and fixed overhead costs
Define Cost allocation
A procedure that distributes a common cost among the items giving rise to the cost
Define Cost driver
Attributes that we can measure for each cost object that distribute the cost pool among cost objects
Define Cost of goods manufactured (COGM)
The cost of items finished and transferred from work in process inventory to finished goods inventory
Define Cost of good sold (COGS)
The cost of products sold in a period. THe cost of items transferred from finished goods inventory to the income statement.
Define Cost objects
The items, or entities, to which cost are to be allocated
Define Cost pool
The total costs to be allocated
Define Denominator volume
Same as allocation volume
Define Direct labor
Labor cost that can be traced to individual untis of a product in a cost effective manner
Define Direct materials
Materials costs than can be traced economically to individual units of a product
Define Fixed overhead
Indirect manufacturing costs that do not vary with production volume
Define Gross margin
Revenues less product costs
Define Inventoriable costs
same as Product costs
Define Manufacturing firms
A firm that uses labor and equipment to transform inputs such as material and components into outputs.
Define Manufacturing overhead
The sum of all indirect manufacturing costs
Define Merchandising firm
A firm that resells essentially the same product it buys from suppliers
Define Overhead
same as Manufacturing overhead
Define Overhead rate
A term frequently used to refer to allocation rate
Define Period Costs
A financial accounting concept under GAAP. ANy cost that is not product cost. A cost related to the selling of goods and the administration of the organization
Define Selling and administration costs
Nonmanufacturing costs. A term frequently used to refer to period costs.
Define Service firm
A firm whose product is neither tangible nor storable
Define Total manufacturing cost charged to production
The sum of materials, labor, and overhead added to the work in process account during the period
Define Variable overhead
Indirect manufacturing cost that vary with production volume.
