chap 2 Flashcards
Raw materials that become an integral
part of the product and that can be
conveniently traced directly to it.
Direct Materials
Those labor costs that can be easily
traced to individual units of product.
Direct Labor
Manufacturing costs that cannot be easily
traced directly to specific units produced.
Manufacturing Overhead
Classifications of Manufacturing Costs
Direct Materials, Direct Labor, Manufacturing Overhead
Classifications of non Manufacturing Costs
Selling Costs, Administrative Costs
include direct materials, direct labor, and
manufacturing overhead.
Product costs
include all
selling costs and
administrative costs.
Period costs
direct material and direct labor cost
prime cost
direct labor and overhead cost
conversion cost
refers
to how a cost will
react to changes in
the level of activity.
Cost behavior
cost per unit is constnat
variable cost per unit
cost per unit decreases as activity/quantity increases and vice versa
fixed cost per unit
cost is directly proportional to the activity level
variable cost
not affected by changes in the activity level within the relevant range
fixed cost
contains both variable and fixed elements.
Mixed/semivariable Costs
can be
easily and conveniently
traced to a unit of
product
Direct costs
Costs that cannot
be easily and
conveniently traced
to a unit of product
or other cost object.
Indirect costs
The potential benefit that is
given up when one alternative
is selected over another.
Opportunity Cost
have already been incurred and
cannot be changed now or in the future.
These costs should be ignored when
making decisions.
Sunk costs
Costs and revenues that differ
among alternatives.
differential cost
