Chapter 16- Terms Flashcards
Cost object
How costs relate to an object or segment of operations
Direct costs
Identified with and can easily be traced directly to a coat object
Indirect costs
Cannot be easily identified with or traced to a coat object
Direct materials cost must be both of the following:
(1). An integral part of the finished product (2). A significant portion of the total cost of the product
Direct labor cost
The cost of employee wages that is an integral part of the finished product
Direct labor cost must be both of the following:
(1). An integral part of the finished product. (2). A significant portion of the total cost of the product
Factory overhead cost
Costs, other than direct materials and direct labor, are combined and classified as factory overhead cost
Example of factory overhead:
Heating and lighting factory, repairing and maintaining factory equipment, property taxes, insurance, depreciation of factory plant equipment
Prime costs
Direct materials and direct labor
Conversion costs
Direct labor and factory overhead (the costs of converting the materials into a finished product)
Product costs
The three elements of manufacturing cost
The three elements of manufacturing cost
Direct materials, direct labor, and factory overhead
Selling expenses
Costs of marketing the product and delivering the sold product to the consumer
Administrative expenses
Costs of managing the company that are not directly related to the manufacturing or selling functions
Materials inventory
The costs of direct and indirect materials that have not yet entered the manufacturing process
