Chapter 2 Flashcards
Actual Cost
Is the cost incurred (a historical or past cost).
Budgeted Cost
Which is a predicted, or forecasted, cost(a future cost).
Cost Object
Which is anything for which a cost measurement is desired.
Cost Accumulation
Is the collection of cost data in some organized way by means of an accounting system.
Cost Allocation
Is used to describe the assignment of indirect costs to a particular cost object.
Cost Assignment
Is a general term that encompasses both 1) tracing direct costs to a cost object and 2) allocating indirect costs to a cost object.
Direct Costs of a Cost Object
Are related to the particular cost object and can be traced to it in an economically feasible way.
Indirect Costs of a Cost Object
Are related to the particular cost object but cannot be traced to it in an economically feasible way.
Variable Cost
Changes in total in proportion to changes in the related level of total activity or volume of output produced.
Fixed Cost
Remains unchanged in total for a given time period, despite wide changes in the related level of total activity or volume of output produced.
Cost Driver
Is a variable, such as the level of activity or volume, that casually affects costs over a given time span.
Relevant Range
Is the band or range of normal activity level or volume I which there is a specific relationship between the level of activity or volume and the cost in question.
Unit Cost(Average Cost)
Is calculated by dividing the total cost by the related number of units produced.
Direct Materials Inventory
Direct materials in stock that will be used in the manufacturing process.
Ex: computer chips and components
Work-in-process Inventory
Goods partially worked on but not yet completed.
Finished Goods Inventory
Goods completed but not yet sold.
Direct Materials Cost
Are the acquisition costs of all materials that eventually become part of the cost object and can be traced to the cost object in an economically feasible way.
Direct Manufacturing Labor Costs
Include the compensation of all manufacturing labor that can be traced to the cost object in an economically feasible way.
Ex: wages and fringe benefits
Indirect Manufacturing Costs
Are all manufacturing Cost that are related to the cost object but cannot be traced to that cost object in an economically feasible way.
Inventoriable Costs
Are all Costs of a product that are considered assets in a company’s balance sheet when the costs are incurred and that are expenses as cost of goods sold only when the product is sold.
Revenues
Are inflows of assets received for products or services customers purchase.
Period Costs
Are all Costs in the income statement other than cost of goods sold.
Cost of Goods Manufactured
Refers to the cost of goods brought to completion, whether they were started before or during be the current accounting period.
Operating Income
Equals total revenues from operations minus cost of goods sold and operating (period) costs (excluding interest expense and income taxes) or, equivalently, gross margin minus period costs.
Prime Costs
Are all direct manufacturing costs.
Conversion Costs
Are all manufacturing costs other than direct Materials costs.
Overtime Premium
Is the wage rate paid to workers (for both direct labor and indirect labor) in excess of their straight-time wage rates.
Idle Times
Refers to the wages paid for time caused by lack of orders, machine or computer breakdowns, work delays, poor scheduling, and the like.
