Chapter - 2 Define and Illustrate a Cost Object Flashcards
What is an actual cost?
a cost that is incurred
What is a budgeted cost?
A predicted cost.
What is cost accumulation?
The gathering of cost data.
Why would accumulating cost data and assining costs be important for a managerial accountant?
- Figuring out how to price things
2. Implementing decisions
What are direct costs of an object?
Related to a particular cost object CAN BE TRACED IN AN ECONOMICALLY FEASIBLE WAY.
What is cost tracing?
describes the assignment of direct cost to a particular cost object.
What are indirect costs of a cost object?
Related to the particular cost object but can not be traced in an economically feasible way.
What is cost allocation?
Describe the assignment of indirect cost to a particular object
Cost assignment
General term that encompasses both (1) tracing direct costs to a cost object and (2) allocating indirect costs to a cost object.
What is a variable cost?
Changes in total in proportion to changes in the related level of total activity or volume of output produced.
What are fixed costs?
remains unchanged in total for a given time period, despite wide changes in the related level of total activity or volume of output produced.
What is a cost driver?
Is a variable, such as the level of activity or volume, that causally affects costs over a given time span.
What is relevant range?
Is the band or range of normal activity level or volume in which there is a specific relationship between the level of activity or volume and the cost in question.
