chapter 3 Flashcards
Define cost objects
resources or activities that serve as the basis for management decisions
require separate cost measurement and may e products, product lines, departments, georgraphic territories or any other classification taht aids in decision making
product costs
not expensed until the product is sold.
all costs related to the manufacture of the product
inventory and COGS
comprised of direct materials direct labor and manufacturing overhead appled
period costs
are expensed in the period in which they are incurred
not inventoriable like product costs
SG&A expense, interest expense
manufacturing cost
treated as product costs
include all costs asociated with the manufacture of a product
nonmanufacturing costs
costs that do not relate to the manufacture of a porduct
i.e. period costs
type of cost - wages for factory employees?
direct labor - product cost
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type of cost - wages for accounting department?
period cost
type of cost - sales and promotion expense
period cost
type of cost - raw materials purchased
direct material - product cost
type of cost - general and administrative costs
period cost
type of cost - manufacturing overhead
product cost
type of cost - interest expense
period cost
What is comprised in product costs?
DM + DL + MOH
define direct costs
can be easily (without excessive cost or significant error) traced to a cost pool or object, as the cost directly relates to that item
includes direct raw material and direct labor
define direct raw materials
costs of materials purchased to be used in production (including freight in net of any applicable purchase discounts )PLUS a reasonable amount for normal scrap created by the process