Cost Accounting Flashcards
Resources or activities that serve as the basis for management decisions. May be product lines, departments, geographic territories or any other classification that aids in decision making.
Cost objectives
The three characteristics of cost objectives are: (PIE)
Product cost
Income determination
Efficiency
Prime costs are:
Direct labor + Direct material
Conversion costs are:
Direct labor + Overhead applied
All costs related to the manufacture of the product are what? They are also not expensed until product is sold.
Product costs
Product costs consist of:
Direct materials, direct labor, and manufacturing overhead applied
These costs are expensed in the period in which they are incurred and are not inventorial. They also include selling, general, administrative expenses, and interest expense.
Period costs
These costs include all costs associated with the manufacture of a product. Consist of direct and indirect costs. These costs are capitalized.
Manufacturing costs
These costs can be easily traced to a cost pool or object, as the cost directly related to that item:
Direct costs
These costs are of materials purchased to be used in production. Includes freight-In (net of any purchase discounts) and reasonable amount of normal scrap.
Direct raw materials
The costs of the labor that is directly related to the production of a product or the performance of a service plus a reasonable amount of expected “downtime” for the labor (breaks, setup, training)
Direct labor
Prime costs is the combination of:
Direct raw materials + direct labor
Cleaning supplies used in the manufacturing area and small replacement parts for the manufacturing machines are an example of what?
Indirect materials
Forklift drivers, maintenance workers, shift supervisors, workers in the receiving department, janitorial staff, inspectors, engineers, training, and other human resource staff are examples of what?
Indirect labor
This overhead allocation method combines all overhead and allocates it to a single pool.
Traditional costing
This allocation method combines all overhead and allocates it to multiple cost pools
Activity based costing
Calculation for overhead allocation using traditional costing method:
Step one: All budgeted OH costs / Single Estimated Cost Drive = Single OH Rate
Step two: Actual cost driver X Single OH Rate = Applied OH
Using variable costs, as volume goes up, what happens to total cost and unit costs?
Total cost goes up, but cost per unit remains constant
Using fixed costs, as volume goes up, what happens to total cost and unit costs?
Total cost remains constant and unit cost goes up per unit
Costs containing both fixed and variable components are called:
Semi-variable costs (Mixed Costs)
Costs accumulation systems are used for what?
To assign costs to products
What sort of cost accumulation system uses components of both job-order costing and process costing?
Operations costing
What cost accumulation system accounts for certain costs at the end of the process when there is little need for in-process inventory valuation?
Backflush costing
Formula to calculate goods available or use:
Beginning raw materials + purchases
