cost accounting (theories) Flashcards
what term is used to refer to the cost of changing direct materials into finished manufactured product?
conversion cost
under this system, the product costs are determined as they occur simultaneously with the manufacturing operation, but the total of product cost is only known as the operation has been completed.
ACTUAL COSTING
The product costs are determined in advance from analysis and forecasts made before the production begins.
STANDARD COSTING
combination of actual and standard costing
NORMAL COSTING
under this method, only direct materials are recorded as part of the inventory while DL and FOH costs are charged as an expense.
THROUGHPUT COSTING
this methods treats all variable costs as part of the inventory and all fixed costs as period cost.
DIRECT (VARIABLE) COSTING
all product costs are capitalized in the inventory once incurred and will be charged as an expense when the inventory is sold to the customer.
FULL ABSORPTION COSTING
this method assigns FOH costs to products in a more logical manner than the traditional way of simply allocating costs on the basis of direct labor hours or machine hours.
ACTIVITY BASED COSTING
it is applicable to companies producing heterogenous products. It is also applicable for work done based on customer’s specifications.
job order costing
it is used when the units are not separately distinguishable from one another during the manufacturing process.
process costing
it is a combination of job order and process costing method.
hybrid costing
the inventory costs are recorded at recent or new prices while the inventory sold is recorded at older prices.
FIFO
the inventory is recorded in terms of older prices and the cost of goods sold is recorded at recent prices.
LIFO
this system requires maintenance of records called stock cards.
perpetual system
it requires the physical counting of inventories on hand at the end of the accounting period to determine the total inventories.
periodic system
it includes direct materials and direct labor
prime cost
what are the three types of inventories in a manufacturing company?
raw materials, work in process, and finished goods inventory.
combination of DL, DM, and FOH
manufacturing/product cost
referred to as inventoriable costs
product cost
the recording of application of factory overhead cost to jobs would include a debit to
work in process
the benefit given up when one alternative is chosen over another.
opportunity cost
costs that is present under one alternative but is absent in whole or in part under another alternative.
differential costing
costs that affect the decision making of the management.
relevant costs
costs or expenses that require the payment of money as a result of their incurrence. It is also called “explicit costs”.
out of pocket money costs