Cost Concepts, Terms and Measurement Flashcards
Raw materials that can be physically and directly associated with the finished product.
Direct Materials
Cannot be traced because their physical association with the product is too small, not becoming a part of the finished product.
Indirect Materials
Work of factory employees that can be physically and directly associated with converting raw materials into finished goods.
Direct Labor
Consists of costs that are indirectly associated with the manufacture of the finished product.
Manufacturing Overhead
Manufacturing Overhead
- Indirect materials
- Indirect labor
- Depreciation on factory buildings and machines
- Insurance
- Taxes
- Maintenance on factory facilities
Cost of Goods Sold
Beg, Finished Goods Inv.
+Cost of Goods Manufactured
(End, Finished Goods Inv.)
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Cost of Goods Sold
Cost of Goods Manufactured
Beg, W.I.P.
+Total Manufacturing Cost
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Cost of W.I.P.
(End, W.I.P.)
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Cost of Goods Manufactures
Study of how specific costs respond to changes in the level of business activity.
Cost Behavior Analysis
Costs that remains the same per unit at every level.
Variable Costs
Costs that remains the same in total at every level.
Fixed Cost
Contains both Variable and Fixed Cost.
Mixed Cost
Fixed and variable elements of the mixed costs are computed from two data points - the high and low periods as to activity level or cost driver.
High-Low Method
Various costs are plotted on a vertical line and measurement figures are plotted on a horizontal line.
Scatter graph Method
A statistical technique that investigates the association between dependent and independent variables.
Least Squares Method
( Y = a + bx )
