Cost Measurement and Assignment Flashcards
Job order costing
a system for allocating costs to groups of unique products made to customer specifications
process costing
a system for allocating costs to homogeneous units of a mass-produced product
hybrid-costing
a system that blends the characteristics of both the job order and process costing systems. Firms using this system typically produce large numbers of closely related products
activity-based costing
a cost system that focuses on activities, determines their costs, and then uses appropriated cost drivers to trace costs to the products based on the activities.
cost driver
a factor that causes a cost to b incurred. may be volume related and transaction related
cost pools
groupings of related costs accumulated together to be allocated to a product or some other cost object
non-value-added costs
cost of activities that can be eliminated without the customer perceiving a decline in product quality or performance
value-added cost
cost of activities that cannot be eliminated without the customer perceiving a decline in product quality or performance
value chain
the sequence of business functions in which value is added to a firm’s products or services. this sequence includes research and development, product design, manufacturing, marketing, distribution, and customer service.
engineered costs
are determined from industrial engineering studies that examine how activities are performed and if/how performance can be improved
activity-based management
integrates ABC (activity based costing) with other concepts such as TQM (total quality management) and target costing to produce a management system that strives for excellence through cost reduction, continuous process improvement and productivity gains.
backflush costing
costing system that omits recording some or all of the journal entries to track the purchase and production of goods. goods are costed after they have been completed
cost management system
is a planning and control system that measures the cost of significant activities, identifies non-value-added costs, and identifies activities that will improve organizational performance
product costs
costs that can be associated with the production of specific goods. product costs attach to a physical unit and become an expense in the period in which the unit to which they attach is sold. normally include direct manufacturing labor, direct materials, and factory overhead
period costs
cannot be associated with manufactured goods. expensed when incurred
prime costs
easily traceable to specific units of production and include direct manufacturing labor and direct materials
conversion costs
include direct manufacturing labor and manufacturing overhead. costs of converting materials into finished products
product life-cycle costing
tracks the accumulation of costs that occur starting with the research and development for a product and ending with the time at which the product is finished
cycle time
(throughput time) time required to complete a good from start of production until finish
computer-integrated manufacturing
highly automated and integrated production process that is controlled by computers
flexible manufacturing system
series of computer-controlled manufacturing processes that c an be easily changed to make a variety of products
cost estimation
examination of past relationships of costs and level of activity to develop predictions of future costs
variable (direct) costing
costing that considers all fixed manufacturing overhead as a period cost rather than as a product costs (not acceptable under GAAP)
absorption (full) costing
considers fixed manufacturing overhead to be a product cost
