Cost Measurement & Assignment (M46) Flashcards
What is the primary objective of the cost accountant?
To compute the cost/unit for financial statement presentation of COGS on the income statement and Ending Inventories on the BS
What are the 3 components of Manufacturing Costs?
1) Direct Materials 2) Direct Labor 3) Factory Overhead, (Variable Overhead & Fixed Overhead)
Essentially, the Cost of Goods Manufactured statement is a summary of what 2 accounts?
1) Direct Materials 2) Work in Process
The result of the CGM statement is used in the _____ statement or the ____ section of the income statement
Cost of Goods Sold Statement CoGS
T/F Freight out is a cost of goods sold
FALSE Freight Out is a selling cost
T/F Freight in is a cost of goods sold
TRUE
What is the difference between the Direct Method & the Step Method when allocating support department costs?
The Direct Method ignores costs between service departments. The Step method recognizes costs between service departments, but only from the department with the highest costs to the departments with the lower costs. The lower cost departments ignore the costs between service departments.
What is the difference between the Step Method & the Reciprocal Method when allocating support department costs?
The Step method recognizes costs between service departments, but only from the department with the highest costs to the departments with the lower costs. The lower cost departments ignore the costs between service departments. The Reciprocal Method provides a way to adjust for the reciprocal services provided among the service departments.
These are inferior goods either discarded or sold for disposal value
Spoilage (Scraps)
These are inferior goods reworked and sold as a normal product
Defective Units
Normal spoilage is a necessary cost in the production process and therefore is considered ____
A Product Cost (Inventoriable Cost)
Abnormal spoilage is a ____
Period Cost
This considers fixed manufacturing overhead to be a product cost
Absorption (full) costing
This is a cost system that focuses on activities, determines their cost, and then uses appropriate cost drivers to trace costs to the products based on the activities
Activity-Based Costing
This integrates ABC with other concepts such as total quality management and target costing to produce a management system that strives for excellence through cost reduction, continuous process improvement, and productivity gains
Activity-based management (ABM)
This is the level of production actually occurring for the period
Actual activity level
This is a 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
Backflush costing
This is a highly automated an integrated production process that is controlled by computers
Computer integrated manufacturing (CIM)
These include direct manufacturing labor and manufacturing overhead. They are the cost of converting direct materials into finished products
Conversion costs
This encompasses both cost tracing and cost allocation. The cost object is the item for which the cost is being determined
Cost assignment
This is assignment of direct costs to a cost object
Cost tracing
This is assignment of indirect cost to the cost object
Cost allocation
This is an item (either a product, department, or process) for which cost is being determined
Cost object
This is a factor that causes it cost to be incurred. It may be volume related and/or transaction related
Cost driver
This is the examination of past relationships of costs and level of activity to determine predictions of future costs
Cost estimation
This 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
Cost management system (CMS)
These are groupings of related costs accumulated together to the allocated to a product or some other cost object
Cost pools
This is the time required to complete a good from the start of the production process until the product is finished
Cycle time or throughput time
These are costs easily traced to a specific business segment
Direct costs
This is the cost of labor directly transforming a product. This theoretically should include fringe benefits, but frequently does not
Direct manufacturing labor
This is the cost of supporting labor
Indirect manufacturing labor
This includes the cost of materials awaiting entry into the production system
Direct materials inventory
This is the cost of materials directly and conveniently traceable to a product. Minor material items are not deemed conveniently traceable
Direct materials
These items, along with production supplies and minor material items, are not deemed conveniently traceable to a product
InDirect materials
This is determined from industrial engineering studies that examine how activities are performed and if or how performance can be improved
Engineered costs
This normally includes indirect manufacturing labor costs, supplies costs, and other production facility costs such as plant depreciation, taxes, etc. It is comprised of all manufacturing costs that are not direct materials or direct manufacturing labor
Factory manufacturing overhead
This includes the cost of units completed but unsold
Finished goods inventory
These are costs that do not vary with the level of activity within the relevant range for a given period of time, usually one year. for example: plant depreciation
Fixed costs
This is a series of computer-controlled manufacturing processes that can be easily changed to make a variety of products
Flexible manufacturing system (FMS)
This is a system that blends the characteristics of both the job order and process costing system. Firms using the system typically produce large numbers of closely related products
Hybrid costing
These costs are not easily traceable to specific segments and include factory overhead
Indirect costs
This is a system for allocating cost to groups of unique products made to customer specifications
Job order costing
These are cost common to multiple products that emerge at a split off point
Joint costs
This is a system of assigning joint costs to joint products who’s overall sales values are relatively significant
Joint costing
This is a function that demonstrates how productivity improves as workers become more proficient at producing the product
Learning curve
These are costs that have a fixed component and a variable component. These components are separated by using the scattergraph, high-low, or linear regression methods
Mixed costs (semi-variable)
This is a cost function that is not described by a straight line over the relevant range
Non-linear cost function
This is the cost of activities that can be illuminated without the customer perceiving a decline in product quality or performance
Non-value added costs
This is the production level expected to be achieved over a number of periods or seasons under normal circumstances
Normal activity level
These are cost that cannot be associated or matched with manufactured goods. Period costs become expenses when incurred
Period Costs
These costs are easily traceable to specific units of production and include direct manufacturing labor and direct materials
Prime costs
This is a system for allocating cost to homogenous units of a mass produced products
Process costing
What is entailed in the Direct Materials or Raw Materials T-Account?
What is entailed in the Direct Labor T-Account, aka Payroll Account?
What is entailed in the Variable & Fixed Factor Overhead T-Account?
What is entailed in the Work in Process T-Account?
What is entailed in the Finished Goods Inventory T-Account?
What do the Traditional Cost Flows look like?
What does the Backflush Costing Method I look like?
What does the Backflush Costing Method II look like?
This is the Cost Measurement Method that has this Income Statement Outline
Direct or Variable Costing
This is the Cost Measurement Method that has this Income Statement Outline
Absorption or Full Costing
