Cost terms, concepts, and classifications

Question 1

May be defined as the sacrifice of resources for the purpose of achieving some economic benefit which will promote the profit-making ability of the firm.

Answer 1

Cost

Question 2

An outlay or expenditure of money to acquire goods and services that assist in performing operations.

Answer 2

Cost

Question 3

are costs collected into meaningful groups

Answer 3

Cost Pools

Question 4

is any product, service or organizational unit to which costs are assigned for some management purpose

Answer 4

cost object

Question 5

What are examples of Cost Objects?

Answer 5

program, department, activity, project, service, product

Question 6

is any factor that has the effect of changing the level of total cost

Answer 6

Cost Driver

Question 7

are all the costs associated with the production of goods. They are frequently classified as direct materials, direct labor, and factory overhead.

Answer 7

Manufacturing costs

Question 8

All raw material costs that become an integral part of the finished product and that can be conveniently and economically assigned to specific units manufactured

Answer 8

Manufacturing costs

- Direct Materials

Question 9

All labor costs related to time spent on products that can be conveniently and economically assigned to specific units manufactured

Answer 9

Manufacturing costs

- Direct Labor

Question 10

includes all costs of manufacturing except direct materials and direct labor. Includes indirect materials and indirect labor

Answer 10

Manufacturing Cost

- Manufacturing Overhead

Question 11

include materials and supplies used in the manufacturing operation that do not become part of the product, such as oil for the machinery and cleaning fluids for the custodian.

Answer 11

Indirect materials

Question 12

costs that cannot be identified or traced to specific units manufactured.

Answer 12

Indirect Labor

Question 13

Direct materials and direct labor

= DM+DL

Answer 13

Prime Cost

Question 14

they are the costs of “converting or transforming” raw material into finished products
= DL+MO

Answer 14

Conversion Costs

Question 15

generally include costs related to selling and other activities not related to the production of goods

Answer 15

Nonmanufacturing Costs

Question 16

all costs associated with marketing or selling a product or all costs incurred by the marketing division from the time the manufacturing process is completed until the product is delivered to the customer

Answer 16

Marketing, distribution, or selling costs

Question 17

include all executive, organizational and clerical costs associated with the general management of the organization rather than with manufacturing, marketing, or selling.

Answer 17

General administrative costs