Cost Test 1 Flashcards
Actual Cost
Cost incurred (a historical or past cost) as distinguished from a budgeted or forecasted cost.
Average Cost
Cost computed by dividing total cost by the number of units. Aka Unit Cost.
Budgeted Cost
Predicted or forecasted cost (future cost) as distinguished from an actual or historical cost.
Conversion Cost
All manufacturing costs other than direct material costs.
Cost
Resource sacrificed or forgone to achieve a specific objective.
Cost Accumulation
Collection of cost data in some organized way by means of an accounting system.
Cost Allocation
Assignment of indirect costs to a particular cost object.
Cost Assignment
General term that encompasses both (1) tracing accumulated costs that have a direct relationship to a cost object and (2) allocating accumulated costs that have an indirect relationship to a cost object.
Cost Driver
Variable, such as the level of activity or volume, that causally affects costs over a given time span.
Cost Object
Anything for which a measurement of costs is desired.
Cost of Goods Manufactured
Cost of goods brought to completion, whether they were started before or during the current accounting period.
Cost Tracing
Describes the assignment of direct costs to a particular cost object.
Direct Costs of a Cost Object
Costs related to the particular cost object that can be traced to that object in an economically feasible (cost-effective) way.
Direct manufacturing Labor Costs
Include the compensation of all manufacturing labor that can be traced to the cost object (work in process and then finished goods) in an economically feasible way.
Direct Material Costs
Acquisition costs of all materials that eventually become part of the cost object (work in process and then finished goods), and that can be traced to the cost object in an economically feasible way.
Direct Materials Inventory
Direct materials in stock and awaiting use in the manufacturing process.
Factory Overhead Costs
All manufacturing costs that are related to the cost object (work in process and then finished goods) but that cannot be traced to that cost object in an economically feasible way. AKA manufacturing overhead costs and indirect manufacturing costs.
Finished Goods Inventory
Goods completed but not yet sold.
Fixed Cost
Cost that remains unchanged in total for a given time period, despite wide changes in the related level of total activity or volume.
Idle Time
Wages paid for unproductive time caused by lack of orders, machine breakdowns, material shortages, poor scheduling, and the like.
Indirect Costs of a Cost Object
Costs related to the particular cost object that cannot be traced to that object in an economically feasible (cost-effective) way.
Indirect manufacturing Costs
All manufacturing costs that are related to the cost object (work in process and then finished goods) but that cannot be traced to that cost object in an economically feasible way. Aka manufacturing overhead costs and factory overhead costs.
Inventoriable Costs
All costs of a product that are considered as assets in the balance sheet when they are incurred and that become cost of goods sold only when the product is sold.
Manufacturing Overhead Costs
All manufacturing costs that are related to the cost object (work in process and then finished goods) but that cannot be traced to that cost object in an economically feasible way. Aka indirect manufacturing costs and factory overhead costs.
Manufacturing-Sector Companies
Companies that purchase materials and components and convert them into various finished goods.
Merchandising-Sector Companies
Companies that purchase and then sell tangible products without changing their basic form.
Operating Income
Total revenues from operations minus cost of goods sold and operating costs (excluding interest expense and income taxes).
Overtime Premium
Wages rate paid to workers (for both direct labor and indirect labor) in excess of their straight-time wage rates.
Period Costs
All costs in the income statement other than costs of goods sold.
Prime Costs
All direct manufacturing costs.
Product Cost
Sum of the costs assigned to a product for a specific purpose.
Relevant Range
Band of normal activity level or volume in which there is a specific relationship between the level of activity or volume and the cost in question.
Revenues
Inflows of assets (usually cash or accounts receivable) received for products or services provided to customers.
Service-Sector Companies
Companies that provide services or intangible products to their customers.
Unit Cost
Cost computed by dividing total cost by the number of units. All called average cost.
Variable Cost
Cost that changes in total in proportion to changes in the related level of total activity or volume.
Work-In-Process Inventory
Goods partially worked on but not yet completed. Also called work in progress.
Work in Progress
Goods partially worked on but not yet completed. Also called work-in-process.
Actual Costing
Cost incurred (a historical or past cost) as distinguished from a budgeted or forecasted cost.
Actual Indirect-Cost Rate
Actual total indirect costs in a cost pool divided by the actual total quantity of the cost-allocation base for that cost pool.
Adjusted Allocation-Rate Approach
Restates all overhead entries in the general ledger and subsidiary ledgers using actual cost rates rather than budgeted cost rates.
Budgeted Indirect-Cost Rate
Budgeted annual indirect costs in a cost pool divided by the budgeted annual quantity of the cost allocation base.
Cost-Allocation Base
Factor that links in a systematic way an indirect cost orr group of indirect costs to a cost object.
Cost-Application Base
Cost-allocation base when the cost object is a job, product, or customer.
Cost Pool
Grouping of individual cost items.
Job
Unit or multiple units of a distinct product or service.
Job-Cost Record
Source document that records and accumulates all the costs assigned to a specific job, starting when work begins. Also call job-cost sheet.
Job-Costing System
Costing system in which the cost object is a unit or multiple units of a distinct product or service called a job.
Labor-Time Sheet
Source document that contains information about the amount of labor time used for a specific job in a specific department.
Manufacturing Overhead Allocated
Amount of manufacturing overhead costs allocated to individual jobs, products, or services based on the budgeted rate multiplied by the actual quantity used of the cost allocation base. Also called manufacturing overhead applied.
Materials-Requisition Record
Source document that contains information about the cost of direct materials used on a specific job and in a specific department.
Normal Costing
Costing system that traces direct costs to a cost object by using the actual direct-cost rates times the actual quantities of the direct-cost inputs and that allocates indirect costs based on the budgeted indirect-cost rates times the actual quantities of the cost-allocation bases.
Overallocated Indirect Costs
Allocated amount of indirect costs in an accounting period is greater than the actual (incurred) amount in that period. Also called overapplied indirect costs and overabsorbed indirect costs.
Process-Costing System
Costing system in which the cost object is masses of identical or similar units of a product or service.
Proration
The spreading of underallocated manufacturing overhead or overallocated manufacturing overhead among ending work in process, finished goods, and cost of goods sold.
Source Document
Original record that supports journal entries in an accounting system.
Underallocated Indirect Costs
Allocated amount of indirect costs in an accounting period is less than the actual (incurred) amount in that period. Also called underapplied indirect costs or underabsorbed indirect costs.
Variable Costing
Method of inventory costing in which only all variable manufacturing costs are included as inventoriable costs. also called direct costing.
Throughput Costing
Method of inventory costing in which only variable direct material costs are included as inventoriable costs. Also called super-variable costing.
