Final Exam Flashcards
3 types of product cost
Direct materials, direct labor, manufacturing overhead
The costs of primary raw materials that are converted into finished goods.
Direct material
Wages earned by production employees for time they spend working on the conversion of raw materials to finished goods.
Direct Labor
All manufacturing costs other than direct materials and direct labor.
Manufacturing overhead
All cost incurred in manufacturing of products; they are carried in the accounts as an asset (inventory) until the product is sold at which time they are recognized as an expense (cost of goods sold).
Product Cost
Expired costs not related to manufacturing inventory; they are recognized as expenses when incurred.
Period Cost
The combined costs of direct labor and manufacturing overhead incurred to convert raw materials to finished goods.
Conversion Cost
The physical ingredients and components that will be converted by machines and/or human labor into finished product.
Raw Materials
The cost of inventories that are in the manufacturing process and have not yet reached completion.
Work in process
The dollar amount of inventory that has completed the production process and is awaiting sale to customers.
Finished goods
Raw material, WIP, finished goods
3 types of inventory
Service merchandising manufacturing
revenue product activities
Product or service trying to accumulate or measure a cost for.
Cost object
Cost directly associated to a product; traced to object; easily identifiable.
Direct Cost
Associated with cost object but cannot be traced or identified; cost allocation cannot be determined.
Indirected cost
Assigns cost to object as direct or indirect.
Cost Assignment
Group of indirect costs; broad or narrow; a collection of related costs, such as departmental manufacturing overhead, that is assigned to one or more cost objectives, such as products.
Cost Pool
A measure of volume activity, such as direct labor hours or machine hours, that determines how much of a cost pool is assigned to each cost objective.
Cost Allocation Base
Process manufacturing, job order production
Production methods
A document used to track the status of and accumulate the costs for a specific job in a job cost system.
Job Cost Sheet
A manufacturing environment where production is on a continuous basis.
Process Manufacturing
The manufacturing of products in a single units or in batches of identical units.
Job Production
A set of accounts or records that contains detailed information about the items included in the balance of one general ledger account.
Subsidiary ledger
A document that contains a job’s unique identification number and specifies details for the job such as the quantity to be produced, the total raw materials requirements, the manufacturing operations and other activities to be performed, and perhaps even the time when each manufacturing operation should be performed.
Production order
