Managerial Accounting Flashcards
Types of Costs
Period Costs / Product Costs
Period Costs
Non Product cost.
eg. Salses & Administration
Product Cost
Cost of Goods manifactured / purchased for resale
Indirect / Overhead Costs
product costs that CANT be traced back to a product in a feasible way -> must be allocated
Indirect Material Costs
Overhead Cost for material used in production but not part of the product
e.g. equipment/glue
Indirect Labour Costs
Overhead Cost personal cost for employees not working in production but necessary for production.
e.g. security guards
Other Manufacturing Costs
Manufacturing Costs that are hard to trace
e.g. insurrance
Direct Costs
product Costs that CAN be traced to a product
Direct Labour
Labour Costs of employees invoved in manufacturin
Direct Material
Material used for production / incorporated into the product
Direct Cost Formula
WIPI
WIPI
Work in Progress Inventory
COGM
Cost of good manufactured
COGM Formula
Beginning WIPI + Direct Costs of period + END WIPI
Cost Driver
Characteristic of an activity that causes costs to be incurred
differential costs
Net difference in costs between two options
Marginal Costs
Aditional costs of producting one more unit
Marginal Costs != VC
Product Costing System
Accumulates the costs incurred in production and assigns these to final products
Product Cost in Merchandising firms
Transportation costs
Product costs in service firms
Costs of delivering services
Product Costs in transportation firms
Full costs to move products
Job order costing
- Products made individualy/in small batches
- Each product/bath is distinguishable
- many costs can be traced directly
e. g. customs homes, audits, airline flight, research project
Process Costing
- Employed for mass production
e. g. microships, gasoline, chemicals
