Midterm Flashcards
Anything for which we want to accumulate costs
Cost object
A hamburger made by a restaurant. Providing a haircut. Preparing a tax tax return for a client. These are examples of what
Cost objects
Costs incurred only because the company manufactures their cost object
Product costs
Costs incurred because the company is in business
Period cost
Consists of activities that convert raw materials into finish goods
Manufacture
Direct materials, direct labor, and manufacturing overhead
Typical classification of manufacturing costs
Raw materials that can be physically, directly and easily associated with the finished product are called
Direct materials
Flower in the baking of bread is an example of
Direct material
Work completed by employees that can be physically, directly and easily associated with converting raw materials into finished goods is called
Direct labour
Legal staff at a law, firm and mechanics at a vehicle service department are examples of
Direct labour
Costs incurred in the manufacturer of a finished good that cannot be practically traced to a specific unit. This includes all manufacturing costs that cannot be classified as direct mate, material or direct labor.
Manufacturing overhead
Indirect materials and indirect labour are an example of
Manufacturing overhead
Raw materials that cannot easily be associated with the cost object are called
Indirect materials
Work completed by employees that has no direct physical association with the finished product, or for which it is impractical to trace the goods produced this is called
Indirect labour
Sum of all direct materials and directly costs. They are all direct manufacturing costs.
Prime costs
