# Shared Flashcard Set

## Details

Bus-A202 Chapter 3
Exam 1
22
Accounting
10/01/2011

Term
 Product Cost
Definition
 In financial accounting terms, the cost associated with getting products and services ready for sale
Term
 Gross Margin
Definition
 Revenue minus product cost (cogs)
Term
 Period Cost
Definition
 Cost that do not directly relate to preparing a service or good to be sold. They are subtracted from gross margin
Term
 Typical Inc Statement
Definition
 Revenue-Cost of providing G N S=Gross Margin-Management salaries, marketing, admin=Profit before taxes
Term
 Service firms offer
Definition
 products that are not tangible or can be stored.
Term
 Merchandising firms
Definition
 buy goods from suppliers and resell substantially the same product. This creates an inventory account
Term
 Inventory Equation
Definition
 Cost of Beginning Inventory+Cost of goods purchased during the period-Cost of ending Inventory=Cost of goods sold during period
Term
 Two methods for cost flow with inventory
Definition
 Fifo and Lifo
Term
 Manufacturing Firms
Definition
 Use labor and equipment to transform inputs such as raw materials and components into outputs
Term
Definition
 total of all indirect manufacturing inputs. can be variable and fixed
Term
 Prime Cost
Definition
 the sum of materials and labor cost
Term
 Capacity Cost
Definition
 sum of their variable and fixed overhead
Term
 Conversion Cost
Definition
Term
 COGM
Definition
 Cost of goods manufactured. The price of the goods moved from WIP to FG
Term
 Cost Allocation
Definition
 procedure that allocates or distributes a common cost.
Term
 Cost Pool
Definition
 Total costs to allocate
Term
 Cost Objects
Definition
 The items or entities to which we allocate the costs in the cost pool
Term
 Cost Driver
Definition
 attributes that we can measure for each cost object. also known as allocation basis.
Term
 Allocation Volume
Definition
 sum of the cost driver amounts across all cost objects. the amount of things the cost is being allocated to
Term
 Allocation rate
Definition
 if there are \$60 to be allocated by 5 people you divide 60/5. 12
Term
 Allocate the Cost
Definition
 To do this you multiple the allocation rate by the number of allocated drivers
Term
 Be Careful When Using Allocation
Definition
 Make sure to remember although allocation appears to be a variable cost, it is actually fixed. Therefore when making decisions do not count it as variable
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