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| all production costs except direct labor and direct materials |
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| sum of direct materials and direct labor |
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| sum of direct labor and manufacturing overhead |
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| costs added to inventory accounts |
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| costs recognized for financial reporting when incurred |
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| product in production process but not yet complete |
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| product fully completed but not yet sold |
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| expense assigned to products sold during a period |
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| costs that change in direct proportion with a change in volume within the relevant range of activity |
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| costs that are unchanged as volume changes within the relevant range of activity |
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| acivity levels within which a cost estimate is valid; in particular a range within which a given fixed or unit variable cost will be unchanged even though volume changes |
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| factor that causes or drives costs |
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| cost that has both fixed and variable components; also mixed cost |
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| any cost that cannot be directly related to a cost object |
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| any cost that can be directly related to a cost object |
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| system to provide information about the costs of process, products, and services used and produced by an organization |
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| any end to which a cost is assigned; examples include a product, department, or product line |
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| process of assigning indirect costs to products, services, people, business units |
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| predetirmined overhead rate |
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| cost per unit of the allocation base used to change overhead to products |
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| provides customers an intangible product, example consulting firms, labor biggest cost |
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| sells product but doesnt make product, example office supply company |
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| company that does not make a product but sells tangible product |
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| direct manufacturing costs |
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| product costs that can be feasibly identified with units of production |
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| materials that can be identified directly with the product at reasonably cost |
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| labor that can be identified directly with the product at reasonable cost |
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| two elements: marketing and administrative; expensed period |
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| process of assigning indirect costs to products, services, people, business units |
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| method used to assign costs in the cost pool to the cost objects |
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| collection of costs to be assigned to the cost objects |
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engineering method
account analysis
statistical cost estimation
high low
regression analyis
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Term
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| costs estimate based on measurement and pricing of the work involved in a task |
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| cost estimation method that calls for a review of each account making up the total cost being analysed |
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| method to estimate costs based on two cost observations usually at the highes and lowest activity levels |
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statistical procedures to determine the relation between variables
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| high low could be unusual circumstances and not representative |
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| cost of goods manufactured |
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| the cost of completed units to be transferred into finished goods is called cost of goods manufactured |
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| total manufacturing costs |
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Definition
Total costs of direct materials, direct labor, and manufacturing overhead incurred and charged to production during an accounting period.
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| The costs of materials that have not yet entered into the manufacturing process |
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| the change in a cost when the level of output changes |
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| The rate of a person's progress in gaining experience or new skills |
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Definition
| The assigning of direct costs to the chosen cost object |
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Term
| cost allocation vs cost tracing |
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Definition
cost allocation The process of assigning costs to one or more cost objects when it is not possible to trace a cost directly
Cost tracing The process of assigning direct costs to the relevant cost objects. |
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Term
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Definition
| An allocation base is the basis upon which an entity allocates overhead costs. It takes the form of a quantity, such as machine hours used, kilowatt hours consumed, or square footage occupied. |
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| purpose for allocating costs |
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Definition
| Companies allocate costs so that all elements that are part of that cost share the incurred costs. It is like spreading the costs amongst those that use it. Companies allocate costs merely to assign responsibility of those costs to either several departments within that company or to just one department. For example, think of a multi-divisional business that has to provide a security service to protect its building, all divisions in that business will share the costs of the security service. |
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