Module 3: Cost Accounting Part 3 Flashcards
Joint products
two or more products that are generated from a common input
By-products
minor products of relatively small value that incedentally result from the manufacture of the main product
Split-off point
point in the process in which the joint products can be recognized as individual products
Relative sale value at split off
assigns cost to the separate joint products in relation to their market values @ split off
Net realizable value
sales value less cost of completion and disposal
Activity based costing (ABC)
assumes that the resource-consuming activities of an enterprise that generate cost are activities and NOT output
Cost drivers
activity bases that are closely correlated with the incurrence of manufacturing overhead costs
Resource cost driver
amount of resources that will be used by an activity
Activity cost driver
amount of activity that a cost object will use
Activity centers
operation necessary to produce a product
Activity based costing
assigns cost to activities or transactions & allocates to products according to their use of activity. This method also means multiple cause and effect relationship may exist.
Significant nonvalue activities/costs
these are activities/cost that a manufacturer can reduce be they are controllable.
Basic cost to allocating cost for costing inventory in joint-cost situations
relative unit volume, relative sales value at splitt off, or net realizable value
Engineered cost
a cost that bears an observable and known relationship to a quantifiable activity base
