ch2 vocab

Question 1

allocate

Answer 1

to assign an indirect cost to a cost object

Question 2

assign

Answer 2

to attach a cost to a cost object

Question 3

average cost

Answer 3

the total cost divided by the number of units

Question 4

biomimicry

Answer 4

a means of product design in which a company tries to mimic, or copy, the natural biological process in which dead organisms become the input for another organism or process

Question 5

controllable costs

Answer 5

costs that can be influenced or changed by management

Question 6

conversion costs

Answer 6

the combination of direct labor and manufacturing overhead costs

Question 7

cost object

Answer 7

anything for which managers want a separate measurement of costs

Question 8

cost of goods manufactured

Answer 8

the cost of manufacturing the goods that were finished during the period

Question 9

customer service

Answer 9

support provided for customers after the sale

Question 10

design

Answer 10

detailed engineering of products and services and the processes for producing them

Question 11

differential cost

Answer 11

the difference in cost between two alternative courses of action

Question 12

direct cost

Answer 12

a cost that can be traced to a cost object

Question 13

direct labor

Answer 13

the cost of compensating employees who physically convert raw materials into the company’s product; labor costs that are directly traceable to the finished product

Question 14

direct materials

Answer 14

primary raw materials that become a physical part of a finished product and whose costs are traceable to the finished product

Question 15

distribution

Answer 15

delivery of products or services to customers

Question 16

finished goods inventory

Answer 16

completed goods that have not yet been sold

Question 17

fixed costs

Answer 17

costs that stay constant in total despite wide changes in volume

Question 18

greenwashing

Answer 18

the unfortunate practice of overstating a company’s commitment to sustainability

Question 19

indirect costs

Answer 19

a cost that relates to the cost object but cannot be traced to it

Question 20

indirect labor

Answer 20

labor costs that are difficult to trace to specific products

Question 21

indirect materials

Answer 21

materials whose costs are difficult to trace to specific products

Question 22

inventoriable product costs

Answer 22

all costs of a product that GAAP requires companies to treat as an asset for external financial reporting. These costs are not expensed until the product is sold

Question 23

life cycle assessment

Answer 23

a method of product design in which the company analyzes the environmental impact of a product, from cradle grave, in an attempt to minimize negative environmental consequences throughout the entire life span of the product

Question 24

manufacturing company

Answer 24

a company that uses labor, plant, and equipment to convert raw materials into new finished products

Question 25

manufacturing overhead

Answer 25

all manufacturing costs other than direct materials and direct labor; also called factory overhead and indirect manufacturing costs

Question 26

marginal cost

Answer 26

the cost of producing one or more unit

Question 27

marketing

Answer 27

promotion and advertising of products or services

Question 28

merchandising company

Answer 28

a company that resells tangible products previously bought from suppliers

Question 29

other indirect manufacturing costs

Answer 29

all manufacturing overhead costs aside from indirect materials and indirect labor

Question 30

period costs

Answer 30

costs that are expensed in the period in which they are incurred; operating expenses, selling, general, and administrative expenses

Question 31

perpetual inventory

Answer 31

an inventory in which both Cost of Goods Sold and Inventory are updated every time a sale is made

Question 32

periodic inventory

Answer 32

an inventory system in which Cost of Goods Sold is calculated at the end of the period, rather than every time a sale is made

Question 33

prime costs

Answer 33

the combination of direct material and direct labor costs

Question 34

production or purchases

Answer 34

resources used to produce a product or service, or to purchase finished merchandise intended for resale

Question 35

raw materials inventory

Answer 35

all raw materials not yet used in manufacturing

Question 36

research and development

Answer 36

researching and developing new or improved products or services or the processes for producing them

Question 37

retailer

Answer 37

merchandising company that sells to consumers

Question 38

service company

Answer 38

a company that sells intangible services rather than tangible products

Question 39

sunk cost

Answer 39

a cost that has already been incurred

Question 40

total costs

Answer 40

the cost of all resources used throughout the value chain

Question 41

trace

Answer 41

to assign a direct cost to a cost object

Question 42

triple bottom line

Answer 42

evaluating a company's performance not only by its ability to generate economic profits, but also by its impact on people and the planet

Question 43

uncontrollable costs

Answer 43

costs that cannot be changed or influenced in the short run by management

Question 44

value chain

Answer 44

the activities that add value to a firm's products and services; R&D, design, production or purchase, marketing, distribution, and customer service

Question 45

variable costs

Answer 45

costs that change in total in direct proportion to changes in volume

Question 46

wholesaler

Answer 46

merchandising companies that buy in bulk from manufacturers, mark up the prices, and then sell those products to retailers

Question 47

work in progress invenory

Answer 47

goods that are partway through the manufacturing process but not yet complete