Flashcards in Chapter1: Managerial Accounting Concepts and Principles Deck (10)
We can classify costs on the basis of their:
(1) behavior, (2) traceability, (3) controllability, (4) relevance, and (5) function.
Product, process, department, or customer to which costs are assigned.
A sunk cost has already been incurred and cannot be avoided or changed. 例）the cost of a company's office equipment previously purchased.
An out-of-pocket cost requires a future outlay of cash and is relevant for decision making.
opportunity cost: Potential benefit lost by choosing a specific action from two or more alternatives.
product costs: Costs that are capitalized as inventory because they produce benefits expected to have future value; include direct materials, direct labor, and overhead.
period costs: Expenditures identified more with a time period than with finished products costs; includes selling and general administrative expenses.
Raw Materials Inventory のdirect materials/indirect materials
Raw materials used directly in a product are called direct materials.
indirect materials: Material used to support the production process but not clearly identified with products or batches of product. 例）靴を作るのに必要な接着剤。一足の靴を作るのにどれほどの接着剤を使用したかなんて細かすぎて記録する？って話。
Items used as indirect materials often appear on a balance sheet as factory supplies or are included in raw materials. Some direct materials are classified as indirect materials when their costs are low (insignificant).
Manufacturers carry several unique assets and usually have three inventories instead of the single inventory that merchandisers carry.
These three are:
1. raw materials inventory
2. goods in process inventory
3. finished goods inventory
goods in process inventory
Account in which costs are accumulated for products that are in the process of being produced but are not yet complete; also called work in process inventory.
If the time required to produce a unit of product is short, the goods in process inventory is likely small; but if weeks or months are needed to produce a unit, the goods in process inventory is usually larger.
finished goods inventory
Account that controls the finished goods files, which acts as a subsidiary ledger (of the Inventory account) in which the costs of finished goods that are ready for sale are recorded.,
Factory activities supporting the production process that are not direct material or direct labor; also called overhead and manufacturing overhead.