Cost terms, concepts, and classifications Flashcards
(17 cards)
May be defined as the sacrifice of resources for the purpose of achieving some economic benefit which will promote the profit-making ability of the firm.
Cost
An outlay or expenditure of money to acquire goods and services that assist in performing operations.
Cost
are costs collected into meaningful groups
Cost Pools
is any product, service or organizational unit to which costs are assigned for some management purpose
cost object
What are examples of Cost Objects?
program, department, activity, project, service, product
is any factor that has the effect of changing the level of total cost
Cost Driver
are all the costs associated with the production of goods. They are frequently classified as direct materials, direct labor, and factory overhead.
Manufacturing costs
All raw material costs that become an integral part of the finished product and that can be conveniently and economically assigned to specific units manufactured
Manufacturing costs
- Direct Materials
All labor costs related to time spent on products that can be conveniently and economically assigned to specific units manufactured
Manufacturing costs
- Direct Labor
includes all costs of manufacturing except direct materials and direct labor. Includes indirect materials and indirect labor
Manufacturing Cost
- Manufacturing Overhead
include materials and supplies used in the manufacturing operation that do not become part of the product, such as oil for the machinery and cleaning fluids for the custodian.
Indirect materials
costs that cannot be identified or traced to specific units manufactured.
Indirect Labor
Direct materials and direct labor
= DM+DL
Prime Cost
they are the costs of “converting or transforming” raw material into finished products
= DL+MO
Conversion Costs
generally include costs related to selling and other activities not related to the production of goods
Nonmanufacturing Costs
all costs associated with marketing or selling a product or all costs incurred by the marketing division from the time the manufacturing process is completed until the product is delivered to the customer
Marketing, distribution, or selling costs
include all executive, organizational and clerical costs associated with the general management of the organization rather than with manufacturing, marketing, or selling.
General administrative costs
