Handout 1 Flashcards
(31 cards)
It refers to the method and process of ascertaining the costs. It also involves classifying, recording, and
allocating the expenditure of an organization to determine the costs of products or services.
Costing
It refers to the costs incurred in the factory for converting raw materials
into finished goods.
Manufacturing costs
It refers to the unincurred costs in transforming materials to finished
goods.
Nonmanufacturing costs
It refers to the costs that can be traced directly to a particular object of costing such
as a particular product, department, or branch.
Direct costs
It refers to the costs that cannot be traced to a particular object of costing.
Indirect costs
Also called common cost or joint cost.
It refers to the costs that form part of inventory and are charged against revenue.
They are also called inventoriable costs
Product costs
It refers to the costs that are not inventoriable and are immediately charged against
revenue.
Period costs
It refers to the ongoing business expenses not including or related to direct labor
or direct materials
Overhead cost
It refers to the predetermined cost based on some reasonable basis such as past
experiences, budgeted amounts, and industry standards.
Standard cost
It refers to the benefit forgone or given up when an alternative is chosen over
the other/s.
Opportunity cost
It refers to the historical costs that will not make any difference in making a decision.
Sunk costs
It refers to the costs resulting from an organization’s structure or the use of its
facilities.
Committed costs
It refers to the costs resulting from a management decision to spend a
particular amount of money for a specific purpose.
Discretionary costs
It refers to the costs that can be influenced or controlled by a supervisor or
manager for a given period of time.
Controllable costs
It refers to the expenditure which results in the acquisition of an asset.
Capital expenditure
It refers to the expenditure which occurs for the maintenance of assets in working condition and not intended for increasing the revenue-earning capacity.
Revenue expenditure
These are constant costs which do not change with an increase or decrease in the
number of goods or services produced and sold.
Fixed costs
Fixed Cost Formula
FC = Total Fixed Cost/Production
These are costs that vary in total, in direct proportion to changes in the volume of
production.
Variable costs
Variable Cost Formula
TVC= Production in units x variable cost per unit
This shows the available raw materials to use in the manufacturing
process.
Raw Materials Inventory
This represents the costs of partially completed goods on which
production activities have been started but not yet completed as of a certain period.
Work-in-Process Inventory
This summarizes the costs of completed job stored in the warehouse
for delivery to the customers.
Finished Goods Inventory
This system requires the need to maintain stock cards or records of
the status of the goods held in the inventory for each type of raw materials.
Perpetual Inventory System
