Management Accounting Concepts Flashcards
(38 cards)
Direct Costing
is a method of costing where only variable manufacturing costs are included in the cost of goods sold. Fixed manufacturing overhead costs are treated as period expenses and are not included in the cost of inventory.
Indirect Costing
also known as absorption costing, involves allocating both variable and fixed manufacturing overhead costs to products. This method treats all manufacturing costs, both variable and fixed, as product costs.
Prime Cost:
Refers to the direct costs of production, including direct materials and direct labor.
Conversion Cost:
represents the costs incurred to convert raw materials into finished products, including direct labor and manufacturing overhead.
Work in Process
refers to inventory that is in the process of being manufactured but is not yet complete.
Tracing
refers to the process of directly assigning a cost to a specific cost object or activity.
Intangible
are non-physical assets that lack physical substance, such as patents, trademarks, and goodwill.
Tangible
are physical assets with a physical form and substance, such as machinery, equipment, and buildings.
Overhead Cost:
are indirect costs that cannot be directly traced to a specific product or activity. These costs include items such as rent, utilities, and depreciation
Variable-Costing Income:
is the profit calculated using the variable costing method, which includes only variable manufacturing costs in the cost of goods sold.
Cost of Direct Labour:
refers to the total wages and benefits paid to employees directly involved in the production of goods or services.
Total Overhead Cost:
represents the sum of all indirect costs incurred in the production process, including both fixed and variable overhead expenses.
Total Manufacturing Cost
includes all costs incurred in the production process, including direct materials, direct labor, and manufacturing overhead.
Factory Overhead Cost:
also known as manufacturing overhead cost, refers to indirect costs incurred in the manufacturing process, such as utilities, maintenance, and depreciation of factory equipment.
Administrative Expense:
are non-manufacturing costs related to the general management and administration of a business, such as salaries of administrative staff, office rent, and utilities.
Variable Production Overhead:
costs are indirect manufacturing expenses that vary with changes in production levels, such as supplies, maintenance, and utilities.
Fixed Production Overhead:
Costs are indirect manufacturing expenses that remain constant regardless of changes in production levels, such as rent, property taxes, and depreciation of factory equipment.
Overhead
refers to indirect costs incurred in the production process that cannot be directly traced to specific products or activities. It includes both fixed and variable manufacturing expenses.
Material Requisition:
is the process of requesting and obtaining materials from the inventory or purchasing department for use in production or other activities.
Selling Cost:
are expenses incurred in promoting and marketing products or services to customers, including advertising, sales commissions, and distribution expenses.
Distribution Cost:
also known as distribution expenses or logistics costs, are expenses associated with the transportation, warehousing, and delivery of products to customers.
Finance Cost:
Also known as financing expenses or interest expenses, are the costs associated with borrowing funds or financing operations through debt instruments.
Period Cost:
expenses that are not directly associated with the production of goods or services and are incurred over a specific accounting period. These costs are expensed in the period in which they are incurred.
Production Cost:
Also known as manufacturing costs, are the expenses incurred in the process of producing goods or services, including direct materials, direct labor, and manufacturing overhead.
