Midterm Flashcards
(23 cards)
Anything for which we want to accumulate costs
Cost object
A hamburger made by a restaurant. Providing a haircut. Preparing a tax tax return for a client. These are examples of what
Cost objects
Costs incurred only because the company manufactures their cost object
Product costs
Costs incurred because the company is in business
Period cost
Consists of activities that convert raw materials into finish goods
Manufacture
Direct materials, direct labor, and manufacturing overhead
Typical classification of manufacturing costs
Raw materials that can be physically, directly and easily associated with the finished product are called
Direct materials
Flower in the baking of bread is an example of
Direct material
Work completed by employees that can be physically, directly and easily associated with converting raw materials into finished goods is called
Direct labour
Legal staff at a law, firm and mechanics at a vehicle service department are examples of
Direct labour
Costs incurred in the manufacturer of a finished good that cannot be practically traced to a specific unit. This includes all manufacturing costs that cannot be classified as direct mate, material or direct labor.
Manufacturing overhead
Indirect materials and indirect labour are an example of
Manufacturing overhead
Raw materials that cannot easily be associated with the cost object are called
Indirect materials
Work completed by employees that has no direct physical association with the finished product, or for which it is impractical to trace the goods produced this is called
Indirect labour
Sum of all direct materials and directly costs. They are all direct manufacturing costs.
Prime costs
The cost of converting raw materials into a final product.Sum of direct labour and manufacturing overhead costs
Conversion costs
Consist of the direct material cost, direct, labour cost, and manufacturing overhead cost
Product costs
This type of cost is recorded as inventory when incurred. Becomes an expense to the business when the finish good is sold.
Product cost
This type of cost is matched with revenue earned within a specific time. And charged to expense as incurred. Deducted from revenues in. Incurred to determine net income.
period costs
The study of how specific costs respond to changes in the level of business activity. As activity levels change, some cost to change. Others or unchanged. Applies to all types of businesses and entities. Helps management to plan operations and make decisions. It begins by identifying and measuring key business activities.
Behaviour analysis
Maybe expressed in terms of; number of units produced, sales, dollars, kilometres driven, room, occupancy, dance classes taught
Activity levels
Changes in the level or volume activity should be correlated with changes in cost
For an activity level to be useful
The activity level selected is called
The activity or volume index
