Vocab
Service is an example of
cost object
can sometimes be called touch labor
direct labor
The third manufacturing cost category, includes all manufacturing costs except direct materials and direct labor.
manufacturing overhead
A method of assigning overhead and indirect cost such as salaries and utilities to products and services
activity base
are all the costs that are not product cost.
period cost
Is a cost that can be easily and conveniently traced to a specified cost object
direct cost
Are raw materials, such as the solder used to make electrical connections in a Toshiba HDTV and the glue used to assemble an Ethan Allen chair, whose costs cannot be easily or conveniently traced to finished products.
indirect materials
Are often divided into two categories :(1) selling cost and (2) administrative costs.
nonmanufacturing cost
Is the potential benefit that is given up when one alternative is selected over another
opportunity cost
The total direct cost of production, including raw materials and labor
prime cost
Is a cost that cannot be easily and conveniently traced to a specified object.
indirect cost
Refers to employees, such as janitors, supervisors, materials handler, maintenance workers, and night security, that play and essential role in running a manufacturing facility
indirect labor cost
Includes all costs that are incurred to secure customer orders and get the finished product to the customer.
selling cost
shows the extent to which a company is profitable or not during a given accounting period
traditional format income statement
Direct labor cost plus manufacturing overhead cost
conversation cost
Is a cost that is incurred to support a number of cost objects but cannot be traced to them individually.
common cost
Is a cost that has already been incurred and that cannot be changes by any decision made now or in the future
sunk cost
Includes all cost associated with the general management of an organization rather than with manufacturing or selling
administrate cost
a statistical technique that may be used to estimate a linear total cost function for a mixed cost, based on past cost data
the least-square regression method
Refers to how a cost reacts to changes in the level of activity
cost behavior
The material that go into the final product are called raw materials (direct materials refer to raw materials that become an integrated part of the finished product and whose costs can be conveniently traced to the finished product)
direct materials
A differential cost
incremental cost
Includes all cost involved in acquiring or making a product
product cost
A way of attempting to separate out fixed and variable cost given a limited amount of data
the high-low method
A corporate expense that changes in proportion to how much a company produces or sells
variable cost