Methods of Cost Allocation
Multiply the percentage in step 4 by the total costs in the cost pool to determine the cost allocated to each cost object.
What Is Method 5
The acquisition costs of all materials that are physically identified as a part of the manufactured goods and that may be traced to the manufactured goods in an economically feasible way.
What Is Direct-Materials Costs
Will not continue if an ongoing operation is changed or deleted. These costs are relevant in making the decision.
What Is Avoidable Costs
Policies to protect and make the most efficient use of an organization's assets.
What Is Internal Controls
Conducting business online
What Is E-Commerce
Determine the percentage of total cost-allocation base units used for each cost object.
What Is Method 4
The wages of all labor that can be traced specifically and exclusively to the manufactured goods in an economically feasible way.
What Is Direct-Labor Costs
An item that restricts or constrains the production or sale of a product or service
What Is Scarce Resource
Accountants who review and evaluate accounting systems, including their internal controls
What Is Internal Auditors
What Is Business Process Reengineering
Select an allocation base for each cost pool, preferably a cost driver, that is, a measure that causes the costs in the cost pool.
What Is Method 2
Include all costs other than direct material or direct labor that are associated with the manufacturing process (e.g., power, supplies, indirect labor, supervisory salaries, property taxes, rent, insurance, and depreciation).
What Is Indirect Production Costs (Indirect Manufacturing Costs, Factory Overhead, Factory Burden, or Manufacturing Overhead)
Requires a future cash disbursement and is the typical cost recorded by accountants.
What Is Outlay Cost
A 2002 law that requires top management oversight of a company's accounting policies and procedures
Sarbanes-Oxley Act
Electronic commerce from business to consumer
What Is BSC
Measure the units of the cost-allocation base for each cost object (e.g., a product) and compute the total units for all cost objects (e.g., all products).
What Is Method 3
Materials on hand and awaiting use in the production process.
What Is Direct-Materials Inventory
Costs of facilities and services that are shared by users (e.g., building depreciation, heating, air conditioning, and general management expenses).
What Is Common Costs
A review to determine whether mangers are implementing the policies and procedures specified by top management
What Is Management Audit
Accumulate indirect costs for a period of time into one or more cost pools. A cost pool is a group of individual costs that a company allocates to cost objects using a single cost-allocation base.
What Is Method 1
Goods undergoing the production process but not yet fully completed. Costs include appropriate amounts of the three major manufacturing costs (i.e., direct material, direct labor, and factory overhead).
What Is Work-In-Process Inventory
Maximum available contribution to profit forgone (i.e., rejected) by using limited resources for a particular purpose. Opportunity cost applies to a resource that a company already owns or that it has already committed to purchase.
What Is Opportunity Cost
A set of standards to which public companies published financial statements must adhere
What Is GAAP
What Is CAM