BUS 371 - Chapter 2 Terms

Frage	Antworten
Product Costs/Inventoriable Costs	Related to making or acquiring the products or providing the services that directly generate the revenues of an entity
Period Costs	Related to business functions other than production, such as selling and administrative
Direct Material	Any material that can be easily and economically traced to a product
Actual Cost System	Actual direct material and actual direct labor costs are accumulated in Work in Process Inventory as costs are incurred
Cost	Reflects the monetary measure of resources consumed to attain an objective such as making a good or performing a service
Unexpired Cost	The balance sheet value of an asset
Expired Cost	The portion of an asset's value consumed or sacrificed during a period
Cost Management System	A set of formal methods developed for planning and controlling an organization's cost-generating activities relative to its strategy, goals, and objectives
Cost Object	Anything for which management wants to collect or accumulate costs
Direct Costs	Conveniently and economically traceable to the cost object
Relevant Range	The assumed range of activity that reflects the company's normal operating range
Variable Cost	A cost that varies in total proportionately with activity
Fixed Cost	A cost that remains constant in total within the relevant range of activity
Mixed Cost	Cost that has both a variable and fixed component
Step Cost	A cost that shifts upward or downward when activity changes by a certain interval or "step".
Predictor	An activity that, when changed, is accompanied by a consistent, observable change in a cost item
Cost Driver	A predictor that has an absolute cause-and-effect relationship to a cost
Overhead Costs	Indirect Costs
Direct Labor	The time spent by individuals who work specifically on manufacturing a product or performing a service
Conversion Costs	Sum of direct labor and overhead costs
Prime Cost	Sum of direct material and direct labor cost
Distribution Cost	Any cost incurred to warehouse, transport, or deliver a product or service
Manufacturer	Any company engaged in a high degree of conversion of raw material input into a tangible output
Service Company	A firm that uses a significant amount of labor to engage in a high or moderate degree of conversion
Raw Material	Work not started
Work in Process	Work started but not completed
Finished Goods	Work Completed
Prevention Costs	Costs incurred to improve quality by precluding product defects and improper processing from occurring
Appraisal Costs	Amounts incurred for monitoring or inspecting
Failure Costs	The inability to control quality results
Cost Allocation	The assignment of an indirect cost to one or more cost objects using some reasonable allocation base or driver
Normal Cost System	Combines actual direct material and direct labor costs with overhead that is assigned using a predetermined rate or rates
Predetermined Overhead Rate/ Overhead Application Rate	A charge per unit of activity that is used to allocate (or apply) overhead cost from the Overhead Control account to Work in Process Inventory for the period's production or services.
Cost of Goods Manufactured (CGM)	The total production cost of the goods that were completed and transferred to Finished Goods inventory during the period
Total Costs to Account for	Beginning Work in Process inventory cost is added to total current manufacturing costs to obtain a subtotal amount

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BUS 371 - Chapter 2 Terms

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