Actual Cost
cost incurred (a historical or past cost), as distinguished from a budgeted cost
Average Cost
another term for unit cost. calculated by dividing total cost by the related number of units
Budgeted Cost
a predicted or forecasted cost (a future cost)
Conversion Cost
all manufacturing costs other than direct material costs. represent all manufacturing costs incurred to convert direct materials into finished goods.
Cost
resource sacrificed or forgone to achieve a specific objective
Cost Accumulation
collection of cost data in some organized way by means of an accounting system
Cost Allocation
describes the assignment of indirect costs to a particular cost object
Cost Assignment
general term that encompasses both (1) tracing direct costs to a cost object and (2) allocating indirect costs to a cost object.
Cost Driver
variable, such as the level of activity or volume that causally affects costs over a given time span.
Cost Object
anything for which a measurement of cost is desired
Cost of Goods Manufactured
cost of goods brought to completion, whether they were started before or during the current accounting period
Cost Tracing
describes the assignment of direct costs to a particular cost object
Direct Costs of a Cost Object
related to the particular cost object and can be traced to it in an economically feasible (cost-effective) way.
Direct Manufacturing Labor Costs
include the compensation of all manufacturing labor that can be traced to the cost object (work in process and then finished goods) and can be traced to the cost object in an economically feasible way
Direct Material Costs
acquisition costs of all materials that eventually become part of the cost object (work in process and then finished goods) and can be traced to the cost object in an economically feasible way.
Direct Materials Inventory
direct materials in stock and awaiting use in the manufacturing process
Factory Overhead Costs
aka manufacturing overhead costs or indirect manufacturing costs. all manufacturing costs that are related to the cost object (work in process and then finished goods) but cannot be traced to that cost object in an economically feasible way.
Finished Goods Inventory
goods (for example, cell phones) completed but not yet sold
Fixed Costs
remains unchanged in total for a given time period, despite wide changes in the related level of total activity or volume
Idle Time
wages paid for unproductive time caused by lack of orders, machine or computer breakdowns, work delays, poor scheduling, and the like.
Indirect Costs of a Cost Object
related to the particular cost object but cannot be traced to it in an economically feasible (cost-effective) way
Indirect Manufacturing Costs
aka manufacturing overhead costs or factory overhead costs. all manufacturing costs that are related to the cost object (work in process and then finished goods) but cannot be traced to that cost object in an economically feasible way.
Inventoriable Costs
all costs of a product that are considered as assets in the balance sheet when they are incurred and that become cost of goods sold only when the product is sold
Manufacturing Overhead Costs
aka indirect manufacturing costs or factory overhead costs. all manufacturing costs that are related to the cost object (work in process and then finished goods) but cannot be traced to that cost object in an economically feasible way.
Manufacturing-Sector Companies
purchase materials and components and convert them into various finished goods.
Merchandising-Sector Companies
purchase and then sell tangible products without changing their basic form.
Operating Income
equals total revenues from operations minus cost of goods sold and operating (period) costs (excluding interest expense and income taxes) or equivalently, gross margin minus period costs.
Overtime Premium
wage rate paid to workers (for both direct labor and indirect labor) in excess of their straight-time wage rates
Period Costs
period costs are all costs in the income statement other than cost of goods sold
Prime Costs
all direct manufacturing costs (example material costs + manufacturing labor costs)
Product Cost
sum of the costs assigned to a product for a specific purpose.
Relevant Range
is the band of normal activity level or volume in which there is a specific relationship between the level of activity or volume and the cost in question.
Revenues
inflows of assets (usually cash or accounts receivable) received for products or services provided to customers
Service-Sector Companies
provide services (intangible products) for example, legal advice or audits to their customers.
Unit Costs
calculated by dividing total cost by the related number of units
Variable Cost
changes in total in proportion to changes in the related level of total activity or volume.
Work-In-Process Inventory
goods partially worked on but not yet completed. aka works in progress
Work in Progress
goods partially worked on but not yet completed aka work-in-process inventory.