Cost assignment
General term that encompasses both (1) tracing accumulated costs that have a direct relationship to a cost object and (2) allocating accumulated costs that have an indirect relationship to a cost object. (29)
Actual cost
Cost incurred (a historical or past cost), as distinguished from a budgeted or forecasted cost. (27)
Average cost or Unit Cost
Cost computed by dividing total cost by the number of units. Also called average cost. (35)
Budgeted Costs
Predicted or forecasted cost (future cost) as distinguished from an actual or historical cost. (27)
Conversion Costs
All manufacturing costs other than direct material costs. (43)
Cost
Resource sacrificed or forgone to achieve a specific objective. (27)
Cost Accumulation
Collection of cost data in some organized way by means of an accounting system. (28)
Cost Allocation
Assignment of indirect costs to a particular cost object. (29)
Cost Assignment
General term that encompasses both (1) tracing accumulated costs that have a direct relationship to a cost object and (2) allocating accumulated costs that have an indirect relationship to a cost object. (29)
Cost Driver
A variable, such as the level of activity or volume, that causally affects costs over a given time span. (32)
Cost Object
Anything for which a measurement of costs is desired. (27)
Cost of goods manufactured
Cost of goods brought to completion, whether they were started before or during the current accounting period. (41)
Cost Tracing
Describes the assignment of direct costs to a particular cost object. (28)
Direct costs of a cost object
Costs related to the particular cost object that can be traced to that object in an economically feasible (cost-effective) way. (28)
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) in an economically feasible way. (37)
Direct material costs
Acquisition costs of all materials that eventually become part of the cost object (work in process and then finished goods), and that can be traced to the cost object in an economically feasible way. (37)
Direct materials inventory
Direct materials in stock and awaiting use in the manufacturing process. (37)
Finished Goods inventory
Goods completed but not yet sold. (37)
Fixed Cost
Cost that remains unchanged in total for a given time period, despite wide changes in the related level of total activity or volume. (30)
Idle time
Wages paid for unproductive time caused by lack of orders, machine breakdowns, material shortages, poor scheduling, and the like. (45)
Indirect costs of cost object
Costs related to the particular cost object that cannot be traced to that object in an economically feasible (cost-effective) way. (28)
Indirect manufacturing costs
All manufacturing costs that are related to the cost object (work in process and then finished goods) but that cannot be traced to that cost object in an economically feasible way. Also called manufacturing overhead costs and factory overhead costs. (37)
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. (37)
Operating income
Total revenues from operations minus cost of goods sold and operating costs (excluding interest expense and income taxes). (42)
Overtime premium
Wage rate paid to workers (for both direct labor and indirect labor) in excess of their straight-time wage rates. (44)
Period costs
All costs in the income statement other than cost of goods sold. (38)
Prime costs
All direct manufacturing costs. (43)
Product cost
Sum of the costs assigned to a product for a specific purpose. (45)
Relevant range
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. (33)
Revenues
Inflows of assets (usually cash or accounts receivable) received for products or services provided to customers. (38)
Variable cost
Cost that changes in total in proportion to changes in the related level of total activity or volume. (30)
Work-in-process inventory
Goods partially worked on but not yet completed. Also called work in progress. (37)