managerial accounting
an activity that provides financial and non-financial information to an organization's managers and other internal decision makers
planning
process of setting goals and making plans to achieve them
control
process of monitoring planning decisions and evaluating an organization's activities and employees
fixed cost
does not change with changes in the volume of activity
cost object
product, process, department or customer to which costs are assigned
direct costs
those traceable to a single cost object
indirect costs
those that cannot be easily and cost- beneficially traced to a single cost object
sunk cost
already been incurred and cannot be avoided or changed
out of pocket cost
requires a future outlay of cash and is relevant for decision making
opportunity cost
the potential benefit lost by choosing a specific action from two or more alternatives
product costs
refer to expenditures necessary and integral to finished products
period costs
refer to expenditures identified more with a time period than with finished products
direct materials
tangible components of a finished product
direct material costs
expenditures for direct materials that are separately and readily traced through the manufacturing process to finished goods
direct labor
refers to the efforts of employees who physically convert materials to finished product
direct labor costs
wages and salaries for direct labor that are separately and readily traced through manufacturing process to finished goods
indirect labor costs
cost of other workers on the assembly line who assist direct laborers
indirect labor
refers to manufacturing worker's efforts not linked to specific units or batches of the product
factory overhead
consists of all manufacturing costs that are not direct materials or direct labor
factory overhead costs
cannot be separately or readily traced to finished goods
conversion costs
expenditures incurred in the process of converting raw materials to finished goods
prime costs
expenditures directly associated with the manufacture of finished goods
raw materials inventory
refers to the goods a company acquires to use in making products
indirect materials
other materials used to support production processes are sometimes not as clearly identified with specific units or batches of a product
goods in process inventory
another inventory held by manufacturers
finished goods inventory
third inventory owned by a manufacturer