acc ch 10
Terms
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- equivalent units of production
- the number of units that could have been completed if they had been worked on from start to finish
- nonmanufacturing costs
- costs not specifically related to the production of goods or the delivery of a service
- manufacturing firm
- convert raw materials into finished goods that are then sold to consumers
- manufacturing overhead
- costs that a company incurs in the manufacture of a product or delivery of a service
- cost driver
- measure of an activity that causes or drives the overhead cost in a given cost pool
- indirect labor costs
- production or service labor costs that are not directly traced to a particular product or service
- direct labor costs
- labor costs directly traced to items produced and services delivered
- average cost per unit
- =total production cost/number of units produced
- indirect materials
- any materials that are not directly traced or applicable to a single product or service
- allocation base
- common characteristic shared by p/s that is used to assign overhead; used to distribute overhead costs proportionately to each product made or service rendered; strongly associated with overhead
- applied overhead
- manufacturing overhead costs that are assigned to products or services
- raw materials inventory
- the costs of materials that have been purchased by not yet entered the production process
- activity based costing
- allocates overhead to p/s based on the activities that cause the overhead cost; assigns the overhead costs of major production or service activities to multiple pool costs
- merchandising firm
- buys completed inventory items from suppliers, then sells those items to customers
- traditional overhead allocation
- overhead is allocated to p/s based on some characteristic that the p/s have in common
- cost of goods sold
- total production cost of finished goods that are sold and reported on the income statement; = finished goods inventory at the beginning of the reporting period + cost of goods manufactured during the period - finished goods inventory balance at the end of the period
- finished goods inventory
- products that are complete and ready for sale
- manufacturing costs
- costs of producing goods and providing services, including direct materials, direct labor, and manufacturing overhead
- prime costs
- term used to describe the sum direct materials and direct labor used in the manufacturing or service delivery process
- overhead allocation rate
- =overhead cost/allocation base
- direct materials cost
- cost of all raw materials that can be traced directly to a manufactured product or delivered service
- work-in-process inventory
- costs of products that have entered the production process but that are not yet complete
- cost of goods manufactured
- the total cost of the finished goods completed during a reporting period; =work-in-process balance at the beginning of the reporting period + total manufacturing costs during the reporting period - work in process balance at the end of the reporting period
- general and administrative costs
- all costs that are neither product or service related nor selling costs
- conversion costs
- direct labor + manufacturing overhead
- process costing system
- costs are accumulated by each operation, rather than by each job, with the unit cost of items determined by dividing the operation's total production costs for a process by the number of identical items produced
- job order costing system
- accumulates manufacturing or service costs for each job performed, each unit produced, each order received, or simply each p/s