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Include all costs that are required to make a product. Include Direct Material, Direct Labor, and Manufacturing Overhead
Selling and Administrative costs. These costs are reported on the income statement they are incurred. Not a part of manufacturing overhead, not related to making the product.
all cost associated with marketing the finished products and getting the product to the customer.
Direct Labor + Manufacturing Overhead. What it costs to take the materials and convert them into a finished product.
a cost that can be easily and conveniently traced to one product. They are direct materials and direct labor
a cost that cannot be easily and conveniently traced to one product. Ex: manufacturing overhead and period costs
costs that are incurred to manufacture products. They include anything that becomes part of the product, anyone who touches teh product to make it, and all the costs of the facilities and management incurred to make the product.
workers that touch the product to make the product- also includes workers who operate the machine if the product is made by the machine
all costs of manufacturing the product except direct materials and direct labor. Ex: utilities support personnel, human resources, computer support
involved in making the product at teh plant but do not touch the product to make it. Ex: salaries, supervisors and quality inspectors
low cost materials that end up in the product or are used to make the product. Ex: glue, tape, screw
a detailed listing of what is estimated to be required and what is estimated to cost to make one product or provide one service.
Changes in total, in direct proportion to changes in the level of activity. The total cost increase/decreases as units made increases/decreases. It is constant if expressed on a per unit basis. Costs that vary with sales.
Total cost does not change with changes in the volume of activity (within a relevant range) The cost per unit will change as teh number of units change. Ex: rent, insurance
The potential benefit that is given up when one alternative is selected over another alternative. They are not recorded/reported because they do not occur. The cost is the benefit that you gave up.
Cost that is already paid for and can not be changed by a decision made now or in the future.
Investment in facilities, equipmnt and the basic operations of the company. They are long term in nature and can't be significantly reduced.
(Cost at high activity level- cost at the low activity level) / (High activity level-low activity level)
The Percentage of total sales for each product. This is important when a company has more than one product. A change in sales mix can change the total profit.
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