Accounting 211 final
Terms in this set (22)
Cost changes in proportion to changes in volume of activity. Ex) Direct materials and shipping costs.
Cost stays the same despite changes in the volume of activity. ex) depreciation and property taxes
Includes both fixed and variable cost components. Ex) compensation for sales representatives often includes fixed monthly salary and a variable commission based on sales.
Indirect labor cost
Refers to the costs of workers who assist in or supervise the manufacturing process. Other costs not directly traceable to the product.
Direct labor cost
Are the wages and salaries for direct labor that are separately and readily traced through the manufacturing process to finished goods.
contribution margin per unit
Selling price - Total variable cost per unit
Contribution margin ratio
Cm per unit/selling price per unit
Break even point in units
fixed costs/cm per unit
Break even point in dollars
fixed costs/cm ratio
Margin of safety (in percent)
Expected sales - break even sale/ Expected sales
Customized product that is not on hand and takes time to create.
mass production of products in a continuous flow of steps. Ex) m&ms
Direct material costs and direct labor costs. Expenditures directly associated with the manufacture of finished goods.
Expenditures incurred in the process of converting raw materials to finished goods.
The extent, or relative size, of fixed costs in the total cost structure.
Consists of all manufacturing costs that are not direct materials or direct labor.
Materials used in manufacturing and become part of the final product, but they are not clearly identified with specific product lines.
factory related costs
Cannot be separately or readily traced to finished goods.
Refers to the efforts of employees who physically convert materials to finished product.
Are tangible components of a finished product.
product vs. period costs
Production costs necessary to create a a product and consist of: direct materials, direct labor and FOH.
Non-production costs and are usually more associated with activities linked to a time period than with completed products.
Enough money to cover all of your costs. No profit