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CH. 2 M. Accounting Terms
Terms in this set (48)
To assign an indirect cost to a cost object.
To attach a cost to a cost object
The total cost divided by the number of units.
A means of product design in which a company tries to mimic, or copy, the natural biological process in which dead organisms (plants and animals) become the input for another organism or
Costs that can be influenced or changed by management.
The combination of direct labor and manufacturing overhead costs.
Anything for which managers want to know the cost.
Cost of Goods Manufactured
The cost of manufacturing the goods that were finished during the period.
Support provided for customers after the sale.
Detailed engineering of products and services and the processes for producing them.
The difference in cost between two alternative courses of action.
A cost that can be traced to a cost object; a cost that is readily identifiable or associated with the cost object.
The cost of compensating employees who physically convert raw materials into the company's products; labor costs that are directly traceable to the finished product.
Primary raw materials that become a physical part of a finished product and whose costs are traceable to the finished product.
Delivery of products or services to customers.
Finished Goods Inventory
Completed goods that have not yet been sold.
Costs that stay constant in total despite wide changes in volume.
The unfortunate practice of overstating a company's commitment to sustainability.
A cost that relates to the cost object but cannot be traced specifically to it; a cost that is jointly used or shared by more than one cost object.
Labor costs that are difficult to trace to specific products.
Materials whose costs are difficult to trace to specific products.
A method of product design in which the company analyzes the environmental impact of a product, from cradle to grave, in an attempt to minimize negative environmental consequences throughout the entire lifespan of the product.
A company that uses labor, plant, and equipment to convert raw materials into new finished products.
All manufacturing costs other than direct materials and direct labor; also called factory overhead and indirect manufacturing cost.
The cost of producing one more unit
Promotion and advertising of products or services.
A company that resells tangible products previously bought from suppliers.
Earnings generated from the company's primary ongoing operations; the company's earnings before interest and taxes.
Other Indirect Manufacturing Costs
All manufacturing overhead costs aside from indirect materials and indirect labor.
The costs incurred by the company to operate the business that do not get treated as inventory, but rather are expensed immediately in the period in which they are incurred. These costs do not relate to manufacturing or purchasing product. Period costs are often called operating expenses or selling, general, and administrative expenses.
An inventory system in which Cost of Goods Sold is calculated at the end of the period rather than every time a sale is made.
An inventory system in which both Cost of Goods Sold and Inventory are updated every time a sale is made.
The combination of direct material and direct labor costs.
The costs incurred by manufacturers to produce their products or incurred by merchandisers to purchase their products. For external financial reporting, GAAP requires that these costs be
assigned to inventory until the products are sold, at which point, they are expensed as Cost of Goods Sold.
Production or Purchases
Resources used to produce a product or service or to purchase finished merchandise intended for resale.
Raw Materials Inventory
All raw materials (direct materials and indirect materials) not yet used in manufacturing.
Research and Development (R&D)
Researching and developing new or improved products or services or the processes for producing them.
Merchandising company that sells to consumers.
A company that sells intangible services rather than tangible products.
A cost that has already been incurred.
The cost of all resources used throughout the value chain.
To assign a direct cost to a cost object.
Triple Bottom Line
Evaluating a company's performance not only by its ability to generate economic profits, but also by its impact on people and the planet.
Costs that cannot be changed or influenced in the short run by management.
The activities that add value to a firm's products and services; includes R&D, design, production or purchases, marketing, distribution, and customer service.
Costs that change in total in direct proportion to changes in volume.
Merchandising companies that buy in bulk from manufacturers, mark up the prices, and then sell those products to retailers.
Work in Process Inventory
Goods that are partway through the manufacturing process but not yet complete.
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