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Direct Expense

cost or expense readily traced to a department because they are incurred for that department's sole benefit

Indirect Expense

cost or expense that is incurred for the joint benefit of more than one department and cannot be readily traced to only one department

Profit Center

a department that incurs costs and generates revenues, also known as a selling department

Cost Center

a department that incurs costs without directly generating revenues

Joint Costs

costs incurred to produce or purchase two or more products at the same time

Controllable Costs

a cost that is controllable by a manager by which they have the power to determine or at least significantly affect the amount incurred

Uncontrollable Costs

costs that are not within a manager's power to control

Activity-Based Costing

an attempt to better allocate costs to the proper users of overhead by focusing on activities

Cost Driver

a factor that causes the cost of an activity to go up or down

Cost Pool

a temporary account accumulating the costs a company incurs to support an identified set of activities

Departmental Contribution to Overhead

a report used to evaluate department performance by reporting the amount of sales less direct expenses

Investment Center

a way to classify and evaluate a department

Performance Report

a report that accumulates and reports costs and expenses that a manager is responsible for and their budgeted amounts

Responsibility Accounting System

a system that uses the concept of controllable costs to assign managers the responsibility for costs and expenses under their control

Direct Expense

an expense that does not require allocation between departments

Responsibility Accounting Report

a report that specifies the expected and actual costs under the control of a manager

Total Sales of Each Department

what is the most useful allocation basis for departmental costs of an advertising campaign for a storewide sale

Activity Cost Based Allocation System

traces costs of products on the basis of activities performed on them

Actual Costs and Budgeted Costs

what appears on a responsibility accounting report

Responsibility Accounting Performance Reports

these become less detailed at higher levels of management

Operating Production Department

the department that is responsible for actually assembling the garments could be described

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