Accounting 203 Flash Cards Chapter 2

Is anything for which cost data are desired-including products, customers, jobs, and organizational subunits

Is a cost that can be easily and conveniently traced to a specified cost object.

Is a cost that cannot be easily and conveniently traced to a specified cost object.

Is a cost that is incurred to support a number of cost objects but cannot be traced to them individually.

Any material that goes into the final product

Those materials that become and integral part of the finished product and whose cost can be conveniently be traced to the finished product.

Consists of labor cost that can be easily traced to individual units of product.

The labor costs of janitors, supervisors, materials handlers, and other factory workers that cannot be conveniently traced to particular products. (p. 4)

Includes all manufacturing costs except direct materials and direct labor.

Include all costs that are incurred to secure customer orders and get the finished product to the customer.

Include all costs associated with the general management of an organization rather than with manufacturing or selling.

Is based on the accrual concept that costs incurred to generate a particular revenue should be recognized as expenses in the same period that the revenue is recognized.

All costs that are involved in acquiring or making a product. In the case of manufactured goods, these costs consist of direct materials, direct labor, and manufacturing overhead. Also see <i>Inventoriable costs.</i> (p. 5)

Are all the costs that are not product costs.  All selling and administrative expenses are treated as period costs.

Is the sum of direct materials and direct labor cost.

Is the sum of direct labor cost and manufacturing overhead cost.

Refers to how a cost reacts to changes in the level of activity

The relative proportion of fixed, variable, and mixed costs in an organization.

Varies, in total, in direct proportion to changes in the level of activity

Is a measure of whatever causes the incurrence of a variable cost.

Is a cost that remains constant, in total, regardless of changes in the level of activity.

nvestments in facilities, equipment, and basic organizational structure that can’t be significantly reduced even for short periods of time without making fundamental changes.

Those fixed costs that arise from annual decisions by management to spend on certain fixed cost items, such as advertising and research

The range of activity within which assumptions about variable and fixed cost behavior are valid

Contains both variable and fixed cost elements.

A method for analyzing cost behavior in which an account is classified as either variable or fixed based on the analyst’s prior knowledge of how the cost in the account behaves

A detailed analysis of cost behavior based on an industrial engineer’s evaluation of the inputs that are required to carry out a particular activity and of the prices of those inputs.

A variable that responds to some causal factor; total cost is the dependent variable,

A variable that acts as a causal factor; activity is the independent variable

A method of separating a mixed cost into its fixed and variable elements by analyzing the change in cost between the high and low activity levels.

A method of separating a mixed cost into its fixed and variable elements by analyzing the change in cost between the high and low activity levels.

An income statement format that organizes costs by their behavior. Costs are separated into variable and fixed categories rather than being separated into product and period costs for external reporting purposes

The amount remaining from sales revenues after all variable expenses have been deducted