ACC Chapters 2,3&8

  1. Direct Materials
    MMaterials that become an integral part of the finish product and where cost can be easily seen
  2. Direct Labor
    labor cost that can be easily traced to an individual unit of product
  3. Manufacturing Overhead
    all manufacturing cost that cannot be easily traced to the specific unit produced
  4. DM + DL + MO =
    Total manufacturing cost
  5. Selling Cost
    all cost necessary to secure customer order and get the finished product into the hands of the customer
  6. Administrative Cost
    includes all costs associated with general management of the organizations
  7. SC + AC =
    Total non-manufacturing cost
  8. Product Cost
    all costs involved in acquiring or making a product - DM, DL, & MO
  9. Period Cost
    includes selling cost and administrative cost
  10. Prime cost =
    DM + DL
  11. Conversion Cost
    DL + MO
  12. Variable Cost
    changes as per the change in the activity
  13. Fixed Cost
    no change in the given cost. Constant cost regardless of changes in the level of activity
  14. Per unit variable cost is...
  15. Per unit fixed cost...
    decreases every time there is an increase in activity
  16. Per unit cost =
    • Total cost
    • level of activity
  17. Direct Cost
    easily traceable to a specific cost object
  18. Indirect Cost
    cannot be easily traced to a cost object
  19. Differential Cost
    difference in cost revenue between two alternatives
  20. Opportunity Cost
    the opportunity forgone. The benefit the manager has given up. Potential benefit given up
  21. Sunk Cost
    cost that has already been incurred in the past and cannot be changed by any decision
  22. Predetermined rate
    • estimated total manufacturing overhead
    • estimated total allocation base
  23. Allocated manufacturing overhead
    predetermined rate x actual allocation base
  24. Per unit manufacturing cost
    • total manufacturing cost
    • total # of units
  25. Raw material purchased
    • Dr raw material
    • Cr accounts payable/cash
  26. Issue of raw materials (raw materials used in production)
    • Dr work in process (direct material)
    • Dr manufacturing overhead (indirect material)
    • Cr
  27. Labor Cost
    • Dr work in process (direct labor cost)
    • Dr manufacturing overhead (indirect labor cost)
    • Cr salaries/wages payable or cash
  28. Manufacturing overhead (actual)
    • Dr manufacturing overhead
    • Cr liability/asset
  29. Assign MO to job (estimated)
    • Dr work in process (predetermined rate x actual allocation base)
    • Cr manufacturing overhead
  30. Non-manufacturing cost
    • Dr xxx expense
    • Cr xxx payble
  31. Transfer goods manufactured to finished goods
    • Dr finished goods
    • Cr work in process
  32. Sales
    • Dr accounts receivable/cash (# of units sold x selling price)
    • Cr selling revenue
  33. Underapplied (+) =
    actual MO (dr) - applied MO (cr)
  34. Overapplied (_) =
    actual MO (dr) - applied MO (cr)
  35. Unit level costing
    this activity is performed every time a unit is produced eg DM, DL
  36. Batch level activity
    this activity is performed each time a batch is handled or produced
  37. Product level activity
    related to specific product
  38. Customer level activity
    related to specific customers
  39. Organization sustaining activity
    related to organizations
Card Set
ACC Chapters 2,3&8
Test 1