| Terms |
Definitions |
|
Depletion
|
The allocation of cost for natural resources
|
|
job-order costing system
|
a costing systems used in situations where many different products, jobs, or services are produced each period
|
|
sunk cost
|
any cost that has already been incurred and that cannot be changed by any decision made now or in the future
|
|
intangible assets
|
operational assets that represent rights
|
|
indirect labor
|
the labor costs of janitors, supervisors, materials handlers, and other factory workers that cannot be easily and conveniently traced to a direct product
|
|
conversion cost
|
direct labor + manufacturing overhead
|
|
materials requisition form
|
a detailed source document that specifies the type and quantity of materials that are to be drawn from that storeroom and identifies the job to which the cost of materials shall be charged
|
|
Direct cost
|
a cost that can be easily and conveniently traced to the particular cost object under construction
|
|
variable cost
|
a cost that varies, in total, in direct proportion to changes in the level of activity. Variable costs are constant per unit.
|
|
differential revenue
|
the difference in revenue between two alternatives
|
|
Manufacturing overhead
|
all costs associated with manufacturing except direct materials and direct labor
|
|
common cost
|
a cost that is common to a number of objects but cannot be traced to them individually
|
|
overhead application
|
the process of charging manufacturing overhead cost to job cost sheets and to the WIP account
|
|
normal cost system
|
a costing system in which overhead costs are applied to jobs by muliplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job
|
|
cost behavior
|
the way in which a cost reacts or responds to changes in levels of business activity
|
|
Absorption costing
|
a costing method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overhead - as part of the cost of a finished unit of product
|
|
trademark
|
exclusive right to display a word, symbol, or an emblem
|
|
Raw materials
|
any materials that go into the final product
|
|
Conversion Cycle Inventory Issues (6)
|
1. Inventory Requisistions2. Trained to move raw materials into WIP3. Shop should have written inventory procedures4. necessary signatures before moved from WIP to finished goods5. High $ placed in steel cages6. Physical count should be done once a year
|
|
goodwill
|
purchase price less fair market value of net identifiable assets
|
|
overapplied overhead
|
a credit balance in the manufacturing overhead account that arises when the amount of overhead cost applied to WIP is greater than the amount of overhead cost actually incurred
|
|
natural resources
|
wasting assets
|
|
cost of goods manufactured
|
the manufacturing costs associated with the goods that were finished that period
|
|
Amortization
|
The allocation of costs for intangible assets
|
|
Nonmonetary exchange
|
Basic principle is to value assets acquired using fair value of assets given
|
|
Relevant range
|
the range of activity within which assumptions about variable and fixed costs are accurate
|
|
Average Accumulated Expenditures
|
Approximation of average amount of debt if all construction funds were borrowed
|
|
marketing or selling costs
|
all costs necessary to secure customer orders and get the finished product or service into the hands of the customer
|
|
copyright
|
exclusive right to benefit from creative work
|
|
cost driver
|
a factor, such as machine-hours, beds occupied, computer time, or flight-hours, that causes overhead costs
|
|
fixed cost
|
a cost that remains constant, in total, regardless of the changes in level of activity within the relevant range
|
|
direct materials
|
those materials that become an integral part of a finished product and can be conveniently traced into it
|
|
Employee time issues (4)
|
1. Electronic payroll devices should be used to track time2. Shop supervisors should approve job time tickets3. Reconcilliations should be conducted between time tickets applied to jobs and the clock4. All employees must be trained on the correct way to handle the recording of time to specific jobs
|
|
Revenue - donation of asset
|
Account credited when assets are donated to a corporation
|
|
Period costs
|
costs that are taken directly to the income statement as expenses in which period they occur
|
|
indirect materials
|
small items such as glue and nails - are traceable only at a great cost or inconvenience
|
|
depreciation
|
The allocation of cost for plant and equipment
|
|
cost object
|
anything for which cost data are desired i.e. products, productlines, customers, jobs, ...
|
|
Incremental cost
|
an increase in cost between two alternatives
|
|
Process costing system
|
a costing system used in those manufacturing situations where a single, homogeneous product is produced for long periods of time
|
|
allocation base
|
a measure of activity such as direct labor-hours or machine-hours that is used to assign costs to cost objects
|
|
differential cost
|
a difference in cost between any two alternatives
|
|
job cost sheet
|
a form prepared for each job that records the materials, labor, and overhead costs charged to the job
|
|
prime cost
|
direct materials cost + direct labor cost
|
|
time ticket
|
a detailed source document that is used to record an employee's hour-by-hour activities during the day
|
|
schedule of costs of goods manufactured
|
schedule showing the direct materials, direct labor, and manufacturing overhead costs associated with WIP in a certain period
|
|
Product costs
|
all costs involved in the purchase or manufacure of goods== direct labor, direct materials, & manufacturing overhead
|
|
Segregation of Duties (3)
|
1. Human resources should be seperated from time keeping2. Employees should not have access to payroll files3. The payroll department should not create the checks
|
|
Other control issues (3)
|
1. Control fictitious employees -- Review new employees2. Payroll should use -- Reasonableness checks3. Monitor timekeeping procedures
|
|
direct labor
|
those factory labor costs that can be easily traced to individual units of product
|
|
indirect cost
|
a cost that cannot be easily and conveniently traced to the particular cost object under construction
|
|
bill of materials
|
a document that shows the type and quantity of each major item of materials required to make a product
|
|
Administrative Costs
|
all executive, organizational, and clerical costs associated with the general management of an organization rather than with manufacturing, marketing, or selling
|
