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Chapter 2 - a Cannot be traced directly to specific sale b...

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A. Fixed Cost a. Remains unchanged in total as the level of activity varies (or cost driver) B. Variable Cost a. Changes in total in direct proportion to a change in the level of activity (or cost driver) C. Cost of Goods Sold a. Product costs recognized as an expense in the period of the sale D. Cost of Goods Manufactured a. Total cost of direct material, direct labor, and manufacturing overhead transferred from work-in-process inventory to finished-goods inventory E. Product Cost a. Cost stored in inventory until time period when products are consumed in the repair process b. Become cost of goods sold expense F. Period Cost a. Costs that aren’t product b. Expensed as operating expenses during the period they’re incurred i. Employee salaries, utilities, depreciation on equipment, etc. G. Direct Cost a. You can trace direct costs to something b. Specific segment of the business H. Indirect Cost
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Unformatted text preview: a. Cannot be traced directly to specific sale b. E.g. CEO’s salary I. Cost Driver a. Characteristic of an activity or event that causes costs to be incurred by that activity or event J. Controllable Cost a. Costs that a manager can control or heavily influence K. Uncontrollable Cost a. Costs that a manager can not heavily influence (MORE FOR FINAL EXAM) L. Opportunity Cost a. Benefit that is sacrificed when the choice of one action precludes taking an alternative course of action M. Sunk Cost a. Costs that have been incurred in the past N. Differential Cost a. Amount by which the cost differs under two alternative actions O. Marginal Cost a. Extra cost incurred when one additional unit is produced P. Average Cost per Unit a. Total cost, for whatever quantity is manufactured, divided by the number of units manufactured...
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