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Chapter 1 Key Terms
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- 1Activity BaseA measure of whatever causes the incurrence of a variable cost. For example, the total cost of surgical gloves in a hospital will increase as the number of surgeries increases. Therefore, the number of surgeries is the activity base that explains the total cost of surgical gloves.
- 2Administrative CostsAll executive, organizational, and clerical costs associated with the general management of an organization rather than with the manufacturing or selling.
- 3Committed Fixed CostsInvestments in facilities, equipment, and basic organizational structure that can't be significantly reduced even for short periods of time without making fundamental changes.
- 4Common CostA cost incurred to support a number of cost objects that cannot be traced to them individually. For example, the wage cost of the pilot of a 747 airliner is a common cost of all of the passengers on the aircraft. Without the pilot, there would be no flight and no passengers. But no part of the pilot's wage is caused by any one passenger taking the flight.
- 5Contribution approachAn 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.
- 6Conversion costDirect Labor plus manufacturing overhead cost
- 7Cost behaviorThe way in which a cost reacts to changes in the level of activity.
- 8Cost objectAnything for which cost data are desired. Examples of cost objects are products, customers, geographic regions, and parts of the organization such as departments or divisions.
- 9Cost structureThe relative proportion of fixed, variable, and mixed costs in an organization.
- 10Differential costA future cost that differs between any two alternatives.
- 11Differential revenueFuture revenue that differs between any two alternatives.
- 12Direct costA cost easily traced to a specified cost object.
- 13Direct LaborFactory labor costs easily traced to specific products. Also called "touch labor'
- 14Direct materialsMaterials that become an integral part of a finished product and whose costs can be conveniently traced to it.
- 15Discretionary fixed costsFixed costs that arise from annual decisions by management to spend on certain fixed cost items, such as advertising and research.
- 16Financial accounting.The phase of accounting that reports historical financial information to external parties, such as stockholders, creditors, and regulators
- 17Finished goodsUnits of product that have been completed but not yet sold to customers.
- 18Fixed costA cost that remains constant, in total, regardless of changes in the level of activity within the relevant range. If a fixed cost is expressed on a per-unit basis, it varies inversely with the level of activity.
- 19Incremental costAn increase in cost between two alternatives.
- 20Indirect costA cost that cannot be easily traced to a specified cost object.
- 21Indirect laborThe labor costs of janitors, supervisors, material handlers and other factory workers that cannot be easily traced to particular products.
- 22Indirect materialsSmall items of materials such as glue and nails that may be an integral part of a finished product, but whose costs cannot be easily traced to it.
- 23Inventoriable costsSynonym for product costs.
- 24Managerial accountingThe phase of accounting that provides information to managers for use within the organization.
- 25Manufacturing OverheadAll manufacturing costs except direct materials and direct labor.
- 26Mixed costA cost with variable and fixed cost elements.
- 27Opportunity costThe potential benefit given up when one alternative is selected over another.
- 28Period costsCosts taken directly to the income statement as expenses in the period incurred or accrued.
- 29Prime costDirect materials cost plus direct labor cost.
- 30Product CostsAll costs 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 "Inventoriable Costs"
- 31Raw materialsAny materials going into the final product.
- 32Relevant benefitA benefit that should be considered when making a decision.
- 33Relevant costA cost that should be considered when making decisions.
- 34Relevant rangeThe range of activity within which assumptions about variable and fixed cost behavior are valid
- 35Selling costsAll costs incurred to secure customer orders and get the finished product or services into the hands of the customer.
- 36Sunk costA cost already incurred that cannot be changed by any decision made now or in the future.
- 37Variable costA cost that varies, in total, in direct proportion to changes in the level of activity. A variable cost is constant per unit.
- 38Work in processPartially complete units of product requiring further work before they are ready for sale to the customer.
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- Descripción
- Managerial and Cost Concepts Key Terms
- Creado por
- Tammy McClintock
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