Home Page Flashcards Chapter 3: Basic Cost Management Concepts - Flashcards

Chapter 3: Basic Cost Management Concepts – Flashcards

Lisa Currey

8 July 2022

question

allocation bases

answer

the cost drivers used to allocate costs.

question

average cost or unit cost

answer

the total manufacturing cost (materials, labor, and overhead) divided by the number of units of output

question

conversion cost

answer

refers to direct labor and overhead combined into a single amount

question

cost

answer

incurred when a resource is used for some purpose

question

cost allocation

answer

the assignment of indirect costs to cost pools and cost objects.

question

cost assignment

answer

the process of assigning costs to cost pools or from cost pools to cost objects.

question

cost driver

answer

any factor that causes a change in the cost of an activity

question

cost object

answer

any product, service, customer, activity, or organizational unit to which costs are assigned for some management purpose

question

cost of goods manufactured

answer

the cost of goods finished and transferred out of the Work-inProcess Inventory account this period.

question

cost of goods sold

answer

the cost of the product transferred to the income statement when inventory is sold.

question

cost pools

answer

the meaningful groups into which costs are often collecte

question

direct cost

answer

can be conveniently and economically traced directly to a cost pool or a cost object

question

direct labor cost

answer

includes the labor used to manufacture the product or to provide the service

question

direct materials cost

answer

includes the cost of the materials in the product and a reasonable allowance for scrap and defective unit

question

executional cost drivers

answer

factors the firm can manage in the short term to reduce costs, such as workforce involvement, design of the production process, and supplier relationships.

question

factory overhead

answer

All indirect costs are commonly combined into a single cost in a factory

question

finished goods inventory

answer

the cost of goods that are ready for sale.

question

fixed cost

answer

the portion of the total cost that does not change with a change in the quantity of the cost driver within the relevant rang

question

indirect cost

answer

has no convenient or economical trace from the cost to the cost pool or from the cost pool to the cost object.

question

indirect labor cost

answer

includes supervision, quality control, inspection, purchasing and receiving, and other manufacturing support costs.

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indirect materials cost

answer

refers to the cost of materials used in manufacturing that are not physically part of the finished product.

question

internal accounting controls

answer

a set of policies and procedures that restrict and guide activities in the processing of financial data with the objective of preventing or detecting errors and fraudulent acts.

question

materials inventory

answer

the cost of the supply of materials used in the manufacturing process or to provide the service.

question

mixed cost

answer

the term used to refer to total cost when total cost includes both variable and fixed cost components

question

overhead

answer

All indirect costs are commonly combined into a single cost

question

period costs

answer

are all non product expenditures for managing the firm and selling the product.

question

prime costs

answer

refer to direct materials and direct labor that are combined into a single amount.

question

product costs

answer

for a manufacturing firm include only the costs necessary to complete the product: direct materials, direct labor, and factory overhea

question

relevant range

answer

the range of the cost driver in which the actual value of the cost driver is expected to fall and for which the relationship to total cost is assumed to be approximately linear.

question

step cost

answer

varies with the cost driver but in steps.

question

structural cost drivers

answer

strategic in nature and involve plans and decisions that have a long-term effect with regard to issues such as scale, experience, technology, and complexit

question

total manufacturing cost

answer

the sum of materials used, labor, and overhead for the period.

question

unit cost or average cost

answer

the total manufacturing cost (materials, labor, and overhead) divided by the number of units of output

question

value stream

answer

a group of related products

question

variable cost

answer

the change in total cost associated with each change in the quantity of the cost driver.

question

work-in-process inventory

answer

contains all costs put into the manufacture of products that are started but not complete at the financial statement date.

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question

allocation bases

answer

the cost drivers used to allocate costs.

question

average cost or unit cost

answer

the total manufacturing cost (materials, labor, and overhead) divided by the number of units of output

question

conversion cost

answer

refers to direct labor and overhead combined into a single amount

question

cost

answer

incurred when a resource is used for some purpose

question

cost allocation

answer

the assignment of indirect costs to cost pools and cost objects.

question

cost assignment

answer

the process of assigning costs to cost pools or from cost pools to cost objects.

question

cost driver

answer

any factor that causes a change in the cost of an activity

question

cost object

answer

any product, service, customer, activity, or organizational unit to which costs are assigned for some management purpose

question

cost of goods manufactured

answer

the cost of goods finished and transferred out of the Work-inProcess Inventory account this period.

question

cost of goods sold

answer

the cost of the product transferred to the income statement when inventory is sold.

question

cost pools

answer

the meaningful groups into which costs are often collecte

question

direct cost

answer

can be conveniently and economically traced directly to a cost pool or a cost object

question

direct labor cost

answer

includes the labor used to manufacture the product or to provide the service

question

direct materials cost

answer

includes the cost of the materials in the product and a reasonable allowance for scrap and defective unit

question

executional cost drivers

answer

factors the firm can manage in the short term to reduce costs, such as workforce involvement, design of the production process, and supplier relationships.

question

factory overhead

answer

All indirect costs are commonly combined into a single cost in a factory

question

finished goods inventory

answer

the cost of goods that are ready for sale.

question

fixed cost

answer

the portion of the total cost that does not change with a change in the quantity of the cost driver within the relevant rang

question

indirect cost

answer

has no convenient or economical trace from the cost to the cost pool or from the cost pool to the cost object.

question

indirect labor cost

answer

includes supervision, quality control, inspection, purchasing and receiving, and other manufacturing support costs.

question

indirect materials cost

answer

refers to the cost of materials used in manufacturing that are not physically part of the finished product.

question

internal accounting controls

answer

a set of policies and procedures that restrict and guide activities in the processing of financial data with the objective of preventing or detecting errors and fraudulent acts.

question

materials inventory

answer

the cost of the supply of materials used in the manufacturing process or to provide the service.

question

mixed cost

answer

the term used to refer to total cost when total cost includes both variable and fixed cost components

question

overhead

answer

All indirect costs are commonly combined into a single cost

question

period costs

answer

are all non product expenditures for managing the firm and selling the product.

question

prime costs

answer

refer to direct materials and direct labor that are combined into a single amount.

question

product costs

answer

for a manufacturing firm include only the costs necessary to complete the product: direct materials, direct labor, and factory overhea

question

relevant range

answer

the range of the cost driver in which the actual value of the cost driver is expected to fall and for which the relationship to total cost is assumed to be approximately linear.

question

step cost

answer

varies with the cost driver but in steps.

question

structural cost drivers

answer

strategic in nature and involve plans and decisions that have a long-term effect with regard to issues such as scale, experience, technology, and complexit

question

total manufacturing cost

answer

the sum of materials used, labor, and overhead for the period.

question

unit cost or average cost

answer

the total manufacturing cost (materials, labor, and overhead) divided by the number of units of output

question

value stream

answer

a group of related products

question

variable cost

answer

the change in total cost associated with each change in the quantity of the cost driver.

question

work-in-process inventory

answer

contains all costs put into the manufacture of products that are started but not complete at the financial statement date.

Chapter 3: Basic Cost Management Concepts – Flashcards

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