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manufacturing costs that are indirectly assoicated with the manufacture of the finished product period costs direct materials and direct labor prodcut costs - costs taht are a necessary and integral part of producing the finished product total cost of work in process = cost of the beginning work in process plus total manufacturing costs for the current period total manufacturing costs sum of direct materials, direct labor and manufacturing overhead incurred in the current period cost actg. - an ara of actg that involves the measuring, recording and reporting of product costs cost actg system - manufacturing cost accts that are fully integrated into the general ledger of a company job cost sheet - form used to record the costs chargable to a job and to determine the total and unit cost of the completed job job order cost system - cost actg system in which costs are assigned to each job or batch materials req. slip - doc authorizing the issuance of raw materaials from the storeroom to production overapplied o/h - situation in which o/h assigned to work in process is greater than the o/h incurred. predetermined o/h rate =- rate baes on the relationship between estimated annual o/h costs and expected annual operating activity expressed in terms of a common act. base process cost system - system of acctg used by companies that manufacture relatively homogeneous products though a series of continuous processes or operations. time ticket - doc that indicates the employee, hrs worked and acct and job to be charged and total labor cost underapplied o/h - sit in which o/h assgned to work in process is less than the o/h incurred cost reconciliation sched = sched that shows that the total cost accounted for equal to total costs to be accounted for equiv. units of prod. - measure of the work done during the period, expressed in fully completed units operations costing =- combo of a process cost and a job order cost syte, in which products are manufactured primarily by standardized methods, with some customization physical units - actual units to be accounted for during a period, irrecspective of any work performed process cost systems - actg sys used to apply costs to similar products that are mass produced in a continuous fashion production cost report - internal report for manmgt that shows both production quantity and cost data for a prod. dept. total units (costs) accounted for - sum of the unitss transferred out during the period plus the units in process at the end of the period unit prod. costs - cost expressed in terms of eqiv. units of prod. weighted avg. method - method used to compute equilv units of prod. which consieer the degreee of completion of the units completed and tranferred out and the ending work in process. activity - any even, action, transaction/ work sequence that causes incurrence of cost in producing a product or rendering a service activing based costing (ABC) overhead cost allocation system that allocates o/h to multiple activity cost pools and assigns the activity cost pools to products or services by means of cost drivers that represent the activities used. activity based mgmt (ABM) extension of ABC from a prodcut costing system to a mgmt function that focuses on reducing costs and improving processes and decision making activity cost pool - o/h cost allocated to a distinct type of activity or related activities batch level activities 0- activiteis performed for each batch of products cost driver - any factor or activity that has a direct causee effect relationship with the resources consumed. in abc cost drivers are used to assign activity costs pools to procuts or services facitity level activities = activities required to suppor / sustain an entire production proces and not dependent on number of products, batches or units produced just in time processing a processing system dedicated to productin the right products or parts as they are needed thereby reducing the amt of inventory nonvalue added activity = activity that adds cost to or increases the time spent on a product / service without increasing its market value product level activities - activities performed for and identifiable with an entire product line unit level activities = activities performed for each unit of production value added activity activity that increases the worth of a product/service absorbtion costing - costing apporach in which all manufacturing costs are charged to the product activity index - activity that causes changes in behavior of costs break even point - level of activity at which total revenues equal total costs contrib. margin amt of rev remaining after deducting variable costs cost behavior analysis = study of how specific costs respond to changes in the level of activity within a company cost volume profit graph shos the relationship between costs, volume, and profits cost volume profit income statement - statement for internal use that classifies cost and expenses as fixed or variable and reports contribution margin in the body of the statement fixed costs costs that remain the same in total regardless of changes in activity level high low method - mathematical method that uses the total cost incurred at the high and low levels of activity margin of safety - diff between actual or expected sales and sales at the break even point mixed costs = costs that contain both a varaiale and fixed cost element and change in total but not proportionately with changes in the activity level relevent range - range of the activity index over which the co expects to operate during the yr target net income income objective for individual product lines variable costing= costing apporach in which only variable manufacturing costs are product costs and fixed manufacturing costs are period costs variable cost vary in total directly and proportionaly with changes in the activity level budget formal written summary of mgmts plans for a specified future time period epxressed in financial terms budget committee =- group responsible for coordinating the preparation of the budget budgeted bal sheet =- projection of financial position at the end of the budget period budgeted income statement - estimate of the expected profitability of operations for the budget period cash budget - projection of anticipated cash flows direct labor budget - projection of the quantity and cost of direct labor to be incurred to meet production requirements direct materials budget - an estimate of the quanity and cost of direct materials materials to be purchased financial budgets - individual budgets that indicate the cash resources needed for expected operations and planned capital expenditures long range planning - formalized proces of selecting strategies to achieve long term goals and developing polocies and plans to implement the stratgies manufactuing overhead budget - estimate of expected manufacturing overhead costs for the budged period master budget - set of interrelated budgets that constistutes a plan of action for a specific time period merchandise purchases budget - estimated cost of goods to be purchased in a merchandizing company to meet expected sales operating budgets = indivual budgets that culminate in a budgeted income statement production budget - projection of the units that must be producted to meet anticipated sales sales budget - estimate expected sales for the budget period sales forcast -= projection of potential sales for the industry and the co's expected share of such sales selling and admin. expense budget - projection of anticipated selling and admin. expenses for budget BUDGETARY CONTROL use of budgets to control operations controllable costs - costs that a mgr has a the authority to incur within a given period of time controllable margin - responsibility center incurs cost but does not directly generate revenues decentralization - control of operations is delegated by top mgmt to many mgrs throughout the organization direct fixed costs - costs that relate specifically to a responsibility center and are incurred for the sole benefit of the center flexible budget - projection of budget data for various levels of activity indirect fixed costs - costs that are incurred for the benefit of more than one profit center investment ctr = responsibility center that incurs costs generates rev, and has control over the investment funds available for use mgmt by exception = rrevie of budget reports by top mgmt directed entierely /primarily to differences between actual resuls and planned objectives noncontrollable costs - incurred indirectly and allocated to a responsibility center that are not controllable at that level profit center - resp. center that incurs cost and also generates rev. resp. actg - part of mgmt that actg that involves accumulating and reporting revs and costs on the basis of the individual mgr who has the authority to make the day to day decisions about the items respon. reporting system - preparaton of reports for each level of resp. show in the companys orgainzation chart return on investment (ROI) measrue of mgmts effectiveness in utilizing assest at its disposal in an investment ctr segment - area of respon. in decentralized operations static budget - projection of budget data at one level of activity incremental analysis process of identifying the financial data that change under the alternative courses of action opportunity costs - potential benefit that may be obtained from follwoing an alternative course of action relevant cost - those costs and revenues that differ across alternatives sales mix - relative combo in which comapny's products are sold sunk cost - cost that cannot be changed by any present / future decision Bibliography: Word Count: 1733
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