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Managerial Accounting
Test 1
38
Accounting
Undergraduate 2
08/31/2010

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Cards

Term
Manufacturing Company
Definition
takes raw materials and produces new products
Term
merchandising company
Definition
sell products someone else has manufactured
Term
Service Companies
Definition
Do Not sell a tangible product as their primary business
Term
Lean Production system
Definition
focused on eliminating waste associated with holding more inventory than required, making unnesecary product, shipping product further than neccesary, and avoiding downtime
Term
Just in Time System
Definition
materials are purchased and products are made JIT to meet customer demand. The process beings with a customer order. Aim to keep inventories at very low levels.
Term
Direct Costs
Definition
costs that are directly attached to the finished product and can be conveiently traced to that product
Term
Indirect costs
Definition
attached to the product but cannot be conveniently traced to each separate product
Term
Manufacturing costs (product Costs)
Definition
those incurred in the manufacture of a product. Usually consist of direct materials, direct labor, and manufacturing overhead.
Term
Direct Materials
Definition
materials that can be directly traced to a particular product and become an integral part of the product.
Term
Direct labor
Definition
labor cost of all production employees who work directly on the product
Term
Manufacturing overhead
Definition
indirect materials and indirect labor
Term
Depreciation of factory machinery
Definition
manufacturing cost
Term
Depreciation of vehicles used by sales staff
Definition
nonmanufacturing cost
Term
Lease expense on factory equipment
Definition
manufacturing cost
Term
Lease expense on office computer
Definition
nonmanufacturing cost
Term
Lubricants used for maintenance of factory machineray
Definition
manufacturing cost
Term
Supplies used in HR
Definition
nonmanufacturing cost
Term
utilities used in the factory building
Definition
manufacturing cost
Term
Utilities used in the administrative headquarters
Definition
nonmanufacturing cost
Term
Actual Costing
Definition
product costing using hte actual overhead costs occured
Term
Normal Costing
Definition
estimated or predetermined overhead rates are used to apply overhead to the Work in Process account
Term
Cost behavior
Definition
how costs react to changes in production volume or other levels of activity
Term
fixed costs
Definition
costs that remain the same in total when production volume increases or decreases but vary per unit
Term
relevant range
Definition
the normal range of production that can be expected for a particular product and company.
Term
step costs
Definition
costs that vary with activity in steps and may look like and be treated as either variable costs or fixed cost.
Term
Mixed costs
Definition
costs that include both a fixed and a variable component, making it difficult to predict the behavior of the cost unless it is first separated into its fixed and variable components.
Term
Job Costing
Definition
a costing system that accumulates, tracks, and assigns costs for each job produced by a company.
Term
process costing
Definition
a costing system that accumulates and tracks costs for each process performed and then assigns those costs equally to each unit produced.
Term
Operations Costing
Definition
a hybrid of job and process costing; used by companies that make products in batches
Term
normal spoilage
Definition
spoilage resulting from the regular operations of the production process
Term
abnormal spoilage
Definition
spoilage resulting from unusual circumstances, including improper handling, poorly trained employees, faulty equipment, etc.
Term
fringe benefits
Definition
payroll costs in addition to the basic hourly wage
Term
idle time
Definition
worker time that is not used in the production of the finished product
Term
allocation
Definition
the process of finding a logical method of assigning overhead costs to the products or services a company produces or provides.
Term
Cost pools
Definition
groups of overhead costs that are similar; used to simplify the task of assigning costs to products using ABC costing.
Term
normal costing
Definition
costing using an estimate of overhead and predetermined overhead rates instead of the actual amount of overhead.
Term
overapplied overhead
Definition
the amount of applied overhead in excess of actual units.
Term
equivalent units
Definition
the numer of finsiehd units that can be made from the materials, labor, and overhead included in partially completed units.
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