Glossary.docx

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Department
Accounting
Course
ACC 406
Professor
Tsogbadral Galaabaatar
Semester
Winter

Description
2 Accumulating costs The way that costs are measured and recorded. (p. 31) Administrative All costs associated with research, development, and general administration of the organization that costs cannot reasonably be assigned to either selling or production. (p. 40) Allocation When an indirect cost is assigned to a cost object using a reasonable and convenient method. (p. 33) Assigning costs The way that a cost is linked to some cost object. (p. 31) Conversion cost The sum of direct labour cost and overhead cost. (p. 37) Cost The amount of cash or cash equivalent sacrificed for goods and/or services that are expected to bring a current or future benefit to the organization. (p. 30) Cost object Any item such as products, customers, departments, projects, and so on, for which costs are measured and assigned. (p. 31) Cost of goods manufactured The total product cost of goods completed during the current period. (p. 42) Cost of goods The total product cost of goods sold during the period. (p. 44) sold Direct costs Costs that can be easily and accurately traced to a cost object. (p. 33) Direct labour The labour that can be directly traced to the goods or services being produced. (p. 37) Direct labour The wages of employees who are integral to the finished product. (p. 41) cost Direct materials Materials that are a part of the final product and can be directly traced to the goods or services being produced. (p. 36) Direct materials cost The cost of any material that is an integral part of the finished product. (p. 41) Expenses Costs that are used up (expired) in the production of revenue. (p. 31) Factory Combined costs that are incurred in the manufacturing process other than direct materials cost and direct overhead cost labour cost. (p. 41) Finished goods inventory Completed products that have not yet been sold. (p. 42) Fixed costs Costs that, in total, are constant within the relevant range as the level of output increases or decreases. (p. 34, 77) Gross margin The difference between sales revenue and cost of goods sold. (p. 48) Indirect costs Costs that cannot be easily and accurately traced to a cost object. (p. 33) Manufacturing (See Cost of goods manufactured) (p. 42) costs Manufacturing Organizations that produce products. (p. 35) organizations Manufacturing All product costs other than direct materials and direct labour. In a manufacturing firm, manufacturing overhead overhead also is known as factory burden or indirect manufacturing costs. Costs are included as manufacturing overhead if they cannot be traced to the cost object of interest (e.g., unit of product). (p. 37) Materials The costs of direct and indirect materials that have not entered the manufacturing process. (p. 42) inventory Opportunity The benefit given up or sacrificed when one alternative is chosen over another. (p. 34, 604) cost Period costs Costs that are expensed in the period in which they are incurred; they are not inventoried. (p. 38) Price The revenue per unit. (p. 31) Prime cost The sum of direct materials cost and direct labour cost. (p. 37) Product Costs associated with the manufacture of goods or the provision of services. Product costs include direct (manufacturing) costs materials, direct labour, and overhead. (p. 36) Products Goods produced by converting raw materials through the use of labour and indirect manufacturing resources, such as the manufacturing plant, land, and machinery. (p. 35) Selling costs Those costs necessary to market, distribute, and service a product or service. (p. 40) Service organization An organization that produces intangible products. (p. 35) Services Tasks or activities performed for a customer or an activity performed by a customer using an organization’s products or facilities. (p. 35) Variable cost Variable costs divided by sales revenues. It is the proportion of each sales dollar needed to cover variable ratio costs. (p. 34, 129) Variable costs Costs that, in total, vary in direct proportion to changes in output within the relevant range. (p. 34, 79) Work in process The cost of the partially completed goods that are still being worked on at the end of a time period. (p. inventory (WIP) 42) 3 Coefficient of determination The percentage of total variability in a dependent variable that is explained by an independent (R2) variable. It assumes a value between 0 and 1. (p. 100) Committed A fixed cost that cannot be easily changed. (p. 79) fixed cost Cost The way in which a cost changes when the level of output changes. (p. 77) behaviour Cost centre A division of a company that is evaluated on the basis of cost. (p. 553) Cost driver A causal measurement that causes costs to change. (p. 77) Dependent A variable whose value depends on the value of another variable. (p. 84) variable Discretionary fixed costs Fixed costs that can be changed relatively easily at management discretion. (p. 79) Driver A factor that causes or leads to a change in a cost or an activity; a driver is an output measure. (p. 78) Fixed costs Costs that, in total, are constant within the relevant range as the level of output increases or decreases. (p. 34, 77) High-low A method for separating mixed costs into fixed and variable components by using just the high method and low data points. [Note: The high (low) data point corresponds to the high (low) output level.] (p. 86) Independent variable A variable whose value does not depend on the value of another variable. (p. 84) Intercept The fixed cost, representing the point where the cost formula intercepts the vertical axis. (p. 84) Method of least squares A statistical method to find the best-fitting line through a set of data points. It is used to break out the fixed and variable components of a mixed cost. (p. 93) (regression) Mixed costs Costs that have both a fixed and a variable component. (p. 82) Relevant The range of output over which an assumed cost relationship is valid for the normal operations range of a firm. (p. 77) Scattergraph A method to fit a line to a set of data using two points that are selected by judgment. It is used method to break out the fixed and variable components of a mixed cost. (p. 87) Semi-variable A type of cost behaviour where the true total cost function is increasing at a decreasing rate. (p. 81) Slope The variable cost per unit of activity usage. (p. 84) Step cost A cost that displays a constant level of cost for a range of output and then jumps to a higher level of cost at some point, where it remains for a similar range of output. (p. 82) Variable costs Costs that, in total, vary in direct proportion to changes in output within the relevant range. (p. 34, 79) 4 Activity A list of activities described by specific attributes such as name, definition, classification as primary or dictionary secondary, and activity driver. (p. 307) Activity-based A system that accumulates overhead costs for each of the activities of an organization and then assigns the costing (ABC) costs of activities to the products, services, or other cost objects that caused those activities. This approach first uses direct and driver tracing to assign costs to activities and then uses drivers to assign costs to cost objects.(p. 304) Break-even point The point where total sales revenue equals total cost; at this point, neither profit nor loss is earned. (p. 124) Common fixed Fixed expenses that cannot be directly traced to individual segments and that are unaffected by the expenses elimination of any one segment. (p. 141, 374) Contribution Sales revenue minus total variable cost or price minus unit variable cost. (p. 125) margin Contribution margin income The income statement format that is based on the separation of costs into fixed and variable components. statement (p. 124) Contribution Contribution margin divided by sales revenue. It is the proportion of each sales dollar available to cover margin ratio fixed
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