Accounting 132

What are the steps to the value chain?

R&D Product design manufacturing marketing distribution customer service

Cost formula variable meanings

Y(total cost)= a(fixed cost per period)+ b(variable rate per unit)*X(number of units of activity

administrative cost

all executive organizational and clerical costs

manufacturing overhead

all manufacturing costs except direct materials and direct labor. cannot be easily traced to specific units produced

performance report

compares budgeted data to actual data

corporate social responsibility

concept where a company considers the needs of all the stakeholders, not just the stockholders

what process is the performance report a part of?

control process

selling cost

costs necessary to secure the order and deliver the product

differential costs

difference in cost between any two alternatives

conversion costs forumula

direct labor + manufacturing costs

Predetermined overhead rate formula

estimated amount of manufacturing overhead cost for the coming period divided by estimated quanitity in the allocation base for the coming period

strategy

game plan that enables a company to attract customers by distinguishing itself from competitors

sunk costs

have already been incurred and cannot be changed so they should be ignored when making decisions.

product cost

include all costs that are involved in making a product including direct materials direct labor and manufacturing overhead

period cost

include all selling and administrative costs

what are the two categories of manufactoring overhead

indirect materials and indirect labor

what are 2 examples of indirect labor

janitors and security guards

what is another name for lean production

just in time production

what are 2 examples of indirect materials

lubricants and cleaning supplied used in the assembly line

indirect materials

materials used to support the production process

Principal activites of management

planning, controlling, decision making

what are some examples of direct materials

radio installed in car engine on airplane

relevant range

range of activity within which the assumptions made about cost behavior are valid

what account is debited when purchesed raw materials are put in production

raw materials inventory account

Direct materials

raw materials that become an integral part of the product and that can be conveniently traced directly to it

direct labor

the portion of labor cost that can be easily traced to individual units of a product

opportunity costs

the potential benefit that is given up when one alternative is selected over another

what is direct labor also known as

touch labor because workers touch the product as its being made

what is an example of direct labor

wages paid to car assembly workers

indirect labor

wages paid to employees who are not directly involved in production work