Accounting Vocab pages 28-36

Fixed cost

A cost that remains constant, in total, regardless of changes in the level of activity

Activity Base

A measure of whatever causes the incurrence of a variable cost

Period Costs

Are all the costs that are not product costs

Relevant range

The range of activity within which the assumption that cost behavior is strictly linear is reasonable valid

Inventoriable costs

product costs are initially assigned to inventories

Cost behavior

refers to how a cost reacts to changes in the level of activity.

Conversion Cost

refers to the sum of direct labor and manufacturing overhead

Committed fixed costs

represent organizational investments with a multiyear planning horizon that can't be significantly reduced even for short periods of time without making fundamental changes

Cost structure

the relative proportion of each type of cost in an organization

Discretionary fixed costs

usually arise from annual decisions by management to spend on certain fixed cost items

Variable cost

varies, in total, in direct proportion to changes in the level of activity.

Finished goods

Consist of completed units of product that have not yet been sold to customers.

Mixed Cost

Contains both variable and fixed cost elements

Administrative Costs

Include all costs associated with the general management of an organization rather than with manufacturing or selling.

Selling Costs

Include all costs that are incurred to secure customer orders and get the finished product to the customer.

Work in progress

consists of units of product that are only partially complete and will require further work before they are ready for sale to the customer.

Product costs

include all costs involved in acquiring or making a product.