Managerial Accounting Chapter 1 Learnsmart

prime costs

-sum of direct materials cost and direct labor cost

two components of prime costs:

1. direct materials 2. direct labor costs

direct labor and overhead costs incurred to change raw materials into finished products are known as _______ costs

conversion

any item for which cost data is desired is called a _________ ________

cost object

direct cost

cost that can be easily and conveniently traced to a specific cost object

indirect cost

cost that cannot be easily and conveniently traced to a specific cost object

common costs

costs that are shared by multiple cost objects in a company

a laptop computer manufacturer would consider the computer's processor chip to be a _________ cost

direct material

selling and administrative costs are either _________ or __________ costs

direct or indirect

true or false: all of a company's depreciation, property taxes, and insurance premiums are considered manufacturing overhead

false

true or false: labor costs that can be specifically traced to a product are indirect labor costs

false

manufacturing overhead costs include:

indirect materials, factory supervisors' salaries, factory depreciation

product costs are also called _________ costs

inventorial

manufacturing overhead costs include

items such as indirect materials, indirect labor, maintenance and repairs on production equipment, depreciation, and insurance on manufacturing facilities

direct materials

materials that become an integral part of the finished product and whose costs can be convinently traced to the finished product

in addition to being classified as either manufacturing or non-manufacturing costs, costs can be classified as either ______ or ________

product costs or period costs

period costs are always expensed on the income statement in the period in which:

they are incurred -period costs are simply costs besides manufacturing costs -include all selling and administrative expenses -ex: public relations, advertising expenses, rental costs of administrative offices

direct labor is also called _________ labor

touch

product costs include

-all materials involved in acquiring or making a product -direct materials -direct labor -manufacturing overhead -also known as manufacturing costs -initially assigned an inventory account on the balance sheet -selling and administrative expenses

manufacturing costs include:

-direct materials -manufacturing overhead -direct labor

manufacturing overhead is also termed...

-factory burden -indirect manufacturing costs -factory overhead

example of indirect materials

-nails, glue, and thread -salaries of factory supervisors and factory maintenance personnel

prior to being recorded on the income statement, manufacturers' product costs flow through:

-raw materials -work in progress -finished goods

conversion costs

-sum of direct labor cost and manufacturing overhead cost

three basic categories of manufacturing costs

1. direct materials 2. direct labor 3. manufacturing overhead

factory materials, such as cleaning supplies, that are not components of finished products, are classified as:

manufacturing overhead

matching principle

the accrual concept that costs incurred to generate a revenue are expensed in the same period the revenue is known

raw materials

the materials that go into the final product

units that are partially complete are found in:

work in progress