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.