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
