COST 2

Actual Cost

The cost incurred or historical cost.

Budgeted Cost

The predicted or forecasted cost, also known as future cost.

Cost Object

Anything for which cost measurement is desired.

Cost Accumulation

The collection of cost data in an organized way through an accounting system.

Direct Cost

Costs that are related to a specific cost object and can be traced to it economically.

Indirect Cost

Costs that cannot be traced to a specific cost object economically.

Cost Tracing

The assignment of direct costs to a particular cost object.

Cost Allocation

The assignment of indirect costs to a particular cost object.

Cost Assignment

Encompasses both tracing direct costs and allocating indirect costs.

Variable Cost

A cost that is constant in volume but varies in total.

Fixed Cost

A cost that remains unchanged in total for a given time period.

Cost Driver

The level of activity or volume that causally affects cost over a given time span.

Relevant Range

The band or range of normal activity levels.

Work in Process Inventory

Goods that are partially worked on but not yet completed.

Finished Goods Inventory

Goods that are completed but not yet sold.

Direct Material Cost

The acquisition cost of all materials that eventually become part of the cost object and can be traced economically.

Direct Manufacturing Labor

Includes the compensation of all manufacturing labor that can be traced to the cost object economically.

Indirect Manufacturing Cost

All manufacturing costs that are related to the cost object but cannot be traced to it.

Inventoriable Cost

All costs that are considered assets in a company's balance sheet when incurred.

Cost of Goods Sold

Inventoriable costs that are sold and counted as expenses.

Period Cost

All costs in the income statement other than the cost of goods sold.

Overtime Premium

The wage rate paid to workers in excess of their straight time wage rates.

Conversion Cost

Direct Manufacturing Labor + Manufacturing overhead.

Prime Cost

Direct Manufacturing Material + Direct Manufacturing Labor.