Datar/Rajan, Horngren's Cost Accounting (ch2)

Actual cost

Cost incurred (a historical or past cost), as distinguished from a budgeted or forecasted cost.

Average cost (unit cost)

Total cost divided by number of units.

Budgeted cost

Predicted or forecasted cost (future cost) as distinguished from an actual or historical cost.

Conversion costs

All manufacturing costs other than direct materials costs.

Cost

Monetary value of resources sacrificed or forgone to achieve a specific objective.

Cost accumulation

Collection of cost data in some organized way by means of an accounting system.

Cost allocation

Assignment of indirect costs to a particular cost object.

Cost assignment

General term that encompasses both (1) tracing accumulated costs that have a direct relationship to a cost object and (2) allocating accumulated costs that have an indirect relationship to a cost object.

Cost driver

A variable, such as the level of activity or volume, that causally affects costs over a given time span.

Cost object

Anything for which a measurement of costs is desired.

Cost of goods manufactured

Cost of goods brought to completion, whether they were started before or during the current accounting period.

Cost tracing

Describes the assignment of direct costs to a particular cost object.

Direct costs of a cost object

Costs related to the particular cost object that can be unambiguously traced to that object in an economically feasible way.

Direct manufacturing labor costs

Compensation of manufacturing labor that can be easily traced to the cost object in an economically feasible way.

Direct materials costs

Acquisition costs of materials that become part of the cost object and can be easily traced in an economically feasible way.

Direct materials inventory

Direct materials in stock and awaiting use in the manufacturing process.

Finished-goods inventory

Goods completed but not yet sold.

Fixed cost

Cost that remains unchanged in total for a given time period despite changes in activity level.

Idle time

Wages paid for unproductive time caused by lack of orders, machine breakdowns, delays, or poor scheduling.

Indirect costs of a cost object

Costs related to the cost object that cannot be traced unambiguously in an economically feasible way.

Indirect manufacturing costs

Manufacturing costs related to the cost object that cannot be traced economically; also called manufacturing or factory overhead.

Inventoriable costs

All product costs treated as assets until the product is sold.

Manufacturing-sector companies

Companies that purchase materials and convert them into finished goods.

Merchandising-sector companies

Companies that purchase and resell tangible products without changing their form.

Operating income

Total revenues minus cost of goods sold and operating costs (excluding interest and taxes).

Overtime premium

Wage rate paid above straight-time wages for both direct and indirect labor.

Period costs

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

Prime costs

All direct manufacturing costs.

Product cost

Sum of costs assigned to a product for a specific purpose.

Relevant range

Normal activity range in which a specific cost relationship is valid.

Revenues

Inflows of assets received for products or services provided to customers.

Service-sector companies

Companies that provide services or intangible products.

Variable cost

Cost that changes in total in proportion to changes in activity level.

Work-in-process inventory

Goods partially completed but not yet finished.