Strategic cost management chap2

cost

monetary measure of amount of resources given up for some purpose.

product cost

cost involved in acquiring or making a product

product cost

are manufacturing or inventoriable cost

period cost

are all cost that are identified with accounting periods and not included in production cost.

direct materials

serve as integral part of a finished product

indirect materials

all other materials that cannot be traced to an individual product

direct labor

include only wages paid to workers

indirect labor

salaries and wages paid to other factory workers who are indirectly involves in the production

factory overhead

all manufacturing cost except direct labor and direct materials.

prime cost

total direct cost of production, including raw materials and labor.

conversion cost

total cost that a manufacturing entity incurs to transform raw material into finished products

controllable cost

cost which the incurrence or non-incurrence depend on the decision or control of a specific manager.

non-controllable cost

are cost which the incurrence or non-incurrence do not depend on the decision or control of a specific manager

committed cost

cost that inevitable consequence of a previous commitment

discretionary cost

cost for which the size or time of incurrence is a matter of choice

programmed or managed cost

discretionary cost is also known as?

variable cost

cost that are changed in total in proportion to changes in the activity but remain constant pr unit.

-        Direct/indirect material and direct/indirect labor, factory supplies

fixed cost

are constant but remain unchanged for a given period of time

-        Depreciation, insurance, property taxes, executive and supervisory salaries

mixed cost

or semi-variable cost

-        Cost that have properties of both fixed and variable cost

-        Factory overhead

cost behavior

is the study on how the firm cost respond to changes in activity level

cost driver

is an item or event that has cause and effect relationship with the incurrence of cost

-        Is the reason why the cost change

cost pool

is a grouping of individual cost item

relevant range

is width or span of activities.

accounting analysis method

Is a cost analysis method that requires a review of accounts by experienced employees or even management

conference method

Estimates cost functions through analyses and opinions of cost and their drivers from a various departments

engineering method

Is a physical way of examining the relationship between cost drivers and cost

scattergraph method

  Is a graphical technique of separating fixed and variable components of mixed cost

visual fit method

scattergraph method is also known as?

high-low method

Is a crude or simple technique of segregating mixed cost

Multiple regression analysis

is an extension of linear regression analysis

standard error of the estimate

is a measure of the accuracy of predictions

standard error of estimate

measure of variation of an observation made

coefficient of deterrmination

Represents the percentage of the total variation in the dependent variable

coefficient of determination

computed by squaring the value of r.

“Pearson’s correlation coefficient”

coefficient of correlation is also known as

coefficient of correlation

measure of the extent of linear relationship

correlation

measures the co-variation

Correlational analysis

focuses on testing the relationships between quantitative variables

linear regression

a mathematical analysis method which considers the relationship between all the data points

least squares method

Is a statistical technique that maybe used to estimate a linear total function for a mixed cost

linear regression analysis

least squares method is also known as?