Q3 Terms Chp 16-17
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The combined costs of direct labor and factory overhead per equivalent unit.
Conversion costs per equivalent unit
Total manufacturing costs (direct materials, direct labor, and factory overhead) for the period plus beginning goods in process less ending goods in process; also called net cost of goods manufactured and cost of goods completed.
Cost of goods manufactured
Number of units that would be completed if all effort during a period had been applied to units that were started and finished.
Equivalent units of production
Method to assign cost to inventory that assumes items are sold in the order acquired; earliest items purchased are the first sold.
Cost accounting system to determine the cost of producing each job or job lot.
Job order cost accounting system
Document that summarizes the materials a department uses during a reporting period; replaces materials requisitions.
Materials consumption report
System of assigning direct materials, direct labor, and overhead to specific processes; total costs associated with each process are then divided by the number of units passing through that process to determine the cost per equivalent unit.
Process cost accounting system
Report of costs charged to a department, its equivalent units of production achieved, and the costs assigned to its output.
Process cost summary
Processing of products in a continuous (sequential) flow of steps; also called process manufacturing or process production.
Method to assign inventory cost to sales; the cost of available-for-sale units is divided by the number of units available to determine per unit cost prior to each sale that is then multiplied by the units sold to yield the cost of that sale.
An event that causes the consumption of overhead resources in an entity.
Cost allocation method that focuses on activities performed; traces costs to activities and then assigns them to cost objects.
Activity-based costing (ABC)
A management approach that focuses on managing activities as a way of eliminating waste and reducing delays and defects.
Variable that causes an activity's cost to go up or down; a causal factor.
Activity cost driver
Temporary account that accumulates costs a company incurs to support an activity.
Activity cost pool
A predetermined overhead rate in activity-based costing; each activity cost pool has its own activity rate that is used to apply overhead to products and services.
Activity overhead (pool) rate
Activities that are performed each time a batch of goods is handled or processed, regardless of how many units are in a batch; the amount of resources used depends on the number of batches run rather than on the number of units in the batch.
Batch level activities
Product, process, department, or customer to which costs are assigned.
Activities that relate to overall production and cannot be traced to specific products; costs associated with these activities pertain to a plant's general manufacturing process.
Facility level activities
System designed to eliminate waste in the accounting process and better reflect the benefits of lean manufacturing techniques.
Activities that relate to specific products that must be carried out regardless of how many units are produced and sold or batches run.
Product level activities
Activities that arise as a result of the total volume of goods and services that are produced, and that are performed each time a unit is produced.
Unit level activities
Activities that add to the value of a product or service.
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