Which cost can be conveniently traced into a identified with the product manufactured?

A	B
Administrative costs	All executive, organizational, and clerical costs associated with the general management of an organization rather than with manufacturing, marketing, or selling
Common costs	a common cost is a cost that is common to a number of costing objects but cannot be traced to them individually
conversion cost	direct labor cost plus manufacturing overhead cost
diffferential cost	a difference in cost between any two alternatives
differential revenue	the difference in revenue between any two alternatives
direct cost	a cost that can be easily and conveniently traced to the particular cost object under consideration
direct labor	those factory labor costs that can be easily traced to individual units of product (also called touch labor)
direct materials	those materials that become an integral part of a finished product and can be conveniently traced into it.
fixed cost	a cost that remains constant, in total regardless of changes in the level of activity within the relevant range. If a fixed cost is expressed on a per unti basis, it varies inversely with the level of activity
incremental cost	an increase in cost between two alternatives
indirect cost	a cost that cannot be easily and conveniently traced to the particular cost object under consideration
indirect labor	the labor costs of janitors, supervisors, materials handlers, and other factory workers that cannot be conveniently traced directly to particular products
indirect materials	small items of material such as glue and nails. These items may become an integral part of a finsihed product but are traceable to the product only at great cost of inconvenience
inventoriable costs	synonym for product costs
manufacturing overhead	all costs associated with manufacturing except direct materials and direct labor
marketing or selling costs	al costs necessary to secure customer orders and get the finished product or service into the hands of the customer
period costs	those costs that are taken directly to the income statement as expenses in the period in which they are incurred or accruied; such costs consist of selling )marketing) and administrative expenses
prime cost	direct materials cost plus direct labor cost
product costs	all costs that are involved in the purchase or manufacture of goods. In the case of manufactured goods, these costs consist of direct materiasl, direct labor, and manufacturing overhead.
raw materials	any materials that go into the final product
schedule of cost of goods manufactured	a schedule showing the direct materials, direct labor, and manufacturing overhead costs incurred for a period and assigned to work in process and completed goods
variable cost	a cost that varies, in total, in direct proportion to changes in the level of activity. it is constant per unit.

Nội dung chính Show

Direct Costs
Indirect Costs
Fixed Costs
Variable Costs
Operating Costs
Opportunity Costs
Sunk Costs
Controllable Costs
The Bottom Line
Can be conveniently traced into or identified with the product manufacturers?
What types of costs are tracked in the manufacturing flow?
What is included in the cost of a manufactured product?
What are the 4 types of cost?

Cost accounting is an accounting process that measures all of the costs associated with production, including both fixed and variable costs. The purpose of cost accounting is to assist management in decision-making processes that optimize operations based on efficient cost management. The costs included in cost accounting are as follows:

Direct Costs

Direct costs are related to producing a good or service. A direct cost includes raw materials, labor, and expense or distribution costs associated with producing a product. The cost can easily be traced to a product, department, or project. For example, Ford Motor Company (F) manufactures cars and trucks. A plant worker spends eight hours building a car. The direct costs associated with the car are the wages paid to the worker and the cost of the parts used to build the car.

Indirect Costs

Indirect costs, on the other hand, are expenses unrelated to producing a good or service. An indirect cost cannot be easily traced to a product, department, activity, or project. For example, with Ford, the direct costs associated with each vehicle include tires and steel. However, the electricity used to power the plant is considered an indirect cost because the electricity is used for all the products made in the plant. No one product can be traced back to the electric bill.

What Are The Different Types Of Costs In Cost Accounting?

Fixed Costs

Fixed costsdo not vary with the number of goods or services a company produces over the short term. For example, suppose a company leases a machine for production for two years. The company has to pay $2,000 per month to cover the cost of the lease, no matter how many products that machine is used to make. The lease payment is considered a fixed cost as it remains unchanged.

Variable Costs

Variable costs fluctuate as the level of production output changes, contrary to a fixed cost. This type of cost varies depending on the number of products a company produces. A variable cost increases as the production volume increases, and it falls as the production volume decreases. For example, a toy manufacturer must package its toys before shipping products out to stores. This is considered a type of variable cost because, as the manufacturer produces more toys, its packaging costs increase, however, if the toy manufacturer's production level is decreasing, the variable cost associated with the packaging decreases.

Operating Costs

Operating costs are expenses associated with day-to-day business activities but are not traced back to one product. Operating costs can be variable or fixed. Examples of operating costs, which are more commonly called operating expenses, include rent and utilities for a manufacturing plant. Operating costs are day-to-day expenses, but are classified separately from indirect costs – i.e., costs tied to actual production. Investors can calculate a company's operating expense ratio, which shows how efficient a company is in using its costs to generate sales.

Opportunity Costs

Opportunity cost is the benefits of an alternative given up when one decision is made over another. This cost is, therefore, most relevant for two mutually exclusive events. In investing, it's the difference in return between a chosen investment and one that is passed up. For companies, opportunity costs do not show up in the financial statements but are useful in planning by management.

For example, a company decides to buy a new piece of manufacturing equipment rather than lease it. The opportunity cost would be the difference between the cost of the cash outlay for the equipment and the improved productivity vs. how much money could have been saved in interest expense had the money been used to pay down debt.

Sunk Costs

Sunk costsare historical costs that have already been incurred and will not make any difference in the current decisions by management. Sunk costs are those costs that a company has committed to and are unavoidable or unrecoverable costs. Sunk costs are excluded from future business decisions.

Controllable Costs

Controllable costs are expenses managers have control over and have the power to increase or decrease. Controllable costs are considered so when the decision of taking on the cost is made by one individual. Common examples of controllable costs are office supplies, advertising expenses, employee bonuses, and charitable donations. Controllable costs are categorized as short-term costs as they can be adjusted quickly.

The Bottom Line

Cost accounting looks to assess the different costs of a business and how they impact operations, costs, efficiency, and profits. Individually assessing a company's cost structure allows management to improve the way it runs its business and therefore improve the value of the firm.

Can be conveniently traced into or identified with the product manufacturers?

Direct materials are those which can be easily be measured and traced to the manufacture of a product. Since these costs are quantifiable based on the product, they have a direct effect on the production cost and therefore on the final cost of the finished good.

What types of costs are tracked in the manufacturing flow?

The three general categories of costs included in manufacturing processes are direct materials, direct labor, and overhead.

What is included in the cost of a manufactured product?

To calculate the cost of goods manufactured, you must add your direct materials, direct labor, and manufacturing overhead to get your businesses' total manufacturing cost.