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| Question | Answer |
|---|---|
| Accounting information system | A set of procedures designed to provide the financial information needed within a business organization. |
| Budget | Management's operating plan expressed in quantitative terms, such as units of production and related costs. |
| Control | The process of monitoring the company's operations and determining whether the objectives identified in the planning process are being accomplished. |
| Conversion cost | The combined cost of direct labor and factory overhead, which is necessary to convert the direct materials into finished goods. |
| Cost accounting | Includes those parts of financial and management accounting that collect and analyze cost information. |
| Cost accounting system | A set of methods and procedures used by a manufacturing organization to accumulate detailed cost data relating to the manufacturing process. |
| Cost and production report | A summary of cost and production data for a particular cost center. |
| Cost center | A unit of activity, such as a department, to which costs may be practically and equitably assigned. |
| Cost of goods manufactured | Determined by adding the cost of the beginning work in process to the manufacturing costs incurred during the period, and then subtracting the cost of the ending work in process |
| Direct labor | The cost of labor for employees who work directly on the product being manufactured. |
| Direct materials | Materials that become part of the product being manufactured and that can be readily identified with a certain product. |
| Factory ledger | A separate ledger containing all the accounts relating to manufacturing, including the inventory accounts; it is maintained at the factory and tied to the general ledger through a special account. |
| Factory overhead | All costs related to the manufacture of a product except direct materials and direct labor; these costs include indirect materials, indirect labor, and other manufacturing expenses, such as depreciation, supplies, utilities, maintenance, insurance, and ta |
| Financial accounting | The branch of accounting that focuses on the gathering of information to be used in the preparation of external financial statements, that is, balance sheet, income statement, and statement of cash flows. |
| Finished goods | The inventory account that represents the total cost incurred in manufacturing goods that are complete but still on hand at the end of the accounting period. |
| For-profit service businesses | These are businesses that sell services rather than products, such as airlines and accountants. |
| Indirect labor | The wages and salaries of employees who are required for the manufacturing process but who do not work directly on the units being produced; examples include department heads, inspectors, materials handlers, and maintenance personnel. |
| Indirect materials | Materials and supplies necessary for the manufacturing process that cannot be readily identified with any particular product manufactured or whose relative cost is too insignificant to measure. |
| Job cost ledger | A subsidiary ledger that consists of the individual job cost sheets. |
| Job cost sheet | A form or computer file used to accumulate costs applicable to each job under a job order cost accounting system. |
| Job order cost system | A method or system of cost accounting that is appropriate for manufacturing operations that produce custom |
| Management accounting | Focuses on both historical and estimated data that management needs to conduct on |
| Manufacturers | They convert raw materials into finished goods by using labor, technology, and facilities. |
| Manufacturing (or production) costs | All costs incurred in the manufacturing process; the costs are classified into three basic elements: direct materials, direct labor, and factory overhead. |
| Manufacturing process | The activities involved in converting raw materials into finished goods through the application of labor and incurrence of various factory expenses. |
| Mark-on percentage | A percentage of the manufacturing cost per unit that is added to provide for selling and administrative expense and profit. |
| Materials | The inventory account that represents the cost of all materials purchased and on hand to be used in the manufacturing process, including raw materials, prefabricated parts, and supplies. |
| Merchandisers | Wholesalers or retailers who purchase finished goods for resale. |
| Not-for-profit service agencies | These include charities, governmental agencies, and some health care facilities that provide services at little or no cost to the user. |
| Performance report | A periodic summary of cost and production data that are controllable by the manager of a particular cost center. |
| Periodic inventory system | A method of accounting for inventory that requires estimating inventory during the year for interim statements and shutting down operations to count all inventory items at the end of the year. |
| Planning | The process of establishing objectives or goals for the organization and determining the means by which the objectives will be attained. |
| Prime cost | The combined costs of direct materials and direct labor incurred in manufacturing a product. |
| Process cost system | A method or system of cost accounting that is appropriate for manufacturing operations that produce continuous output of homogeneous products. Manufacturing costs are accumulated separately for each department and are recorded on a cost of production repo |
| Responsibility accounting | The assignment of accountability for costs or production results to those individuals who have the most authority to influence costs or production. |
| Retailers | A type of merchandiser who sells products or services to individuals for consumption. |
| Standard costs | The costs that would be incurred under efficient operating conditions and are forecast before the manufacturing process begins. The predetermined standard costs are compared with actual manufacturing costs incurred and are used by management as a basis fo |
| Unit cost | The cost of manufacturing one unit of product. |
| Variance | The difference, during an accounting period, between the actual and standard or budgeted costs of materials, labor, and overhead. |
| Wholesalers | A type of merchandiser who purchases goods from manufacturers and sells to retailers. |
| Work in process | The inventory account that includes all the manufacturing costs incurred to date for goods that are in various stages of production but are not yet completed. |
| COST OF GOODS SOLD | COST OF GOODS SOLD = Beginning finished goods inventory PLUS cost of goods manufactured EQUALS finished goods available for sale LESS ending finished goods inventory EQUALS Cost of Goods sold |
| Merchandise Inventory account | Unsold items on hand at the end of an accounting period (Asset account) |
| Finished Goods account | this account represents the total cost incurred in manufacturing goods completed but still on hand at the end of the period.(current asset account) |
| Work in process account | the balance of the work in process account includes all manufacturing costs incurred to date for goods in various stages of production but not yet completed. (current asset account) |
| Materials account | the balance of the materials account represents the cost of all materials purchased and on hand to be used in the manufacturing process, including raw materials, prefabricated parts, and other factory materials and supplies. Service entities do not have i |
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