| A | B |
|---|
| Cost Drivers | activities or events which cause a business to incur cost |
| Variance Analysis | quantitative investigation of the difference between actual and planned behavior |
| Activity-Based Costing | allocating a company’s overhead to those items which actually use them |
| Breakeven Point | point at which a company’s revenue covers cost; beyond the breakeven point, revenue brings profit for each unit sold |
| Contribution Margin | cost accounting concept which allows a company to determine the profitability of individual products |
| Conversion Cost | all cost incurred by a company to convert raw material into a finished product |
| Cost | what a company gives up in resources to obtain a benefit or any other resource |
| Cost Accounting System | framework used by companies to estimate the cost of their products for profitability analysis, inventory valuation and cost control |
| Cost Allocation | process of identifying, aggregating and assigning cost to cost objects among a company’s departments or inventory items |
| Cost of Goods Sold | direct cost attributed to the production of the goods sold by a company |
| Cost Volume Profit | analysis of how a company’s profit changes as volume changes |
| Direct Labor | wages incurred by a company to produce a specific good or provide a specific service |
| Direct Material | raw materials and components used by a company to create a product |
| Fixed Cost | those costs which do not fluctuate with a change in a company’s production level or sales volume |
| Job Order Costing | company’s cost accounting system which accumulates manufacturing cost separately for each job |
| Labor Efficiency Variance | measures the company’s ability to utilize labor in accordance with expectation |
| Labor Rate Variance | measures the company’s difference between actual and expected cost of labor |
| Linear Regression | business model uses one independent variable (X) to explain and/or predict the outcome of a dependent variable (Y) |
| Make-or-Buy Decision | company’s process of choosing whether to make a product in house or buy it from an external supplier |
| Managerial Accounting | process of identifying, measuring, analyzing, interpreting and communicating financial information for the pursuit of an organization's goal |
| Manufacturing Overhead | all of a company’s production cost except for direct labor and direct material |
| Material Yield Variance | difference between the actual amount of material used by a company and the standard amount expected to be used |
| Opportunity Cost | potential benefit of selecting one alternative over another which does not require the payment by a company of cash or its equivalents |
| Overhead Rate | total indirect cost of a company for a specific reporting period, divided by an allocation measure |
| Period Cost | any cost which cannot be capitalized by a company into a prepaid expense, inventory or fixed asset |
| Prime Cost | sum of all direct costs of a company such as direct labor, direct materials and any other direct costs |
| Process Costing | method of collecting and assigning a company’s manufacturing cost to the unit produced |
| Product Cost | cost assigned to the manufacture of a company’s products and recognized for financial reporting when sold |
| Project Costing | single overhead rate which is applied to each job or in each department of a company |
| Purchase Price Variance | actual price paid for materials used in a company’s production process, minus the standard cost, multiplied by the number of units used |
| Selling Price Variance | difference between actual and expected revenue which is caused by a change in the price of a product or service |
| Standard Costing | practice of substituting an expected cost for an actual cost in a company’s accounting records, then periodically recording the variances to show the difference between the expected cost and actual cost |
| Sunk Cost | costs which have already been incurred by a company and cannot be changed by any decision |
| Variable Costs | those costs which respond directly to a change in a company’s production activity level or volume |
| Variable Overhead Efficiency Variance | difference between actual and budgeted hours worked for a company |
| Variable Overhead Spending Variance | difference between the actual and budgeted rate of spending on variable overhead by a company |
| Aggregating | combining of multiple costs to form one cost |
