Financial Accounting

reporting financial information to external parties (like stockholders, creditors, and regulators)

Managerial Accounting

providing information to employees within an organization so that they can formulate plans, control operations, and make operations

Direct Costs

costs that can be easily and conveniently traced to a unit of product or other cost object (ex- direct material and direct labor)

Indirect Costs

costs that can't be easily and conveniently traced to a unit of product or other cost object (ex- manufacturing overhead)

Common Costs

indirect costs incurred to support a number of cost objects, these costs can't be traced to any individual cost object

Direct Materials

raw materials that become an integral part of the product and that can be conveniently traced directly to it (ex- a seat installed in an aircraft)

Direct Labor

labor cost that can be easily traced to individual units of product (ex- waged paid to automobile assembly workers)

Manufacturing Overhead

includes all manufacturing costs except direct material and direct labor, these costs can't be readily traced to finished products (ex-property taxes, utility costs)

Indirect Materials

involved in manufacturing overhead to describe materials that can't be easily or conveniently traced to specific units of product

Indirect Labor

involved in manufacturing overhead to describe labor costs that can't be easily or conveniently traced to specific units of product

Period Costs

includes all selling costs and administrative costs

Selling Costs

costs necessary to secure the order and deliver the product, selling costs can be either direct or indirect costs

Administrative Costs

all executive, organizational, and clerical costs (administrative costs can be either direct or indirect costs)

Product Costs

include all costs involved in acquiring or making a product (this includes direct materials, direct labor, and manufacturing overhead)

Raw Materials (In the Context of Manufacturing Product Costs)

include any materials that go into the final product

Work in Process (In the Context of Manufacturing Product Costs)

consists of units of product that aren't complete all the way and require further work before they are ready for sale to a customer

Finished Goods (In the Context of Manufacturing Product Costs)

consist of completed units of product that have not yet been sold to customers

Variable Cost

a cost that varies, in total, in direct proportion to changed in the level of activity

Fixed Cost

a cost that remains constant, in total, regardless of changes in the level of activity

Committed Fixed Cost

long term, can't be significantly reduced in the short term

Discretionary Fixed Cost

may be altered in the short term by current managerial decisions