(See related pages)
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| Control | The process of monitoring planning decisions and evaluating the organization’s activities and employees. (See page(s) 1093) |
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| Controllable or not controllable costs | A cost is controllable or not depending on a manager’s responsibilities and whether or not they are in a position to make decisions on expenditures. (See page(s) 1100) |
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| Conversion costs | Expenditures incurred in the process of converting raw materials to finished goods. They include direct labour costs and factory overhead costs. (See page(s) 1110) |
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| Cost object | A product, process, department, or customer to which costs are assigned. (See page(s) 1100) |
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| Direct cost | Costs that are incurred for the benefit of one specific cost object. (See page(s) 1100) |
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| Direct labour | Efforts of employees who physically convert materials to finished product. (See page(s) 1110) |
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| Direct labour costs | Wages and salaries for direct labour that are separately and readily traced through the manufacturing process to finished goods. (See page(s) 1110) |
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| Direct material costs | Expenditures for direct materials that are separately and readily traced through the manufacturing process to finished goods. (See page(s) 1110) |
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| Direct materials | Raw materials that physically become part of the product and therefore are clearly identified with specific units or batches of product. (See page(s) 1107) |
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| Factory overhead | Factory activities supporting the manufacturing process that are not direct materials or direct labour. (See page(s) 1110) |
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| Factory overhead costs | Expenditures for factory overhead that cannot be separately or readily traced to finished goods. (See page(s) 1110) |
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| Finished goods inventory | Products that have completed the manufacturing process and are ready to be sold by the manufacturer. (See page(s) 1108) |
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| Fixed cost | The cost does not change with changes in the volume of an activity. (See page(s) 1099) |
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| Goods in process inventory | Products that are in the process of being manufactured but that are not yet complete (also called work in process inventory). (See page(s) 1108) |
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| Implementation | The process of ensuring that the plans are carried out; involves developing actions, and directing and motivating employees. (See page(s) 1093) |
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| Indirect cost | Costs that are incurred for the benefit of more than one cost object. (See page(s) 1100) |
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| Indirect labour | Efforts of manufacturing employees who do not work specifically on converting direct materials into finished products and that are not clearly associated with specific units or batches of product. (See page(s) 1110) |
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| Indirect materials | Materials that are used in support of the production process but that do not become a part of the product and are not clearly identified with units or batches of product. (See page(s) 1108) |
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| Just-in-time (JIT) | A system whereby a company acquires or produces inventory only when needed. (See page(s) 1098) |
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| Lean business practices | Includes practices such as just-in-time, total quality management, and theory of constraints which are designed to reduce waste in an organization. (See page(s) 1098) |
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| Management accounting | See managerial accounting. |
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| Managerial accounting | The collecting, managing, and processing of financial and nonfinancial information for use by managers and other internal decision makers of an organization. (See page(s) 1092) |
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| Manufacturing cost | A cost that is necessary and integral towards the production of finished goods. (See page(s) 1101) |
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| Manufacturing statement | A statement that summarizes the types and amounts of costs incurred by a company during a given period for its manufacturing process; also called the schedule of manufacturing activities or the schedule of goods manufactured. (See page(s) 1112) |
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| Non-manufacturing cost | A cost that is not integral to the production of finished goods. (See page(s) 1101) |
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| Opportunity costs | The potential benefit lost by taking a specific action out of two or more alternative choices. (See page(s) 1101) |
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| Out-of-pocket cost | A cost requiring a future outlay of cash. (See page(s) 1101) |
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| Period costs | Expenditures identified more with a time period than with finished products costs. Includes selling and general administration expenses. (See page(s) 1101) |
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| Planning | The process of setting goals and making plans to achieve them. (See page(s) 1092) |
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| Prime costs | Expenditures directly associated with the manufacturing of finished goods. They include direct material costs and direct labour costs. (See page(s) 1110) |
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| Product costs | Costs that are capitalized as inventory because they produce benefits that are expected to have value in the future. They include direct materials, direct labour, and factory overhead costs. (See page(s) 1101) |
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| Raw materials | Materials that are purchased for use in manufacturing a product; those that become an integral part of the finished product are called direct materials, and the others are called indirect materials. (See page(s) 1112) |
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| Raw materials inventory | The goods a company acquires to use in making products. (See page(s) 1107) |
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| Relevant Cost | A cost that influences or has a bearing on a certain decision. (See page(s) 1100) |
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| Sunk cost | A cost already incurred and that cannot be avoided or changed. (See page(s) 1100) |
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| Theory of constraints (TOC) | The process of identifying factors that constrain or limit a company’s operations. (See page(s) 1098) |
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| Throughput | The added value (selling price minus direct material costs) of finished products processed through the system. (See page(s) 1098) |
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| Total Quality Management (TQM) | A management process that achieves continuous improvement by relentlessly focusing on improving quality everywhere in the organization. (See page(s) 1098) |
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| Unit contribution margin | A product’s sale price less its total variable costs per unit. (See page(s) 1099) |
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| Variable cost | The cost changes in proportion to changes in the volume of an activity. (See page(s) 1099) |