Cost Accouting L.C.P. Martha Yolanda Pancardo Cortazar

COST ACCOUNTING Is a managerial accounting activity designed to help managers identify, measure, and control operating costs.

Material MATERIALS are physical goods (and their cost) used in the manufacture of a product, often separated into DIRECT MATERIAL (that which goes directly into the product such as cream into ice cream, or steel into cars) and INDIRECT MATERIAL (that which is used in maintaining the manufacturing environment such as cleaning fluids or oil for lubrication of manufacturing equipment). Indirect materials are usually part of the overhead component of cost. The term material, when used without the direct or indirect qualifier, usually refers to direct materials.

Direct labor DIRECT LABOR is work performed by individuals which is directly related to a specific cost objective. This work is readily identifiable with a particular product or service.

Indirect labor. Costs which are not directly related to the making of a product, e.g. cleaning, rent or administration

Overheads The indirect costs of the day-to-day running of a business, i.e. not money spent of producing goods, but money spent on such things as renting or maintaining buildings and machinery. Example: Depreciation. Maintenance

Cash Balance A balance that represents cash alone, as distinct from a balance that includes money owed but as yet unpaid