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Definition of direct material
a readily identifiable part of a product; the cost of such a part
The cost of all materials used in a cost object, such as finished goods.
The variance between the budgeted and actual mixes of
a cost accumulation and reporting
the total of direct labor and overhead cost;
The charge to expense of the direct materials, direct labor, and
the total of all costs (direct material, direct labor,
a valuation method that uses actual
any factory or production cost that is indirect to
the total cost of direct material and direct labor for a product
This is a key factor in the profit model of a business. Product
a valuation method that uses predetermined
a cost accumulation and reporting method
Very early orders for materials before the completion
A listing of all the materials and quantities that go to make up a completed product.
a document that contains information about
Bill of materials
An itemization of the parts and subassemblies required to create a
Bill of materials (BOM)
A listing of all parts and subassemblies required to produce one
Breeder bill of materials
A bill of material that accounts for the generation and
a cost that is distinctly traceable to a particular cost object
A cost that can be clearly associated with specific activities or products.
see variable costing
A costing methodology that only assigns direct labor and material costs
Costs that are readily traceable to particular products or services.
The direct transfer of payroll funds from the company bank account
A system where funds are electronically credited to your account by a financial institution or a payroll service. For example, you can arrange with your employer to have your pay cheques automatically deposited into your no fee bank account.
Direct estimate method
A method of cash budgeting based on detailed estimates of cash receipts and cash
the time spent by individuals who work specifically
Labor that is specifically incurred to create a product.
Lease in which the lessor purchases new equipment from the manufacturer and leases it to the
A method of preparing the operating section of the Statement of Cash Flows that uses the company’s actual cash inflows and cash outflows.
a service department cost allocation approach
A format for the operating section of the cash-flow statement that reports actual cash receipts and cash disbursements from operating activities.
Commercial paper sold directly by the issuer to investors.
Selling a new issue not by offering it for sale publicly, but by placing it with one of several
For foreign exchange, the number of U.S. dollars needed to buy one unit of a foreign currency.
Advertising designed to elicit sales to customers who can be
Direct search market
Buyers and sellers seek each other directly and transact directly.
Direct stock-purchase programs
The purchase by investors of securities directly from the issuer.
Direct write-off method
A method of adjusting accounts receivable to the amount that is expected to be collected by eliminating the account balances of specific nonpaying customers.
A member of a company’s Board of directors.
Inventory that has been physically marked as being for a
Foreign direct investment (FDI)
The acquisition abroad of physical assets such as plant and equipment, with
Indented bill of material
A bill of material reporting format under which successively
a cost that cannot be traced explicitly to a particular
A cost that is not directly associated with a single activity or event. Such
Costs that are necessary to produce a product/service but are not readily traceable to particular products or services – see overhead.
The cost of any labor that supports the production process, but which is
A method of preparing the operating section of the Statement of Cash Flows that does not use the company’s actual cash inflows and cash outflows, but instead arrives at the net cash flow by taking net income and adjusting it for noncash expenses and the changes from last year in the current assets and current liabilities.
A format for the operating section of the cash-flow statement that
For foreign exchange, the number of units of a foreign currency needed to buy one U.S.$.
Taxes paid by consumers when they buy goods and services. A sales tax is an example.
Interac® Direct Payment
Instead of paying with cash or a credit card, Interac direct Payment allows you to pay for your purchase with a debit card, such as your bank card. The amount of the purchase is electronically debited, or withdrawn, from your bank account (see debit card).
material mix variance
(actual mix X actual quantity X standard price) - (standard mix X actual quantity X standardprice);
material price variance
total actual cost of material purchased
material quantity variance
(actual quantity X standard price) - (standard quantity allowed standard price);
Material requirements planning
A computerized system used to calculate material
Material requirements planning (MRP)
A computer-driven production methodology
material requisition form
a source document that indicates
Material review board
A company committee typically comprising members representing
material yield variance
(standard mix X actual quantity X standard price) - (standard mix X standard quantity X standard price);
The proportional size of a financial misstatement. It can be construed as
A characterization of the magnitude of a financial statement item's effect on a
Materials price variance
The difference between the actual and budgeted cost to
Materials quantity variance
The difference between the actual and budgeted quantities
Materials requirement planning
Computer-based systems that plan backward from the production schedule
materials requirements planning (MRP)
a computerbased information system that simulates the ordering and
A document listing the quantities of specific parts to be withdrawn
Matrix bill of material
A bill of materials chart listing the bills for similar products,
Modular bill of material
A bill of material format in which components and subassemblies
Multilevel bill of material
An itemization of all bill of material components, including
Any inventory item that does not match its original design
The waste materials resulting from a production process.
Phantom bill of material
A bill of materials for a subassembly that is not normally
pre-authorized direct deposit
A system where funds are electronically credited to your account by a financial institution or a payroll service.
Base-level items used by the manufacturing process to create either
Raw material supply agreement
As used in connection with project financing, an agreement to furnish a
Unprocessed goods bought for manufacture, part of inventory.
Raw materials inventory
The total cost of all component parts currently in stock that
Repair bill of material
A special bill itemizing changes needed to refurbish an
material that has been reworked and returned to stock.
material that has been reserved for a specific purpose.
Single-level bill of material
A list of all components used in a parent item.
Summarized bill of materials
A bill of materials format showing the grand total
actual cost system
a valuation method that uses actual direct
Refers to the sum of manufacturing direct labor and overhead
Cost of goods sold
The accumulated total of all costs used to create a product or service,
All the costs incurred during the manufacturing process, minus the
Manufacturing resource planning (MRP II)
An expansion of the material requirements planning concept, with additional computer-based capabilities in the areas of
Overhead generally refers to indirect, in contrast to direct,
The total of all costs assigned to a product, typically including direct
standard cost card
a document that summarizes the direct
The purchase of material for direct delivery to the production
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