Costs that have been used up or consumed. Expired costs are reported as expenses. (Costs that have not yet expired are reported as assets.)
Costs that have been used up or consumed. Expired costs are reported as expenses. (Costs that have not yet expired are reported as assets.)
expired Costs that have a future value that can be measured Assets are recorded at their cost and (except for some securities) are not adjusted for changes in market value. Long-term assets such as buildings and...
What is insurance expense? Author: Harold Averkamp, CPA, MBA Definition of Insurance Expense Under the accrual basis of accounting, insurance expense is the cost of insurance that has been incurred, has expired, or has...
Our Explanation of Accounting Basics uses a simple story to introduce important accounting concepts and terminology. It illustrates how transactions will be included in a company's financial statements.
business during that accounting period. These costs are expenses because they may have expired, may have been used up, or may not have a future value that can be measured. Some authors define operating expenses as only...
Are direct costs fixed and indirect costs variable? Author: Harold Averkamp, CPA, MBA Direct Costs vs. Indirect Costs The terms direct costs and indirect costs could be referring to a product, a department, a machine,...
Why are some expenses deferred? Author: Harold Averkamp, CPA, MBA Definition of Deferred Expenses Under the accrual basis of accounting, an expense is a cost that is used up, has expired, or is directly related to...
Our Explanation of Accounting Basics uses a simple story to introduce important accounting concepts and terminology. It illustrates how transactions will be included in a company's financial statements.
income statement, or Reported as an asset and expensed later. To defer the cost to the balance sheet is to capitalize the costs. Examples of Costs Being Expensed Costs are reported as expenses in the accounting period...
What is prepaid insurance? Author: Harold Averkamp, CPA, MBA Definition of Prepaid Insurance Prepaid insurance is the portion of an insurance premium that has been paid in advance and has not expired as of the date of a...
See manufacturing costs.
See mixed expenses.
Usually refers to manufacturing overhead costs such as factory supplies, factory depreciation, indirect factory labor, etc. To learn more, see Explanation of Manufacturing Overhead.
See indirect manufacturing costs.
The combination of direct materials and direct labor.
What are direct costs? Author: Harold Averkamp, CPA, MBA Definition of Direct Costs Direct costs are directly traceable to a cost object such as a product or a department. In other words, direct costs do not have to be...
The cost to hold an item in inventory. Includes the cost of capital tied up in inventory, the cost of space and insurance, and the cost of items becoming obsolete while being held in inventory. This is an important...
See bond issue costs.
financial statements to comply with U.S. GAAP. The resulting unit costs are used for inventory valuation and for the calculation of the cost of goods sold. Example of Manufacturing Costs Manufacturing costs are...
Also referred to as manufacturing overhead, factory burden, factory overhead, and manufacturing support costs. To learn more, see Explanation of Manufacturing Overhead.
What are inventoriable costs? Author: Harold Averkamp, CPA, MBA Definition of Inventoriable Costs Inventoriable costs are: A retailer’s cost of the goods (products) that it purchased for resale, and any additional cost...
See inventory carrying costs.
The combination of a manufacturer’s direct labor and factory overhead.
In the EOQ model, the holding costs are the incremental costs of storing or holding an item in inventory for one year.
What are semivariable costs? Author: Harold Averkamp, CPA, MBA Definition of Semivariable Costs Semivariable costs are costs or expenses whose behavior is partially fixed and partially variable. That is, part of the...
What are production costs? Author: Harold Averkamp, CPA, MBA Definition of Production Costs In managerial accounting and cost accounting, production costs are the costs that occur in the manufacturing facilities....
R & D costs. These are costs incurred to develop new products or processes that may or may not result in commercially viable items. The general rule is that research and development costs are to be expensed...
Also referred to as factory burden, factory overhead, indirect manufacturing costs, and manufacturing support costs. To learn more, see Explanation of Manufacturing Overhead.
Assigning more manufacturing overhead to production than the amount that was actually incurred.
Costs that are common to several products, processes, activities, departments, territories, etc. Often common costs are subsequently allocated to each of the joint products, joint processes, etc. in order to determine...
Bond Issue Costs is a contra liability accounts reported along with Bonds Payable. Bond Issue Costs include the professional fees and registration fees associated with the issuance of bonds. The amount in the account...
the graphed data, you could use a mathematical tool known as simple linear regression analysis. This will calculate the fixed expenses (a) and the variable rate (b) based on the historical observations. Example of Mixed...
Costs that have both a fixed and variable component. For example, the cost of operating an automobile includes some fixed costs that do not change with the number of miles driven (e.g., operating license, insurance,...
See fixed expenses.
What are conversion costs? Author: Harold Averkamp, CPA, MBA Definition of Conversion Costs Conversion costs is a term used in cost accounting that represents the combination of direct labor costs and manufacturing...
Direct materials, direct labor and manufacturing overhead costs. Also referred to as product costs, production costs, and inventoriable costs.
In the EOQ model, order costs are the incremental costs of processing an order of goods from a supplier. Examples of order costs include the costs of preparing a requisition, a purchase order, and a receiving ticket,...
Why is the distinction between product costs and period costs important? Author: Harold Averkamp, CPA, MBA The distinction between product costs and period costs is important to: Properly measure a company’s net income...
What is the difference between prime costs and conversion costs? Author: Harold Averkamp, CPA, MBA Cost Categories of a Manufactured Product Prime costs and conversion costs pertain to the three cost categories of a...
Featured Review
"AccountingCoach got me through university without a tutor! Invaluable resource, even after school!! Thank you so much for providing such a useful, accurate and easy to understand resource! Well worth the membership fee! I got an A+ in my accounting classes!" - Lynn A.
Join PRO or PRO Plus and Get Lifetime Access to Our Premium Materials
Read all 2,645 reviewsWe now offer 10 Certificates of Achievement for Introductory Accounting and Bookkeeping: