Chapter 12 Managerial Accounting

By-Product-a product that, like a joint product, is not individually identifiable until manufacturing reaches a split-off point, but has relatively insignificant total sales value.

Cost Accounting Systems-the techniques used to determine the cost of a product, service, or other cost objective by collecting and classifying costs and assigning them to cost object.

Cost-Allocation Base-a cost driver when it is used for allocating costs.

Cost Application- the allocation of total departmental costs to the revenue-producing products or services.

Direct Method-a method for allocating service department costs that ignores other service departments when any given service department’s costs are allocated to the revenue-producing (operating) departments.

Service Departments-units that exist only to support other departments.

Step-Down Method-a method for allocating service department costs that recognizes that some service departments support the activities in other service departments as well as those in production departments.