CHAPTER 16 PAGE: 722 Vocabulary: Management Accounting-is the design and use of accounting information systems inside the

company to achieve the company's objectives. Value Chain- is the linked set of activities and resources necessary to create and deliver the product or service to the customer. Benchmark Studies- These studies show an organization how its costs and processes compare with others in its industry. Manufacturing CostsConversion Costs- The costs of converting raw materials into finished goods, specifically the direct labor and overhead costs Prime Costs- the direct materials and direct labor that are consumed in production Direct Materials-the raw materials and component parts used in production whose costs are directly traceable to the products manufactured. Direct Labor- wages and other payroll costs of employees whose efforts are directly traceable to the products they manufacture. Both a prime cost and a conversion cost Manufacturing Overhead- a catchall classification, which includes all manufacturing costs other than the costs of direct materials and direct labor. Examples include factory utilities, supervisor salaries, equipment repairs, and depreciation on production machinery. Product Costs- are those costs incurred to manufacture inventory. Period Costs- Operating expenses associated with time periods, rather than with the production of inventory Materials Inventory- raw materials on hand and available for use in the manufacturing process Work in Process Inventory- partially completed goods on which production activities have been started but not yet completed Finished Goods Inventory- unsold finished products available for sale to customers.

Indirect MaterialsIndirect LaborDirect Manufacturing CostsIndirect Manufacturing CostsSchedule of the Cost of Finished Goods Manufactured- to provide managers with an overview of manufacturing activities during the period.