The work of factory employees that can be physically and directly associated with converting raw materials into finished goods. Direct materials Raw materials that can be physically and directly associated with manufacturing the finished product.
Direct labor
The work of factory employees that can be physically and directly associated with converting raw materials into finished goods.
Direct materials
Raw materials that can be physically and directly associated with manufacturing the finished product.
Enterprise resource planning (ERP) system
Software that provides a comprehensive, centralized, integrated source of information used to manage all major business processes.
Indirect labor
Work of factory employees that has no physical association with the finished product or for which it is impractical to trace the costs to the goods produced.
Indirect materials
Raw materials that do not physically become part of the finished product or for which it is impractical to trace to the finished product because their physical association with the finished product is too small.
Just-in-time (JIT) inventory
Inventory system in which goods are manufactured or purchased just in time for sale.
Line positions
Jobs that are directly involved in a company’s primary revenue-generating operating activities.
Managerial accounting
A field of accounting that provides economic and financial information for managers and other internal users.
Manufacturing overhead
Manufacturing costs that are indirectly associated with the manufacture of the finished product.
Period costs
Costs that are matched with the revenue of a specific time period and charged to expense as incurred.
Product costs
Costs that are a necessary and integral part of producing the finished product.
Sarbanes-Oxley Act (SOX)
Law passed by Congress intended to reduce unethical corporate behavior.
Staff positions
Jobs that support the efforts of line employees.
Theory of constraints
A specific approach used to identify and manage constraints in order to achieve the company’s goals.
Total cost of work in process
Cost of the beginning work in process plus total manufacturing costs for the current period.
Total manufacturing costs
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