Accounting 1B Chapter 1

Front 1

continuous process improvement

Back 1

A management approach that is part of the overall total quality management philosophy. The approach requires all employees to constantly improve processes of which they are a part or for which they have managerial responsibility.

Front 2

controller

Back 2

The chief management accountant of a division or other segment of a business.

Front 3

controlling

Back 3

A phase in the management process that consists of monitoring the operating results of implemented plans and comparing the actual results with the expected results.

Front 4

conversion costs

Back 4

The combination of direct labor and factory overhead costs

Front 5

cost

Back 5

A payment of cash (or a commitment to pay cash in the future) for the purpose of generating revenues.

Front 6

cost object

Back 6

The object or segment of operations to which costs are related for management’s use, such as a product or department.

Front 7

cost of finished goods available for sale

Back 7

The beginning finished goods inventory added to the cost of goods manufactured during the period.

Front 8

cost of goods manufactured

Back 8

The total cost of making and finishing a product.

Front 9

cost of goods sold

Back 9

The cost of finished goods available for sale minus the ending finished goods inventory.

Front 10

cost of merchandise sold

Back 10

The cost that is reported as an expense when merchandise is sold.

Front 11

decision making

Back 11

A component inherent in the other management processes of planning, directing, controlling, and improving.

Front 12

direct costs

Back 12

Costs that can be traced directly to a cost object.

Front 13

direct labor cost

Back 13

The wages of factory workers who are directly involved in converting materials into a finished product.

Front 14

direct materials cost

Back 14

The cost of materials that are an integral part of the finished product.

Front 15

directing

Back 15

The process by which managers, given their assigned level of responsibilities, run day-to-day operations.

Front 16

factory burden

Back 16

Another term for manufacturing overhead or factory overhead.

Front 17

factory overhead cost

Back 17

All of the costs of producing a product except for direct materials and direct labor.

Front 18

feedback

Back 18

Measures provided to managers on the performance of subunits of the organization. These measures are used by employees to adjust and achieve goals.

Front 19

financial accounting

Back 19

concerned with recording transactions using generally accepted accounting principles (GAAP) for a business or economic unit

Front 20

finished goods inventory

Back 20

The direct materials costs, direct labor costs, and factory overhead costs of finished products that have not been sold.

Front 21

indirect costs

Back 21

Costs that cannot be traced directly to a cost object.

Front 22

line department

Back 22

A unit that is directly involved in the basic objectives of an organization.

Front 23

management (or managerial) accounting

Back 23

uses both historical and estimated data in providing information that management uses in conducting daily operations, in planning future operations, and in developing overall business strategies.

Front 24

management by exception

Back 24

The philosophy of managing which involves monitoring the operating results of implemented plans and comparing the expected results with the actual results. This feedback allows management to isolate significant variations for further investigation and possible remedial action.

Front 25

management process

Back 25

The five basic management functions of (1) planning, (2) directing, (3) controlling, (4) improving, and (5) decision making.

Front 26

managerial accounting

Back 26

The branch of accounting that uses both historical and estimated data in providing information that management uses in conducting daily operations, in planning future operations, and in developing overall business strategies.

Front 27

manufacturing overhead

Back 27

Costs, other than direct materials and direct labor costs, that are incurred in the manufacturing process.

Front 28

materials inventory

Back 28

The cost of materials that have not yet entered into the manufacturing process.

Front 29

objectives (goals)

Back 29

Developed in the planning stage, these reflect the direction and desired outcomes of certain courses of action.

Front 30

operational planning

Back 30

The development of short-term plans to achieve goals identified in a business’s strategic plan. Sometimes called tactical planning.

Front 31

period costs

Back 31

Those costs that are used up in generating revenue during the current period and that are not involved in manufacturing a product, such as selling, general, and administrative expenses.

Front 32

planning

Back 32

A phase of the management process whereby objectives are outlined and courses of action determined.

Front 33

predetermined factory overhead rate

Back 33

The rate used to apply factory overhead costs to the goods manufactured. The rate is determined by dividing the budgeted overhead cost by the estimated activity usage at the beginning of the fiscal period.

Front 34

prime costs

Back 34

The combination of direct materials and direct labor costs.

Front 35

product costs

Back 35

The three components of manufacturing cost: direct materials, direct labor, and factory overhead costs.

Front 36

staff department

Back 36

A unit that provides services, assistance, and advice to the departments with line or other staff responsibilities.

Front 37

statement of cost of goods manufactured

Back 37

The income statement of manufacturing companies.

Front 38

strategic planning

Back 38

The development of a long-range course of action to achieve business goals.

Front 39

strategies

Back 39

The means by which business goals and objectives will be achieved.

Front 40

work in process inventory

Back 40

The direct materials costs, the direct labor costs, and the applied factory overhead costs that have entered into the manufacturing process but are associated with products that have not been finished.