Accounting 1B Chapter 12

Front 1

activity analysis

Back 1

The study of employee effort and other business records to determine the cost of activities.

Front 2

appraisal costs

Back 2

Costs to detect, measure, evaluate, and audit products and processes to ensure that they conform to customer requirements and performance standards.

Front 3

backflush accounting

Back 3

Simplification of the accounting system by eliminating accumulation and transfer of costs as products move through production.

Front 4

conversion costs

Back 4

The combination of direct labor and factory overhead costs.

Front 5

cost of quality report

Back 5

A report summarizing the costs, percent of total, and percent of sales by appraisal, prevention, internal failure, and external failure cost of quality categories.

Front 6

costs of quality

Back 6

The cost associated with controlling quality (prevention and appraisal) and failing to control quality (internal and external failure).

Front 7

electronic data interchange (EDI)

Back 7

An information technology that allows different business organizations to use computers to communicate orders, relay information, and make or receive payments.

Front 8

employee involvement

Back 8

A philosophy that grants employees the responsibility and authority to make their own decisions about their operations.

Front 9

enterprise resource planning (ERP)

Back 9

An integrated business and information system used by companies to plan and control both internal and supply chain operations.

Front 10

external failure costs

Back 10

The costs incurred after defective units or services have been delivered to consumers.

Front 11

internal failure costs

Back 11

The costs associated with defects that are discovered by the organization before the product or service is delivered to the consumer.

Front 12

just-in-time (JIT) processing

Back 12

A processing approach that focuses on eliminating time, cost, and poor quality within manufacturing and nonmanufacturing processes.

Front 13

lead time

Back 13

The elapsed time between starting a unit of product into the beginning of a process and its completion.

Front 14

non-value-added activity

Back 14

The cost of activities that are perceived as unnecessary from the customer’s perspective and are thus candidates for elimination.

Front 15

non-value-added lead time

Back 15

The time that units wait in inventories, move unnecessarily, and wait during machine breakdowns.

Front 16

nonfinancial measure

Back 16

A performance measure that has not been stated in dollar terms.

Front 17

Pareto chart

Back 17

A bar chart that shows the totals of a particular attribute for a number of categories, ranked left to right from the largest to smallest totals.

Front 18

prevention costs

Back 18

Costs incurred to prevent defects from occurring during the design and delivery of products or services.

Front 19

process-oriented layout

Back 19

Organizing work in a plant or administrative function around processes (tasks).

Front 20

product-oriented layout

Back 20

Organizing work in a plant or administrative function around products; sometimes referred to as product cells.

Front 21

pull manufacturing

Back 21

A just-in-time method wherein customer orders trigger the release of finished goods, which triggers production, which triggers release of materials from suppliers.

Front 22

push manufacturing

Back 22

Materials are released into production and work in process is released into finished goods in anticipation of future sales.

Front 23

radio frequency identification devices (RFID)

Back 23

Electronic tags (chips) placed on or embedded within products that can be read by radio waves that allow instant monitoring or production location.

Front 24

Raw and In Process (RIP) Inventory

Back 24

The capitalized cost of direct materials purchases, labor, and overhead charged to the production cell.

Front 25

Six-Sigma

Back 25

A quality improvement process developed by Motorola Corporation consisting of five steps: define, measure, analyze, improve, and control (DMAIC).

Front 26

supply chain management

Back 26

The coordination and control of materials, services, information, and finances as they move in a process from supplier, through the manufacturer, wholesaler, and retailer to the consumer.

Front 27

value-added activity

Back 27

The cost of activities that are needed to meet customer requirements.

Front 28

value-added lead time

Back 28

The time required to manufacture a unit of product or other output.

Front 29

value-added ratio

Back 29

The ratio of the value-added lead time to the total lead time.