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40 Cards in this Set

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A measure of the difference between the actual hourly labor rate and the standard rate, multiplied by the number of hours worked during the period.
Labor rate variance
A system of management in which standards are set for various operating activities, with actual results compared to these standards. Any differences that are deemed significant are brought to the attention o management as "exceptions"
Management by exception
Process (value-added) time as a percentage of through-put time
Manufacturing cycle efficiency (MCE)
A measure of the difference between the actual unit price paid for an item and the standard price, multiplied by the quantity purchased.
Materials price variance
A measure of the difference between the actual quantity of materials used n production and the standard quantity allowed, multiplied by the standard price per unit of materials.
Materials quantity variance
Standards that allow for normal machine downtime and otehr work interruptions and that can be attained through reasonable, though highly efficient, efforts by the average worker.
Practical standards
A detailed listing of the standard amounts of inputs that should go into a unit of product, multiplied by the standard price or rate that has been set for each input.
Standard cost card
The standard cost of a unit of product as shown on the standard cost card; it is computed by multiplying the standard quantity or hours by the standard price or rate for each cost element
Standard cost per unit
The time that should hae been taken to complete the period's output. It is computed by multiplying the actual number of units produced by the standard hours per unit.
Standard hours allowed
The amount of labor time that should be required to complete a single unit of product, including allowances for breaks, machine downtime, cleanup, rejects, and other normal inefficiencies
Standard hours per unit
The price that should be paid for a single unit of a material, including allowances for quality, quantity purchased, shipping, recieving, and other such costs, net of any discounts allowed
Standard price per unit
The amount of materials that should have been used to complete the period's actual output. It is computed by multiplying the actual number of units produced by the standard quantity per unit.
Standard quantity allowed
The amount of materials that shoudl be required to complete a single unit of product, including allowances for normal waste, spoilage, rejects, and similar inefficiencies
Standard quantity per unit
The labor rate that should be incurred per hour of labor time, including employment taxes, fringe benefits, and other such labor costs
Standard rate per hour
The amount of time required to turn raw materials into completed products
Throughput time
The difference between the actual level of activity (direct labor-hours, machine-hours, or some other base) and the standard activity allowed, multiplied by the variable part of the predetermined overhead rate.
Variable overhead efficiency variance
The difference between the actual variable overhead cost incurred during a period and the standard cost that shoudl have been incurred based on the actual activity of the period
Variable overhead spending variance
The difference between standard prices and quantities on the one hand and actual prices and quantities on the other hand
Variance
A measure of the difference between the actual fixed overhead costs incurred during the period and budgeted fixed overhead costs as contained in the flexible budget
Budget variance
The activity figure used to compute the predetermined overhead rate
Denominator activity
A budget that is designed to cover a range of activity and that can be used to develop budgeted costs at any point within that range to compare to actual costs incurred
Flexible budget
A budget created at the beginning of the budgeting period that is valid only for the planned level of activity
Static budget
The variance that arises whenever the standard hours allowed for the output of a period are different from the denominator activity level that was used to compute the predetermined overhead rate
Volume variance
A fixed cost that supports more than one business segment, but is not traceable in whole or in part to any one of the business segments
Common fixed cost
A business segment whose manager has control over cost but has no control over revenueor the use of investment funds
Cost center
An organization in which decision making authority is not confined to a few top executives but rather is sprea throughout the organization
Decentralized organization
A concept similar to residual income in which a variety of adjustments may be made to GAAP financial statements for performance evaluation purposes
Ecomomic Value Added (EVA)
A business segment whose manager has control over cost, revenue, and the use of investment funds
Investment center
Net operating income divided by sales
Margin
Income before interest and income taxes have been deducted
Net operating income
Cash, accounts receivable, inventory, plant and equipment, and all other assets held for productive use in an organization
Operating assets
A business segment whose manager has control over cost and revenue but has no control over the use of investment funds
Profit Center
The net operating income that an investment center earns above the required return on its operating assets
Residual income
Any business segment whose manager has control over cost, revenue, or the use of investment funds
Responsibility center
Net operating income divided by average operating assets. It also equals margin multiplied by turnover
Return on investment (ROI)
Any part or activity of an organization about which the manager seeks cost, revenue, or profit data
Segment
A segments contribution margin less its traceable fixed costs. It represents the margin available after a segment has covered all of its own traceable costs
Segment margin
A fixed cost that is incurred because of the exisistence of a particular business segment and would be eliminated if the segment were eliminated
Traceable fixed cost
Sales divided by average operating assests
Turnover
The major business functions that add value to a company's products and services such as research and development, product design, manufacturing, marketing, distribution, and customer service
Value Chain