Acct Final

Front 1

avoidable cost

Back 1

a cost that can be eliminated in whole or in part by choosing one alternative over another in a decision. This term is synonymous with relevant cost and differential cost.

costs that differ among alternatives)

Front 2

bottleneck

Back 2

a machine or some other part of a process that limits the total output of the entire system

Front 3

constraint

Back 3

a limitation under which a company must operate, such as limited available machine time or raw materials, that restricts the company's ability to satisfy demand

Front 4

differential cost

Back 4

any cost that differs between alternatives in a decision making situation. This term is synonymous with avoidable cost and relevant cost

Front 5

joint costs

Back 5

costs that are incurred up to the split off point in a process that produces joint products

Front 6

make or buy decision

Back 6

a decision concerning whether an item should be produced internally or purchased from an outside supplier

Front 7

relaxing ( or elevating) the constraint

Back 7

an action that increases the amount of a constrained resource. equivalently an action that increases the capacity of the bottleneck

Front 8

relevant cost

Back 8

a cost that differs between alternatives in a decision. this term is synonymous with avoidable cost and differential cost.

Front 9

sell or process further decision

Back 9

a decision as to whether a joint product should be sold at the split off point or sold after further processing

Front 10

special order

Back 10

a one time order that is not considered part of the company's normal ongoing business

Front 11

split off point

Back 11

that point i the manufacturing process where some of all of the joint products can be recognized as individual products

Front 12

sunk cost

Back 12

any cost that has already been incurred and that cannot be changed by any decision made now or in the future

Front 13

vertical integration

Back 13

the involvement by a company in more than one of the activities in the entire value chain from development through production, distribution, sales and after sales service

Front 14

CM per limited resource

Back 14

CM per unit/ constrained resource per unit

Front 15

managerial accounting

Back 15

concerned with providing information to managers- people inside an organization who direct and control its operations

Front 16

performance report

Back 16

report that compares budgeted to actual results

Front 17

decentralization

Back 17

the delegation of decision making authority throughout an organization by giving managers the authority to make decision relating to their area of responsibility

Front 18

lean thinking model

Back 18

a five step management approach that organizes resources such as people and machines around the flow of business processes and that pulls units through these processes in response to customer orders

Front 19

theory of constraints

Back 19

based on the insight that effectively managing the constraint is the key to success

Front 20

six sigma

Back 20

a process improvement method that relies on customer feedback and fact based data gathering and analysis techniques to drive process improvement
associated with term- zero defects
DMAIC- define, measure, analyze, improve, control

Front 21

sarbanes oxley act of 2002

Back 21

intended to protect the interests of those who invest in publicly traded companies by improving the reliability and accuracy of corporate financial reports and disclosures

Front 22

raw materials

Back 22

any materials that are used in the final product

Front 23

manufacturing oh

Back 23

all manufacturing costs except direct materials and direct labor

Front 24

matching principle

Back 24

costs incurred to generate particular revenue should be recognized as expenses in the same period that the revenue is recognized

Front 25

prime cost

Back 25

direct materials cost plus direct labor cost

Front 26

conversion cost

Back 26

direct labor cost plus manufacturing over head

Front 27

cost of goods manufactured

Back 27

consists of the manufacturing costs associated with the goods that were finished during the period

Front 28

absorption costing

Back 28

all manufacturing costs, fixed and variable, are assigned to units of products- units are said to fully absorb manufacturing costs

Front 29

process costing system

Back 29

used in situations where the company produces many unites of a single product for long periods
ex making hot dogs at oscar meyer

Front 30

job order costing system

Back 30

is used in situations where many different products are produced each period

Front 31

bill of materials

Back 31

a document that lists the type and quantity of each type of direct materials needed to complete a unit of product

Front 32

materials requisition form

Back 32

a detailed source document that specifies the type and quantity of materials to be drawn from the storeroom and identifies the job that will be charged for the cost of the materials

Front 33

job cost sheet

Back 33

a form prepared for a job that records the materials, labor, and manufacturing overhead costs charged to that job

Front 34

normal cost system

Back 34

applies over head to jobs by multiplying a predetermined oh rate by the actual amt of the allocation based incurred by the jobs

Front 35

relevant range

Back 35

the range of activity within which the assumptions made about cost behavior are reasonably valid

Front 36

committed fixed costs

Back 36

investments in facilities, equipment, and the basic organization that can't be significantly reduced even for shorter periods of time without making fundamental changes

Front 37

discretionary fixed costs

Back 37

arise from annual decisions by management to spend on certain fixed cost items ex. advertising, research, public relations

Front 38

fixed portion of a mixed cost

Back 38

represents the minimum cost of having a service ready and available for use

Front 39

variable portion of a fixed cost

Back 39

represents the cost incurred for actual compensation of the service

Front 40

account analysis

Back 40

an account is classified as either variable or fixed based on the analyst's prior knowledge of how the cost in the account behaves

Front 41

engineering approach

Back 41

to cost analysis involves a detailed analysis of what cost behavior should be based on an industrial engineer's evaluation of the production methods to be used

Front 42

least squares regression model

Back 42

uses all of the data to separate a mixed cost into its fixed and variable components- computes the regression line that minimizes the sum of the squared errors

Front 43

multiple regression

Back 43

used when the dependent variable is caused by more than one factor

Front 44

contribution approach

Back 44

provides managers with an income statement that clearly distinguishes between fixed and variable costs

Front 45

equation for vc per unit
"b"

Back 45

change in total cost/ change in total activity

Front 46

cost formula

Back 46

y = a +bx

Front 47

break even point

Back 47

level of sales at which profit is zero

Front 48

incremental analysis

Back 48

consider only those items of revenue, cost and volume that will change if the new program is implemented

Front 49

margin of safety

Back 49

the amount above break even

Front 50

operating leverage

Back 50

measures how a given percentage change in sales affects net operating income

Front 51

sales mix

Back 51

refers to the relative proportions in which a company's products are sold

Front 52

CVP analysis

Back 52

how profits respond to prices, costs, and volume

Front 53

degree of operating leverage (equation)

Back 53

contribution margin/ net operating income

Front 54

sales (equation for cvp)

Back 54

sales = vc+ fc+ profit

Front 55

BE in units sold (equation

Back 55

Total FC/ CM per unit

Front 56

BE In sales (equation)

Back 56

Total FC/ Cm ratio

Front 57

# of units sold needed to reach target NI

Back 57

Total fc +NI/ CM per unit

Front 58

# of $ in sales needed to reach target NI

Back 58

Total FC + NI/ CM ratio

Front 59

CM ratio (equation)

Back 59

Contribution Margin / Sales
VAR AND CM RATIOS AND PER UNITS STAY CONSTANT as volume changes, total changes

Front 60

CM income statement (equation)

Back 60

sales - vc = Cm - FC= NI

Front 61

variable costing

Back 61

consists of DM, DL, VMOH (VCOGS)
only those manufacturing costs that vary with output are treated as product costs
"new material"

Front 62

reconciliation

Back 62

V cost NI
+(FOH per unit of current yr X units in end FG inv)
- (FOH per unit of prior yr X units in beg FG inv) = absorption costing NI

Front 63

end inventory for variable costing (equation)

Back 63

units X var cost per unit (product)

Front 64

end inventory for absorption costing

Back 64

units X product cost (absorption cost per unit)

Front 65

activity based costing (ABC)

Back 65

a costing method that is designed to provide managers with cost information for strategic and other decisions that potentially affect capacity and therefore "fixed" as well as variable costs

Front 66

transaction drivers

Back 66

simple counts of the number of times an activity occurs such as the number of bills sent out to cumsters

Front 67

duration drivers

Back 67

measure the amount of time required to perform an activity such as the time spent preparing individual bills for customers

Front 68

activity based management

Back 68

involves focusing on activities to eliminate waste, decrease processing time, and reduce defects

Front 69

benchmarking

Back 69

a systematic approach to identifying the activities with the greatest room for improvement

Front 70

two stages of budgeting

Back 70

planning :developing future objectives
control: involves steps taken by management to attain the objectives down at the planning stage

Front 71

variances

Back 71

differences between standard prices and actual prices and between standard quantities and actual quantities

Front 72

std quantity allowed or std hours

Back 72

the amount of an input that should have been used to produce the actual output of the period

Front 73

balanced scorecard

Back 73

consists of an integrated set of performance measures that are derived from and support the company's strategy throughout the organization

Front 74

manufacturing cycle efficiency (MCE)

Back 74

value added time (process time) / throughput (manufacturing cycle) time
-cant be greater than 1
-lower MCE less time spent adding value to the product

Front 75

standard quantity allowed
(equation)

Back 75

the amount of materials, labor, or overhead that should have been used to complete the ACTUAL output of the period
SQA= std for 1 unit X actual units produced

Front 76

throughput time

Back 76

process time+ inspection time+ move time +queue time
add wait = delivery cycle time

Front 77

static budget

Back 77

prepared at the beginning of the budgeting period and is valid for only the planned level of activity

Front 78

flexible budget

Back 78

a budget that recognizes that a budget can be adjusted to show what costs should be for the actual level of activity

Front 79

SR for fixed overhead activity

Back 79

SR= FOH budget costs / denominator activity

Front 80

traceable fixed cost

Back 80

fixed costs that will NOT happen if the segment disappears (avoidable)

Front 81

common fixed cost

Back 81

a FC that supports the operations of more than one segment, but is not traceable in whole or in part to any one segment

Front 82

segment

Back 82

a part or activity of an organization about which managers would like cost, revenue, or profit data
ex. product lines, sales territories, individual stores

Front 83

residual income equation

Back 83

NOI -(avg op assets X min Required rate of return )