Comprehensive Vocabulary

Front 1

A summary of a company's plans in which specific targets are set for sales, production, distribution, and financing activities and that generally culminates in a cash budget, budgeted income statement, and budgeted balance sheet.

Back 1

Master Budget

Front 2

The excess of budgeted (or actual) sales over the break-even volume of sales

Back 2

Margin of Safety

Front 3

A fixed cost that is incurred because of the existence of a particular business segment and would be eliminated if the segment were eliminated.

Back 3

Traceable fixed costs

Front 4

Any part or activity about which the manager seeks cost, revenue, or profit data.

Back 4

Segment

Front 5

Percentage of total sales

Back 5

Contribution Margin Ratio

Front 6

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.

Back 6

Common fixed Costs

Front 7

Point where total sales equals total expenses or where total contribution margin equals total fixed expenses.

Back 7

Break even

Front 8

A detailed plan for the acquisition and use of financial and other resources over a specific time.

Back 8

Budget

Front 9

Method of budgeting in which managers are required to justify all costs as if the programs involved were being proposed for the first time.

Back 9

Zero based Budgeting

Front 10

A measure of how sensitive net operating income is to a given percentage change in sales. It is computed by dividing the contribution margin by net operating income.

Back 10

Operating Leverage

Front 11

GAAP is not mandatory

Back 11

Managerial Accounting

Front 12

Direct labor + Manufacturing overhead

Back 12

Conversion Costs

Front 13

This is made up of units of product that are only partially complete and will require further work before they are ready for sale to a customer.

Back 13

Work in progress

Front 14

These are factory labor costs that can be easily traced to individual units of product.

Back 14

Direct Labor

Front 15

Used to charge overhead costs to jobs; established in advance for each period using estimates of total manufacturing overhead cost and of the total allocation base for the period.

Back 15

Predetermined overhead rate

Front 16

Range of activity within which assumptions about variable and fixed cost behavior are valid.

Back 16

Relevant range

Front 17

Contains both variable and fixed costs.

Back 17

Mixed Costs

Front 18

A measure of whatever causes the incurrence of a variable cost. For example, the total cost of x-ray film in a hospital will increase as the number of x-rays taken increases.

Back 18

Activity Base

Front 19

These are small items of material such as glue and nails that may become and integral part of a a finished product bust are traceable to the product only at great cost or inconvenience.

Back 19

Indirect materials

Front 20

A cost incurred in the past that is not relevant to any current decision.

Back 20

Sunk

Front 21

All transactions (other than interest payments) involving borrowing from creditors or repaying creditors as well as transactions with the company's owners.

Back 21

Financing Activities

Front 22

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

Back 22

Sunk Cost

Front 23

Any cost that differs between alternatives in a decision-making situation. The term is synonymous with avoidable cost and relevant cost.

Back 23

Differential Cost

Front 24

That point in the manufacturing process where some or all of the joint products can be recognized as individual products.

Back 24

Split off point

Front 25

Activities that affect current assets, current liabilities, or net income.

Back 25

Operating Activities

Front 26

Two or more products that are produced from a common input.

Back 26

Joint Products

Front 27

Short term highly liquid investments such as treasury bills, commercial paper, and money market funds.

Back 27

Cash Equivalents

Front 28

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

Back 28

Avoidable Cost

Front 29

Synonymous with differential and avoidable costs.

Back 29

Incremental Costs

Front 30

Included dividends paid to owners.

Back 30

Financing Activities

Front 31

A method of computing the net cash provided by operating activities, investing activities, and financing activities.

Back 31

Indirect Method

Front 32

An action that increases the amount of a constrained resource.

Back 32

Relaxing the Constraint

Front 33

A financial statement that highlights the major activities that impact cash flows and effect the overall cash balance.

Back 33

Statement of Cash Flows

Front 34

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

Back 34

Bottleneck

Front 35

A cost that differs between alternatives in a decision.

Back 35

Relevant Cost

Front 36

Begins with net income and adjustments for depreciation expense.

Back 36

Operating Activities

Front 37

Includes marketable securities and other short term investments with a 90 day or less maturity.

Back 37

Cash Equivalents

Front 38

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.

Back 38

Volume Variance

Front 39

Name of the variance that can occur for direct labor or variable overhead and is the indicator of the time actually spent and the time allowed given the actual output achieved.

Back 39

Efficiency Variance

Front 40

A budget created at the beginning of the budgeting period that is valid only for the planned level of activity.

Back 40

Planning or Static Budget

Front 41

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.

Back 41

Standard Cost Card

Front 42

Difference between budgeted fixed overhead and actual fixed overhead.

Back 42

Budget Variance

Front 43

The activity figure used to compute the predetermined overhead rate.

Back 43

Denominator Activity

Front 44

Use of this type of budget for performance evaluations is not advised due to the fact that it may never be achieved and negatively affect moral among the workers.

Back 44

Ideal Budget

Front 45

Standards that allow for no machine breakdowns or other work interruptions and that require peak efficiency at all times.

Back 45

Ideal Standards

Front 46

A budget that is designed to cover a range of activity and that can be used to develop budgeted cost at any point within the range to compare to actual cost incurred.

Back 46

Flexible Budget

Front 47

The amount of materials that should have been used to compute the the periods actual output, it is computed by multiplying the actual number of units produced by the standards quantity per unit.

Back 47

Standard quantity allowed

Front 48

The amount of an input that should be required to compete a single unit of product, including allowance for normal waste, spoilage, rejects

Back 48

Standard quantity per unit

Front 49

A management system in which standards are set for various activities, with actual results compared to these standards. Significant deviations from standards are flagged as exceptions.

Back 49

Management by Exception

Front 50

A detailed plan showing the production costs, other than direct materials and direct labor, that will be incurred over a specific time period.

Back 50

Overhead Budget

Front 51

A variance that is computed by taking the differences between the actual price and the standard price and multiplying the result by the actual quantity of the input.

Back 51

Price Variance

Front 52

Consists of direct materials and direct labor

Back 52

Prime Cost

Front 53

Consists of direct labor and manufacturing overhead

Back 53

Conversion Cost

Front 54

A cost that cannot easily and conveniently traced to the cost object

Back 54

Indirect Cost

Front 55

Used in situations when many different products or services are produced each period.

Back 55

Job order costing

Front 56

A measure of activity, such as direct labor hours, direct labor cost, or machine hours that all have jobs in common.

Back 56

Allocation Base

Front 57

Shows the profitability of a segment after it has covered all of the costs that can be traced to it.

Back 57

Segment Margin

Front 58

Details the amount of raw materials that must be acquired to support production and to provide for adequate inventories.

Back 58

Direct Materials Budget

Front 59

The net cash provided by operating activities less capital expenditures and dividends

Back 59

Free Cash Flow