Managerial Accounting Final

Front 1

Capital Budget

Back 1

the final list of approved projects

Front 2

Capital budgeting decisions

Back 2

Investment decisions

Front 3

Capital expenditure decisions

Back 3

Investment decisions involving the acquisition of long-lived assets

Front 4

Net present Value

Back 4

the sum of the present values of all cash flows

Front 5

Required Rate of Return

Back 5

the minimum return that top management wants to earn on investments

Front 6

Internal Rate of Return

Back 6

The rate of return that equates the present value of future cash flows to the investment outlay

Front 7

Cost of Capital

Back 7

The weighted average of the costs of debt and equity financing used to generate capital for investments.

Front 8

Depreciation Tax Shield

Back 8

the tax savings resulting from depreciation

Front 9

Accounting rate of return

Back 9

the average after-tax income from a project divided by the average investment in the project

Front 10

Payback Period

Back 10

The length of time it takes to recover the inital cost of an investment

Front 11

Budgets

Back 11

formal documents that quantify a company's plan for achieving its goals

Front 12

Flexible budget

Back 12

a set of budget relationships that can be adjusted to various activity levels

Front 13

Slack

Back 13

a budget with targets that are easy to achieve

Front 14

Budget committee

Back 14

the group within a company that is responsible for approval of various budgets

Front 15

Management by exception

Back 15

only exceptional variences from the budget are investigated

Front 16

Static budget

Back 16

a budget that is not adjusted for the acual leval of production

Front 17

Budget variences

Back 17

Differences between budgeted and actual amounts

Front 18

Master Budget

Back 18

a comprehensive planning document that incorporates a number of individual budgets

Front 19

Zero-based budgeting

Back 19

a method of budget preparation that requires budgeted amoundts to be justified by each period at the start of each budget period, even if the amounts were supported in prior budget periods.

Front 20

Standard cost

Back 20

the cost that management believes should be incurred to produce a good or service under anticipated conditions

Front 21

Budgeted cost

Back 21

the cost of a single unit

Front 22

Attainable Standards

Back 22

standard costs that take into account the possibility that a variety of circumstances may lead to costs that are greater than ideal

Front 23

Ideal Standards

Back 23

costing standards developed under the assumption that no obstacles to the production process will be encountered

Front 24

Standard Cost Vairence

Back 24

analysis between the difference between a standard and an actual cost

Front 25

Variance Analysis

Back 25

breaking down the difference between standard and actual cost into two components (material price material quality, labor rate and labor efficiency)

Front 26

Material price variance

Back 26

equal to the difference between the actual price per unit of material and the standard price per unit of the material times the actual quantity of material purchased

Front 27

Material quantity variance

Back 27

equal to the difference between the actual quantity of material used and the standard quantity of material allowed for the number of units produced times the standard price

Front 28

Labor rate variance

Back 28

equal to the difference between the actual wage rate and the standard wage rate times the actual number of labor hours worked

Front 29

Labor Efficiency Varience

Back 29

equal to the difference between the actual number of hours worked and the standard labor hours allowed for the number of units produced times the standard labor wage rate

Front 30

controllable overhead varience

Back 30

the difference between the actual amount of overhead and the amount of overhead that would be included in a flexible budget for the actual level of production

Front 31

overhead volume varience

Back 31

equal to the difference between the amount of overhead included in the flexible budget and the amount of overhead applied to production using the standard overhead rate

Front 32

Decentralized organizations

Back 32

a firm that grants substantial decision-making authority to managers of sub units

Front 33

Lack of goal congruence

Back 33

managers of subunits may pursue peronal goals that are incompatible with goals of the company as a whole

Front 34

Responsiblity centers

Back 34

a subunit (department, subsidiary, or a division)

Front 35

Cost center

Back 35

a subunit that has responsibility for controlling costs but does not have responsiblity for generating revenue

Front 36

Investment Center

Back 36

a subunit that is responsible for generating revenue, controlling costs, and investing in assets

Front 37

Profit Center

Back 37

a subunit that has responsibility for generating revenue as well as for controlling costs

Front 38

Relative performance evaluation

Back 38

evaluating the profitibility of each profit center relative to the profitiblity of other, similar profit centers

Front 39

Return on investment

Back 39

the ratio of investment center income to invested capital

Front 40

Profit margin

Back 40

The ratio of income to sales

Front 41

Investment turnover

Back 41

the ratio of sales to invested capital

Front 42

Net operating profit after taxes

Back 42

investment center income

Front 43

Noninterest-bearing current liabilities

Back 43

current liabilities that do not require interest payments (accounts payable, income taxes payable, accrued liabilities, etc.)

Front 44

Residual income

Back 44

the net operating profit after taxes of an investment center in excess of its required profit

Front 45

Economic value added

Back 45

developed by stern stewart that accounts for accounting distortions that arise from following gaap

Front 46

Balanced Scorecard

Back 46

a set of performance measures constructed for four dimensions of performance (financial, customer, and internal process perspectives and learning and growth)

Front 47

Strategy map

Back 47

a diagram of the relationships across the four dimenstions of a balanced scorecard

Front 48

Transfer price

Back 48

the price that is used to value internal transfers of goods or services

Front 49

Horizontal analysis

Back 49

analyzing the dollar value and percentage changes in financial statment amounts across time

Front 50

vertical analysis

Back 50

analyzing financial statment amounts in comparison to a base amount

Front 51

Management discussion and analysis

Back 51

the section that management provides stockholders and other financial statement users with explanations for financial results that are not obvious simply from reading the basic financial statements

Front 52

Financial leverage

Back 52

the use of debt financing to acquire assets