Managerial Accounting Final

Front 1

Balanced Scorecard

Back 1

An integrated set of performance measures that are derived from and support the organizations strategy.

Front 2

Cost Center

Back 2

A business segment whose manager has control over cost but has no control over revenue or investments in operating assets.

Front 3

Decentralized organization

Back 3

An organization in which decision-making authority is not confined to a few top executives but rather is spread throughout the organization.

Front 4

Delivery Cycle Time

Back 4

The elapsed time from receipt of a customer order to when the completed goods are shipped to the customer

Front 5

Investment Center

Back 5

A business segment whose manager has control over cost, revenue, and investments in operating assets.

Front 6

Manufacturing Cycle efficiency

Back 6

Process (value added) time as a percentage of through-put time

Front 7

Margin

Back 7

Net operating income / Sales

Front 8

Net Operating Income

Back 8

Income before interest and income taxes have been deducted.

Front 9

Operating assets

Back 9

Cash, accounts recievable, inventory, plant and equipment, and all other assets held for operating purposes.

Front 10

Profit Center

Back 10

A business segment whose manager has control over cost and revenue but has no control over investments in operating assets.

Front 11

Residual Income

Back 11

The net operating income that an investment center earns above the minimum required return on its operating assets

Front 12

Responsibility Center

Back 12

Any business segment whose manager has control over costs, revenues or investments in operating assets.

Front 13

Return on Investment (ROI)

Back 13

Net operating income / Average operating assets. It also equals Margin x Turnover

Front 14

Throughput time

Back 14

The amount of time required to turn raw materials into completed products

Front 15

Turnover

Back 15

Sales / Average operating Assets

Front 16

Operating Department

Back 16

A department in which the central purposes of the organization are carried out.

Front 17

Service department

Back 17

A department that does not directly engage in operating activities, rather, it provides services or assistance to the operating departments.

Front 18

Avoidable Cost

Back 18

A cost that can be eliminated by choosing one alternative over another in a decision. This term is synonymous with relevant cost

Front 19

Bottleneck

Back 19

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

Front 20

Constraint

Back 20

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

Front 21

Join costs

Back 21

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

Front 22

Joint products

Back 22

Two or more products that produced from a common input

Front 23

Make or Buy Decision

Back 23

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

Front 24

Relaxing or elevating the constraint

Back 24

An action that increases the amount of a contrained resource. Equivalently, an action that increases the capacity of a bottleneck

Front 25

Relevant benefit

Back 25

A benefit that differs between alternatives in a decision. Synonyms are avoidable cost, differential cost, and incremental cost.

Front 26

Sel or process further decision

Back 26

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

Front 27

Special Order

Back 27

A one time order that is not considered part of the companys normal ongoing businesses.

Front 28

Split-off point

Back 28

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

Front 29

Sunk Cost

Back 29

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

Front 30

Vertical integration

Back 30

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 31

Capital Budgeting

Back 31

The process of planning significant investments in projects that have long term implications such as the purchase of new equipment or the introduction of a new product

Front 32

Cost of capital

Back 32

The average rate of return a company must pay to its long term creditors and shareholders for the use of their funds

Front 33

Internal rate of return

Back 33

The discount rate at which the net present value of an investment project is zero; the rate of return of a project over its useful life.

Front 34

Net present value

Back 34

The difference between the present value of an investment projects cash inflows and the present value of its cash outflows

Front 35

Out-of-pocket costs

Back 35

actual cash outlays for salaries, advetising, repairs and similar costs

Front 36

Payback period

Back 36

The length of time that it takes for a project to fully recover its initial cost out of the net cash inflows that it generates.

Front 37

postaudit

Back 37

the follow up after a project has been approved and implemented to determine whether expected results were actually realized

Front 38

Preference decision

Back 38

A decision in which the alternatives must be ranked

Front 39

Project profitability index

Back 39

The ratio of the net present value of a projects cash flows to the investment project is acceptable

Front 40

Simple rate of return

Back 40

The rate of return computed by dividing a projects annual incremental accounting net operating income by the initial investment required.

Front 41

Working capital

Back 41

Current assets less current liabilities.

Front 42

Materials Quantity Variance

Back 42

(AQ used x SP) - (SQ x SP)

Front 43

Materials Price Variance

Back 43

(AQ Purchased x AP) - (AQ Purchased X SP)

Front 44

Variable Overhead Rate Variance

Back 44

AH ( AR - SR )

Front 45

Variable Overhead efficiency Variance

Back 45

( AH - SH ) SR

Front 46

Labor Rate Variance

Back 46

AH ( AR - SR)

Front 47

Labor Efficiency Variance

Back 47

( AH - SH ) SR

Front 48

Materials Price Variance

Back 48

AQ ( AP - SP )

Front 49

Materials Quantity Variance

Back 49

( AQ - SQ ) SP