Strategic Managerial Accounting

Front 1

Differential Costs

Back 1

Costs that change in response to a particular course of action

Front 2

Differential Revenues

Back 2

Revenues that change in response to a particular course of action

Front 3

Fixed Costs

Back 3

Costs that are unchanged as volume changes within the relevant range of activity

Front 4

Variable Costs

Back 4

Costs that change in direct proportion with a change in volume within the relevant range of activity.

Front 5

Relevant Range

Back 5

Activity levels within which a given total fixed cost or unit variable cost will be unchanged

Front 6

Product Costs

Back 6

Costs assigned to the manufacture of products and recognized for financial reporting when sold.

Front 7

Direct Manufacturing Costs

Back 7

Product costs that can be feasibly identified with units of production.

Front 8

Direct Materials

Back 8

Those materials that can feasibly be identified directly with the product.

Front 9

Direct Labor

Back 9

Work that actually transforms materials into finished products during the production process.

Front 10

Indirect Manufacturing Costs

Back 10

All product costs except direct costs.

Front 11

Manufacturing Overhead

Back 11

All production costs except direct labor and direct materials.

Front 12

Prime Costs

Back 12

Sum of direct materials and direct labor.

Front 13

Conversion Costs

Back 13

Sum of direct labor and manufacturing overhead.

Front 14

Period costs

Back 14

Costs recognized for financial reporting when incurred

Front 15

Cost Allocation

Back 15

Process of assigning indirect costs to products, services, people, business units, etc.

Front 16

Cost Pool

Back 16

Collection of costs to be assigned to the cost objects.

Front 17

Full Absorption Cost

Back 17

All variable and fixed manufacturing costs; used to compute a product's inventory value under GAAP.

Front 18

Analysis Paralysis

Back 18

The state of over-analyzing or overthinking a situation.

Front 19

Purchase Price Variance

Back 19

Price variance based on the quantity of materials purchased.

Front 20

Production Mix Variance

Back 20

Variance that arises from a change in the relative proportion of inputs (a materials or labor mix variance).

Front 21

Production Yield Variance

Back 21

The difference between expected output from a given level of inputs and the actual output obtained from those inputs.

Front 22

Impact

Back 22

The likely monetary effect from an activity (such as variance).

Front 23

Controlability

Back 23

The extent to which an item can be managed.

Front 24

Management by exception

Back 24

An approach to management requiring that reports emphasize the deviation from an accepted base point, such as a standard, a budget, an industry average, or a prior period experience.

Front 25

Transfer Price

Back 25

The value assigned to the goods or services sold or rented (transferred) from one unit of an organization to another.

Front 26

Market Price based transfer pricing

Back 26

A transfer pricing policy that sets the transfer price at the market price or a small discount from the market price.

Front 27

Cost Plus Transfer Pricing

Back 27

A transfer pricing policy based on a measure of cost (full costing or variable costing, actual or standard cost) plus an allowance for profit.

Front 28

Dual transfer pricing

Back 28

A transfer pricing system that charges the buying division with costs only and credits the selling division with cost plus some profit allowance.

Front 29

Negotiated Transfer Pricing

Back 29

A system that arrives at the transfer prices through negotiation between managers of buying and selling divisions.

Front 30

Operating Budget

Back 30

Part of the master budget that includes budgeted income statement, production budget, budgeted cost of goods sold, and supporting budgets.

Front 31

Financial Budgets

Back 31

Part of the master budget that includes budgets of financial resources, cash and the balance sheet.

Front 32

Variance

Back 32

The difference between planned result and actual outcome.

Front 33

Favorable Variance

Back 33

The variance that, taken alone, results in an addition to operating profit.

Front 34

Unfavorable Variance

Back 34

The variance that, taken alone, reduces operating profit.

Front 35

Static Budget

Back 35

Budget for one level of anticipated activity usually the master budget.

Front 36

Flexible Budget

Back 36

Expected monthly costs at different output levels.

Front 37

Sales Activity Variance

Back 37

The difference between operating profit in the master budget and operating profit in the flexible budget that arises because the actual number of units sold is different from the budgeted number.

Front 38

Profit Variance Analysis

Back 38

Analysis of the causes of differences between budgeted profits and the actual profits earned.

Front 39

Sales Price Variance

Back 39

The difference between the actual revenue and budgeted selling price multiplied by the actual number of units sold.

Front 40

Standard Cost Sheet

Back 40

A form that provides standard quantities of inputs (direct material, direct labor, and variable production overhead) required to produce a unit of output and the standard budgeted unit prices for the inputs.

Front 41

Cost Variance Analysis

Back 41

Comparison of actual input amounts and prices with standard input amounts and prices.

Front 42

Price Variance

Back 42

The difference between actual costs and budgeted costs arising from changes in the cost of inputs to a production process or other activity.

Front 43

Efficiency Variance

Back 43

The difference between budgeted and actual results arising from differences between the inputs that were budgeted per unit of output and the inputs actually used.

Front 44

Total Cost Variance

Back 44

The difference between budgeted and actual results (equal to the sum of the price and efficiency variances)

Front 45

Flexible production budget

Back 45

Standard input price times standard quantity of input allowed for actual good output.

Front 46

Spending (or Budget) Variance

Back 46

The price variance for fixed overhead.

Front 47

Production Volume Variance

Back 47

The difference between the applied fixed overhead and the budgeted fixed overhead.