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66 Cards in this Set
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- Back
- 3rd side (hint)
Moving Inventory |
An example of a non value-added activity |
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Activity-based Costing |
The costing method that first assigns costs to activities, and then assigns them to products based on the products' consumption of activities |
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Cost Accounting |
Type of accounting that emphasizes relevancy over comparability |
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Value Chain |
The linked sequence of activities that create value for the customer |
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Differential Revenue |
Revenue that changes in response to a particular course of action |
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Just-In-Time Method |
An inventory flow system that minimizes the amount of inventory on hand |
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Cost Driver |
A factor that causes cost |
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Total Quality Management |
The method by which an organization seeks to excel in all demensions, with the customer defining quality. |
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Benchmarking |
The process of measuring a company's products and activities against competitors' performance |
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Differential Cost |
A cost that changes in response to a particular course of action |
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Value-added Activity |
A unit of work that contributes to a product's ability to satisfy customer needs |
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Cost-Benefit Analysis |
The process of comparing the benefits with the costs associated with a proposed change |
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Responsibility Center |
A unit of an organization assigned to a manager who is held accountable for its operations |
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Contribution Margin |
Sales less variable costs |
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Variable Cost |
Costs that vary in direct proportion with changes in the activity level |
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Cost |
A sacrifice of resources |
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Gross Margin |
Revenue less cost of goods sold |
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Expense |
The cost charged against revenue in a particular accounting period |
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Product Cost |
Costs assigned to products that are expensed when the unit is sold |
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Semivariable Cost |
Costs that have a fixed AND variable component |
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Indirect Cost |
Costs that cannot be directly related to a cost object |
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Direct Cost |
Costs that can be directly related to a cost object |
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Operating Leverage |
The extent to which an organization's cost structure consists of fixed costs |
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Fixed Cost |
Costs that remain the same in total regardless of the activity level |
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Step Cost |
Costs that increase with volume in steps |
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Opportunity Cost |
The lost benefit from the best forgone alternative |
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Outlay Cost |
Past, present, or near future cash flow |
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Full Absorption Costing |
Manufacturing costs used to calculate inventory value under GAAP |
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Period Cost |
Costs that can be easily attributable to time intervals |
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Operating Profit Formula |
Total Revenues - Total Costs |
Profit = TR - TC |
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Total Revenue Formula |
Price × Units of output produced and sold |
TR = PX |
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Total Costs Formula |
(Variable costs per unit × Unit of output) + Fixed Costs |
TC = VX + F |
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Total Contribution Margin Formula |
Total sales - Total variable costs |
Total Contribution Margin = P - V |
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Unit Contribution Margin Formula |
Unit Selling Price - Unit Variable Cost |
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Contribution Margin Ratio Formula |
Unit Contribution Margin ÷ Unit Sales Price |
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Break-even Point in Units Formula |
Fixed Costs ÷ Unit Contribution Margin |
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Break-even Point in Sales Dollars Formula |
Fixed Costs ÷ Contribution Margin Ratio |
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Target Volume in Units Formula |
(Fixed Costs + Target Profit) ÷ Contribution Margin |
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Target Volume in Sales Dollars Formula |
(Fixed Costs + Target Profit) ÷ Contribution Margin Ratio |
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Margin of Safety Formula |
Sales Volume - Break-even sales Volume |
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Margin of Safety Percentage Formula |
Margin of Safety ÷ Sales |
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Differential Analysis |
Method used to determine how costs will be affected if one alternative is chosen over another |
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High-low Cost Estimation |
Method of estimating costs based on the highest and lowest points in the data set |
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Engineering Estimate |
Method of cost estimation that utilizes a detailed step-by-step analysis of the process involved |
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Scattergraph |
Graph that plots costs against activity levels |
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Relevant Range |
Range of data over which assumptions are assumed to be valid |
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Account Analysis |
Method of estimating costs that reviews each account making up the total cost being analyzed |
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Sunk Costs |
Costs incurred in the past that cannot be changed by present or future decisions. |
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Operation Costing |
Hybrid costing system used in manufacturing goods that have some common characteristics. |
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Cost Management System |
System to provide information about the costs of process, products, and services used and produced by an organization |
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Job Costing |
Accumulates cost for a particular job which is uniquely identifiable. |
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Predetermined Overhead Cost |
Cost per unit of the allocation base used to charge overhead to products |
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Cost Flow Diagram |
Picture representing the flow of costs to each product |
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Continuous Flow Processing |
System that generally mass-produces a single homogeneous output in a continuous process |
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Allocation Basis |
The link that connects activity to the level of overhead incurred |
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Process Costing |
Assigns costs to indistinguishable products as they pass through a series of unique processes |
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Two-stage Cost Allocation |
Process of first allocation costs to intermediate cost pools and then to the individual cost objects using different allocation bases. |
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Master Budget |
Financial plan of an organization for the coming year or other planning period |
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Organizational Goals |
Company's broad objectives established by management that employees work to achieve |
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Budget |
Financial plan of the resources needed to carry out activites and meet financial goals |
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Participative Budgeting |
Use of input from lower and middle management employees |
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Delphi Technique |
Forecasting method in which individual forecasts of group members are submitted anonymously and evaluated by the group as a whole |
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Budgeted Balance Sheets |
Statement of budgeted financial position |
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Production Budget |
Production plan of resources needed to meet current sales demand and ensure that inventory levels are sufficient for future sales |
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Strategic Long-range Plan |
Statement detailing steps to take to achieve a company's organization goals |
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Trend Analysis |
Forecasting method that ranges from simple visual extrapolations of point on a graph to highly sophisticated computerized time series analysis |
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