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planning

process of setting goals and preparing to achieve them

managerial accounting

area of accounting aimed mainly at serving the decision making needs of internal users

control

process of monitoring planning decisions and evaluating the organization's activities and employees

ethics

codes of conduct by whichactions are judged as right or wrong, fair or unfair, honest or dishonest

Institute of Management Accountants

a professional association of management accountants

fixed cost

cost that does not change with changes in the volume of activity

variable cost

cost that changes in proportion to changes in the activity output volume

cost object

product, process, department, or customer to which costs are assigned

direct costs

costs incurred for the benefit of one specific cost object

indirect costs

costs incurred for the benefit of more than one cost object

controllable costs

costs that a manager has the power to control or at least strongly influence

sunk cost

cost already incurred and cannot be avoided or changed

opportunity cost

potential benefit lost by choosing a specific action from two or more alternatives

product costs

costs that are capitalized as inventory because they produce benefits expected to have future value; include direct materials, direct labor, and overhead

period costs

expenditures identified more with a time period than with finished product costs; including selling and general administrative expenses

raw materials inventory

goods a company acquires to use in making products

indirect materials

material used to support the production process but not clearly identified with products or batches of product

goods in process inventory

account in which costs are accumulated for products that are in the process of being produced but are not yet complete

finished goods inventory

account that controls the finished goods files, which acts as a subsidiary ledger in which the costs of finished goods that are ready for sale are recorded

direct materials cost

expenditures for direct material that are seperately and readily traced through the production process to finished goods

direct labor

efforts of employees who physically convert materials to finished product

direct labor costs

wasges and salaries for directlabor that are seperately and readily traced through the production process to finished goods

indirect labor costs

labor costs that cannotbe physically traced to production of a product or service; included as part of overhead

indirect labor

efforts of production employees who do not work specifically on converting direct materials into finished products and who are not clearly identified with specific units or batches of product

factory overhead

factory activities supporting the production process that are not direct material or direct labor

factory overhead costs

expenditures for factory overhead that cannot be seperately or readily traced to finished products

prime costs

expenditures directly identified with the production of finished goods; include direct materials costs and direct labor costs

conversion costs

expenditures incurred in converting raw materials to finished goods; include direct materials costs and direct labor costs

manufactoring statement

report that summarizes the types and amounts of costs incurred in a companys production process for a period

lean business model

practiceof eliminating waste while meeting customer needs and yielding positive customer returns

customer orientation

company position that its managersand employees be in tune with the changing wants and needs of customers

continous improvement

concept requiring every manager and employee continually to look to improve operations

total quality management

concept requiring for all managers and employees at all stages and operations to strive toward higher standards and reduce number of defects

just in time manufacturing

process of acquiring or producing inventory only when needed

value chain

sequential activities that add value to an entity's products or services; include design, production, marketing, distribution

not controllable costs

costs that a manager does not have power to control or strongly influence

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