Managerial Accounting Exam 1
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johneastman on February 12, 2012
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Chapters 1-5 vocab
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117 terms
Terms | Definitions |
|---|---|
 activity accounting | the collection of financial or operational performance information about significant activities in an enterprise |
| activity-based costing | two-stage procedure used to assign overhead costs. First stage - significant activities identified, overhead costs assigned to activity cost pools. Second stage - overhead costs allocated from each cost pool to product line in proportion to amount of cost driver consumed |
| activity-based management | using an activity-based costing system to improve the operations of an organization |
| attention-directing function | the function of managerial accounting information in pointing out to managers issues that need their attention |
| balanced scorecard | model of business performance evaluation that balances measures of financial performance, internal operations, innovation and learning, and customer satisfaction |
| capacity | the upper limit on the amount of goods/services that an organization can produce in a specified period of time |
| Certified Management Accountant (CMA) | accountant who has earned professional certification in managerial accounting |
| chief financial officer (CFO) | an organization's top managerial and financial accountant |
| continuous improvement | the constant effort to eliminate waste, reduce response time, simplify design, and improve quality and customer service |
| controller (or comptroller) | supervises the accounting department and assists management at all levels in interpreting and using managerial-accounting info |
| cost accounting system | part of the basic accounting system that accumulates costs for use in both managerial and financial accounting |
| cost driver | a characteristic of an activity or event that results in the incurrence of costs by that activity or event |
| cost management system (CMS) | a management planning and controlling system that measures the cost of significant activities, identifies non-value-added costs, and identifies activities that will improve organizational performance |
| empowerment | the concept of encouraging and authorizing workers to take the initiative to improve operations, reduce costs, and improve product quality and customer service |
| financial accounting | the use of accounting information for reporting to parties outside the organization |
| internal auditor | an accountant who reviews the accounting procedures, records, and reports in both the controller's and treasurer's areas of responsibility |
| kaizen costing | the process of cost reduction during the manufacturing phase of a product; refers to continual and gradual improvement through small betterment activities |
| line positions | positions held by managers directly involved in providing the goods or services that constitute an organization's primary goals |
| managerial accounting | the process of identifying, measuring, analyzing, interpreting, and communicating information in pursuit of an organization's goals |
| non-value-added costs | the costs of activities that can be eliminated without deterioration of product quality, performance, or perceived value |
| practical capacity | the upper limit on the amount of goods or services that an organization can produce in a time period, allowing for normal occurrences such as machine down-time and employee fatigue or illness |
| staff positions | positions held by managers who are only indirectly involved in producing an organization's product or service |
| strategic cost management | overall recognition of the cost relationships among the activities in the value chain, and the process of managing those cost relationships to a firm's advantage |
| theory of constraints | a management approach that focuses on identifying and relaxing the constraints that limit an organization's ability to reach a higher level of goal attainment |
| total quality management (TQM) | broad set of management and control processes designed to focus an entire organization on doing the best possible job of satisfying the customer |
| treasurer | an accountant in a staff position who is responsible for managing relationships with investors and creditors and maintaining custody of cash, investments, and other assets |
| value chain | an organization's set of linked, value-creating activities |
| activity | a measure of an organization's output of goods or services |
| average cost per unit | total cost of producing a particular quantity of product ÷ # of units produced |
| controllable cost | a cost that is subject to the control or substantial influence of a particular individual |
| conversion costs | direct-labor cost plus manufacturing-overhead costs |
| cost | the sacrifice made, usually measured by the resources given up, to achieve a particular purpose |
| cost objects | responsibility centers, products, or services to which costs are assigned |
| cost of goods manufactured | the total cost of DM, DL, and MOH transferred from Work-in-Process to Finished Goods Inventory during an accounting period |
| cost of goods sold | the expense measured by the cost of the finished goods sold during a period of time |
| differential cost | the difference in a cost item under two decision alternatives |
| direct cost | a cost that can be traced to a particular department or other subunit of an org. |
| direct-labor cost | costs of salaries, wages, and fringe benefits for personnel who work directly on the manufactured products |
| direct material | raw material that is physically incorporated in the finished product |
| expense | the consumption of assets for the purpose of generating revenue |
| finished goods | completed products awaiting sale |
| fixed cost | a cost that does not change in total as activity changes |
| idle time | unproductive time spent by employees due to factors beyond their control; added to MOH |
| incremental cost | the increase in cost from one alternative to another |
| indirect cost | a cost that cannot be traced to a particular department |
| indirect labor | all costs of compensating employees who do not work directly on the firm's product but who are necessary for production to occur |
| indirect materials | materials that either are required for the production process to occur but do not become an integral part of the finished product, or are consumed in production but significant in cost |
| inventoriable cost | goods that can be stored before sale |
| manufacturing overhead | all manufacturing costs other that direct-material and direct-labor costs |
| marginal cost | the extra cost incurred in producing one additional output of unit |
| mass customization | a manufacturing environment in which many standardized components are combined to produce custom-made products to customer order |
| operating expenses | costs incurred to produce and sell services, such as transportation, repair, financial, or medical services |
| opportunity cost | the potential benefit given up when the choice of one action precludes selection of a different action |
| out-of-pocket costs | costs incurred that require the expenditure of cash or other assets |
| overtime premium | the extra compensation paid to an employee who works beyond the normal period of time; added to MOH |
| period costs | costs that are expensed during the time period in which they are incurred |
| prime costs | the costs of direct material and direct labor |
| product cost | cost associated with goods for sale until the time period during which the products are sold, at which time the costs become expenses |
| raw material | material entered into a manufacturing process |
| schedule of cost of goods manufactured | detailed schedule showing the manufacturing costs incurred during an accounting period and the change in work-in-process inventory |
| schedule of cost of goods sold | detailed schedule showing the costs of goods sold and the change in finished-goods inventory during an accounting period |
| service departments | subunits in an organization that are not involved directly in producing the organization's output of goods/services |
| sunk costs | costs that were incurred in the past and cannot be altered by any current or future decision |
| variable cost | a cost that changes in total in direct proportion to a change in an organization's activity |
| work in process | partially completed products that are not yet ready for sale |
| activity base | measure of an organization's activity that is used as a basis for specifying cost behavior; used to compute predetermined overhead rate |
| actual costing | product-costing system in which actual DM, DL, and actual MOHare added to Work-in-Process Inventory |
| actual manufacturing overhead | the actual costs incurred during an accounting period for MOH |
| applied manufacturing overhead | amount of MOH costs added to Work-In-Process Inventory during an accounting period |
| bill of materials | list of all the materials needed to manufacture a product or product component |
| cost distribution | the first step in assigning MOH costs; overhead costs are assigned to all departmental overhead centers |
| departmental overhead centers | any department to which overhead costs are assigned via overhead cost distribution |
| departmental overhead rate | an overhead rate calculated for a single production department |
| job-cost record | document that records the costs of DM, DL, and MOH for a particular production job or batch; is a subsidiary ledger account for the Work-in-Process Inventory account |
| job-order costing system | product-costing system in which costs are assigned to batches or job orders of production; used by firms that produce relatively small numbers of dissimilar products |
| material requisition form | document used by the production department supervisor to request the release of raw materials for production |
| normal costing | product-costing system in which actual Dm, actual DL, and applied MOH are added to Work-In-Process Inventory |
| overapplied overhead | amount by which the period's applied MOH exceeds actual MOH |
| overhead application | the third step in assigning MOH costs; all costs associated with each production department are assigned to the product units on which a department has worked |
| plantwide overhead rate | an overhead rate calculated by averaging MOH costs for the entire production facility |
| process-costing system | product-costing system in which production costs are averaged over a large number of nearly identical product units |
| product-costing system | the process of accumulating the costs of a production process and assigning them to the products that constitute the organization's output |
| proration | process of allocating underapplied or overaplied overhead to Work-In-Process, Finished Goods, and COGS |
| service department cost allocation | the second step in assigning MOH costs; all costs associated with a service department are assigned to the departments that use the services it produces |
| source document | document used as the basis for an accounting entry |
| supply chain | the flow of all goods, services, and information into and out of an organization |
| throughput time | the average amount of time required to convert raw materials into finished goods ready to be shipped to customers |
| time record | document that records the amount of time an employee spends on each production job |
| two-stage cost allocation | two-step procedure for assigning overhead costs to products or services produced. First stage - all production costs are assigned to the production departments. Second stage - costs assigned to each production department are applied to the products or services produced in those departments |
| underapplied overhead | the amount by which the period's actual MOH exceeds applied MOH |
| volume-based cost driver | a cost driver that is closely associated with production volume, such as DL hours or machine hours |
| repetitive production | the manufacture of large numbers of identical or very similar products in a continuous flow |
| equivalent unit | a measure of the amount of production effort applied to a physical unit of production |
| activity cost pool | a grouping of overhead costs assigned to various similar activities identified in an activity-based costing system |
| activity dictionary | complete listing of the activities included in an organization's ABC analysis |
| batch-level activity | activity that must be accomplished for each batch of products rather than for each unit |
| bill of activities | complete listing of the activities required for a product or service to be produced |
| consumption ratio | the proportion of an activity consumed by a particular product |
| cost hierarchy | the classification of activities into levels, such as unit-level, batch-level, product-sustaining level, and facility-level activities |
| customer profitability analysis | using the concepts of ABC costing to determine the activities, costs, and profit associated with serving particular customers |
| customer profitability profile | a graphical portrayal of a company's customer profitability analysis |
| facility-level activity | an activity that is required for an entire production process to occur |
| just-in-time (JIT) inventory and production management system | a comprehensive inventory and manufacturing control system in which no materials are purchased and no products are manufactured until they are needed |
| just-in-time (JIT) purchasing | an approach to purchasing management in which materials and parts are purchased only as they are needed |
| non-value-added activities | operations that are either (1) unnecessary and dispensable or (2) necessary, but inefficient and improvable |
| pool rate | the cost per unit of the cost driver for a particular activity cost pool |
| process | a set of linked activities |
| process value analysis (PVA) | another term for activity analysis, which is the detailed identification and description of activities conducted in an enterprise |
| production Kanban | a card specifying the number of parts to be manufactured in a particular work center |
| product-sustaining-level activity | an activity that is needed to support an entire product line but is not always performed every time a new unit or batch or products is produced |
| pull method | a method of coordinating stages in a production process in which goods are produced in each stage of manufacturing only as they are needed in the next stage |
| storyboarding | procedure used to develop a detailed process flowchart, which visually represents activities and the relationships among those activities |
| total quality control (TQC) | a product-quality program in which the objective is complete elimination of product defects |
| two-dimensional ABC model | a combination of the cost assignment view of the role of ABC with its process analysis and evaluation role |
| unit-level activity | activity that must be done for each unit of production |
| volume-based costing system | a product-costing system in which costs are assigned to products on the basis of a single activity base related to volume |
| withdrawal Kanban | a card sent to the preceding work center indicating the number and type of parts requested from that work center by the next work center |
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