 | Term | Definition |
| |
activity-based costing (ABC) |
focuses on activities as the fundamental cost objets. the costs of those activities become building blocks for compiling the indirect costs or products, services, and customers |
| |
activity-based management (ABM) |
using activity-based cost information to make decisions that increase profits while satisfying customers needs |
| |
appraisal costs |
costs incurred to detect poor-quality goods or services |
| |
backflush costing |
a stnadard costing system that starts with output completed and then assigns manufacturing costs to units sold and to inventories. also called JUST-IN-TIME COSTING |
| |
external failure costs |
costs incurred when the company does not detect poor-quality goods or services until after delivery to customers |
| |
internal failure costs |
costs incurred when the company detects and corrects poor-quality goods or services before delivery to customers |
| |
just-in-time (JIT) costing |
a standard costing system that starts with output completed and then assigns manufacturing costs to units sold and to inventories. also called BACKFLUSH COSTING |
| |
prevention costs |
costs incurred to avoid poor-quality goods or services |
| |
target cost |
allowable cost to develop, produce, and deliver the product or service. equals target price minus desired profit |
| |
target price |
what customers are willing to pay for the product or service |
| |
value engineering |
reevaluating activities to reduce costs while satisfying customer needs |
