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chapter 4 vocab
Terms in this set (30)
a workplace organization system comprised of the following steps: sort, set in order, shine, standardize, and sustain
activity based costing (ABC)
focuses on activities as fundamental cost objects. The costs of those activities become building blocks for compiling the indirect costs of the products, services, and customers.
activity based management (ABM)
using activity based information to make decisions that increase profits while satisfying customers' needs.
costs incurred to detect poor quality goods or services
a simplified accounting production in which production costs are not assigned to units until they are finished, or even sold, thereby saving the bookkeping steps of moving the inventory through various inventory accounts.
activities and costs incurred for every batch, regardless of the number of units in the batch
over costing some products while under costing others
costs of quality report
a report that lists the costs incurred by the company related to quality. The costs are categorized as prevention costs, appraisal costs, internal failure costs, and external failure costs.
customer response time
the time that elapses between receipt of the customer order and delivery of the product or service
departmental overhead rate
separate manufacturing overhead rates established for each department.
an acronym for the eight wastes: defects, overproduction, waiting, not utilizing people to their full potential, transportation, inventory, movement, excess waiting
external failure costs
costs incurred when the company does not detect poor quality goods or services until after delivery is made to customers.
activities and costs incurred no matter how many units, batches, or products are produced in the plant.
internal failure costs
costs incurred when the company does not detect poor quality goods or services until before delivery is made to customers.
Just in time (JIT)
an inventory management philosophy that focuses on purchasing raw materials just in time for production and completing finished goods just in time for delivery to customers.
a jap word meaning "a change for the better"
a management strategy and philosophy focused on creating value for the customer by eliminating waste
manufacturing cycle time
the time that elapses between the start of production and the production's completion.
activities that neither enhance the customer's image of the product or service nor provide a competitive advantage. Also known as waste activities
plant wide overhead rate
when overhead is allocated to every product using the same manufacturing overhead rate.
point of use storage (POUS)
a storage system used to reduce the waste of transportation and movement in which tools, materials, and equipment are stored in places where they will be used most frequently.
costs incurred to avoid poor quality goods or services
activities and costs incurred for a particular product, regardless of the number of units or batches of the product produced.
quality at the source
refers to shifting the responsibility of quality adherence to the operators at each step in the value stream, rather than relying on supervisors or a quality assurance department to catch errors
the rate of production needed to meet customer demand yet avoid overproduction
total quality management (TQM)
a management philosophy of delighting customers with superior products and services by continually setting higher goals and improving the performance of every business function.
activities and costs incurred for every unit produced
activities for which the customer is willing to pay because these activities add value to the final product or service
eliminating waste in the system by making the company's processes as effective and efficient as possible.
activities that neither enhance a customer's image of a product or service nor provide a competitive advantage; also known as non-value-added activities
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