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Managerial Accounting Chapter 16
LBCC Winter 2015
Terms in this set (29)
Choosing goals and deciding how to achieve them.
A financial plan that managers use to coordinate a business's activities.
Implementing plans and evaluating the results of business operations by comparing the actual results to the budget.
Weighing costs against benefits to help make decisions.
The manager's responsibility to wisely manage the resources of an organization.
An individual or group that has an interest in a business, including customers, creditors, suppliers, and investors.
Enterprise Resource Planning (ERP)
Software system that can integrate all of a company's functions, departments, and data into a single system.
Just-In-Time (JIT) Management
A cost management system in which a company produces products just in time to satisfy needs. Suppliers deliver materials just in time to begin production and finished units are completed just in time for delivery to the customer.
Total Quality Management (TQM)
A philosophy designed to integrate all organizational areas in order to provide customers with superior products and services, while meeting organizational goals throughout the value chain.
Includes all activities that add value to a company's products and services
A company that sells services - time, skills, and/or knowledge - instead of products.
Operating cost that is expensed in the accounting period in which it is incurred.
A company that resells products previously bought from suppliers.
The cost of purchasing or making a product. The cost is recorded as an asset and then expenses when the product is sold.
A company that uses labor, equipment, supplies, and facilities to convert raw material into finished products.
Raw Materials Inventory (RM)
Materials used to manufacture a product.
Work-In-Progress Inventory (WIP)
Goods that have been started in the manufacturing process but are not yet complete.
Finished Goods Inventory (FG)
Completed goods that have not yet been sold.
Cost that can be easily and cost-effectively traced to a cost object.
Anything for which managers want a separate measurement of cost.
Cost that cannot be easily or cost-effectively traced to a cost object.
Direct Materials (DM)
Materials that become a physical part of a finished product and whose cost are easily traced to the finished product.
Direct Labor (DL)
The labor cost of employees who convert raw materials into finished products.
Manufacturing Overhead (MOH)
Manufacturing costs that cannot be easily and cost-effectively traced to a cost object. Includes all manufacturing costs except direct materials and direct labor.
Materials used in making a product but whose costs either cannot be conveniently traced directly to specific finished products or whose costs are not large enough to justify tracing to the specific product.
Labor costs for activities that support the production process but either cannot be conveniently traced directly to specific finished products or are not large enough to justify tracing to the specific product.
Direct materials plus direct labor
Direct labor plus manufacturing overhead.
Cost of Goods Manufactured
The manufacturing costs of the goods that finished the production process in a given accounting period.
Recommended textbook explanations
Glencoe Accounting: First Year Course
Ray H Garrison
David Spiceland, Don Herrmann, Wayne Thomas
The Economics of Money, Banking and Financial Markets
Frederic S. Mishkin
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