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Definition
units within an organization that are directly responsible for creating the products and services sold to customers.
(ex. cutting, assembly, and packaging) |
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units within an organization that provide essential support services for producing departments.
(ex. maintenance, accounting, HR) |
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Definition
- To obtain a mutually agreable price.
- To compute product-line profitability.
- To predict the economic effects of planning and control.
- To value inventory.
- To motivate managers.
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Term
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Definition
If either the quantity or the of inputs departs significantly from standards, managers investigate descrepancies to find the cause of the problem and eliminate it. |
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Term
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Definition
shows the standard quantities and costs of the inputs required to produce a unit of a specific product. |
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Definition
Standards attained only under the best circumstances
(ex. no machine breakdowns, or interruptions) |
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Definition
Standards that are 'tight but attainable'
(ex. normal machine downtime or employee breaks) |
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Term
| Standard quantity per unit |
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Definition
| amount of material required for each unit of finished product as well as an allowance for unavoidable waste. |
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Definition
| reflection of the final delivered cost of the materials net of any discounts taken |
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| Direct labor including wages, employment taxes, and fringe benefits. |
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| standard direct labor time required to complete a unit of product. |
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Definition
the standard quantity allowed per unit of the output of quantity multiplied by the standard price. |
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Definition
| the difference between the actual price of an input and its standard price. |
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Definition
| difference between how much of an input was actually used and how much should have been used based on standard price. |
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| Standard quantity allowed |
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Definition
| The amount of an input that should have been used to produce the actual output of the period. |
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Definition
the difference between what should have been paid for a given quantity of materials and what should have been paid according to the standard.
(AQ x AP) - (AQ x SP) |
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Term
| Materials Quantity Variance |
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Definition
measures the difference between the quantity of materials used in production and the quantity that should have been used according to the standard.
(AQ x SP) - (SQ x SP) |
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Term
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Definition
variance measuring deviation from standard in the average hourly rate paid to DL workers.
(AH x AR) - (AH x SR) |
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| Labor Efficiency Variance |
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Definition
measure the productivity of DL.
(AH x SR) - (SH x SR) |
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Definition
| The amount of time from when a customer order is received to when the completed order is shipped. |
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Definition
| The amount of time required to turn raw materials into completed products. |
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Term
Manufacturing Cycle Efficiency
(MCE) |
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Definition
The elimination of non value-added time in relation to throughput.
MCE = Value-added Time (Process Time)
Throughput (Mfg. Cycle) Time
Non value-added time results in MCE< 1
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Term
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Definition
| two or more products produced simultaneously by the same process up to a 'split-off' point |
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Definition
| the point at which joint products become seperate and identifiable |
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Definition
| costs easily traced to individual products |
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Term
Physical units mehtod
(accounting for joint costs) |
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Definition
joint costs are distributed to products on the basis of some physical measure.
(ex. weight or measurement) |
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Term
Weighted average method
(accounting for joint costs) |
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Definition
| Takes physical unit method and distrubutes by a weight factor such as % of sales. |
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Term
Sales-value-at-split-off Method
(accounting for joint costs) |
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Definition
allocates joint cost based on each product's proportionate share of market or sales value at the split off point.
Product measure x selling price = sales value % of rev x joint cost
1 200ft $2.00/ft $400 57% x $60,000
2 600ft $0.50/ft $300 43% x $60,000
Total 800ft $700 |
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Term
Net Realizable Value Method
(accounting for joint costs) |
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Definition
No ready market for intermediate products. Products at spilt-off are not finished and have a hypothetical market value.
product value @ - further = Net hyp x # units = Hyp mkt value
split processing mkt $
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Term
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Definition
a secondary product that is produced in the course of manufacturing the main product and has a relatively low market value.
No cost allocated to it. |
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Definition
| product produced in the manufacturing of another product, but has a relevant market value. |
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Definition
| One department allocates their overhead to other departments. |
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Term
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Definition
One department allocates their cost to another department and then the second department in turns allocated their costs to other departments including the first allocation.
(ex. HR - maintenance - machine shop + packing) |
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Term
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Definition
| the departments allocate based on use so one department would allocate their cost to another department, but then in turn through using that department would be allocated the others' costs. |
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| Responsibility Accounting |
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Definition
| Should only be charged with costs that you control. |
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Definition
- Planning
- Controlling
- Decision making
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Term
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Definition
| Estimate of how much a cost should be |
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Definition
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Term
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Definition
- research the cause and understand it
- take corrective action if possible
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