Term
| budgeted financial statements |
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Definition
| A set of planned financial statements showing what an organization’s overall financial condition is expected to be at the end of the budget period if planned operations are carried out. |
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Term
| budgeted income statement |
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Definition
| Shows the expected revenue and expenses for the budget period, assuming that planned operations are carried out. |
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Term
| budgeted schedule of cost of goods manufactured and |
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Definition
| Details the direct material, direct labor, and manufacturing overhead costs to be incurred and shows the cost of the goods to be sold during a budget period. |
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Term
| budgeted statement of cash flows |
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Definition
| A budget schedule providing information about the expected sources and uses of cash for operating activities, investing activities, and financing activities during a particular period of time. |
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Term
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Definition
| The set of procedures used to develop a budget. |
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Term
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Definition
| A long-term budget that shows planned acquisition and disposal of capital assets, such as land, building, and equipment. |
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Term
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Definition
| A production process accomplished largely by machinery. |
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Term
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Definition
| Details the expected cash receipts and disbursements during a budget period. |
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Term
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Definition
| A schedule detailing expected cash payments during a budget period. |
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Term
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Definition
| A schedule detailing the expected cash collections during the budget period. |
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Term
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Definition
| The organization of a production facility into FMS cells. |
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Term
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Definition
| An individual who recognizes the need for change and seeks to bring it about through his or her own effort. |
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Term
| computer aided design system |
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Definition
| Computer software used by engineers in the design of a product. |
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Term
| computer aided manufacturing system |
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Definition
| Any production process in which computers are used to help control production. |
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Term
| computer integrated system |
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Definition
| The most advanced form of automated manufacturing, in which virtually all parts of the production process are accomplished by computer-controlled machines and automated material-handling equipment. |
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Term
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Definition
| The constant effort to eliminate waste, reduce response time, simplify the design of both products and processes, and improve quality and customer service. |
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Term
| contribution income statement |
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Definition
| An income statement on which fixed and variable expenses are separated. |
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Term
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Definition
| Sales revenue minus variable expenses. The amount of sales revenue, which is left to cover fixed expenses and profit after paying variable expenses. |
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Term
| contribution margin per unit |
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Definition
| The difference between the unit sales price and the unit variable expense. The amount that each unit contributes to covering fixed expenses and profit. |
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Term
| contribution-margin ratio |
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Definition
| The unit contribution margin divided by the sales price per unit. |
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Term
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Definition
| The relative proportions of an organization’s fixed and variable costs. |
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Term
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Definition
| A graphical expression of the relationships between sales volume, expenses, revenue, and profit. |
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Term
| cost-volume-profit analysis |
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Definition
| A study of the relationships between sales volume, expenses, revenue, and profit. |
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Term
| customer profitability analysis |
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Definition
| Using the concepts of activity-based costing to determine the activities, costs, and profit associated with serving particular customers. |
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Term
| customer profitablity profile |
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Definition
| A graphical portrayal of a company’s customer profitability analysis. |
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Term
| departmental production report |
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Definition
| The key document in a process-costing system. This report summarizes the physical flow of units, equivalent units of production, cost per equivalent unit, and analysis of total departmental costs. (Reflects all activity in the Work-in-Process account) |
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Term
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Definition
| A schedule showing the amount and cost of direct labor to be used in production of services or goods during a budget period. |
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Term
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Definition
| A schedule showing the number of units and the cost of material to be purchased during a budget period. |
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Term
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Definition
| An electronic and enterprise-wide budgeting process in which employees throughout the organization can submit and retrieve budget information electronically via the Internet. |
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Term
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Definition
| The concept of encouraging and authorizing workers to take the initiative to improve operations, reduce costs, and improve product quality and customer service. |
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Term
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Definition
| A measure of the amount of production effort applied to a physical unit of production. For example, a physical unit that is 50 percent completed represents one-half of an equivalent unit. |
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Term
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Definition
| A schedule that outlines how an organization will acquire financial resources during the budget period (for example, through borrowing or sale of capital stock). |
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Term
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Definition
| A set of mathematical relationships that expresses the interactions among the various operational, financial, and environmental events that determine the overall results of an organization’s activities. |
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Term
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Definition
| A computer or information router placed between a company’s internal network and the Internet to control and monitor all information between the outside world and the company’s local network. |
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Term
| flexible manufacturing system |
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Definition
| A series of manufacturing machines, controlled and integrated by a computer, which is designed to perform a series of manufacturing operations automatically. |
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Term
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Definition
| A group of machines and personnel within a flexible manufacturing system (FMS). |
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Term
| hybrid product-costing system |
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Definition
| A system that incorporates features from two or more alternative product-costing systems, such as job-order and process costing. |
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Term
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Definition
| A budget detailing the additional resources needed to add various activities to a base package. |
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Term
| just-in-time inventory and production management system |
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Definition
| A comprehensive inventory and manufacturing control system in which no materials are purchased and no products are manufactured until they are needed. |
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Term
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Definition
| An approach to purchasing management in which materials and parts are purchased only as they are needed. |
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Term
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Definition
| The process of cost reduction during the manufacturing phase of a product. Refers to continual and gradual improvement through small betterment activities. |
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Term
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Definition
| A production process accomplished largely by manual labor. |
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Term
| manufacturing overhead budget |
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Definition
| Shows the cost of overhead expected to be incurred in the production process during the budget period. |
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Term
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Definition
| A comprehensive set of budgets that covers all phases of an organization’s operations for a specified period of time. |
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Term
| non-value-added activities |
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Definition
| Operations that are either (1) unnecessary and dispensable or (2) necessary, but inefficient and improvable. |
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Term
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Definition
| The costs of activities that can be eliminated without deterioration of product quality, performance, or perceived value. |
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Term
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Definition
| Activities during the product design and engineering phases that will improve the manufacturability of the product, reduce production costs, and ensure high quality. |
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Term
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Definition
| The extent to which an organization uses fixed costs in its cost structure. The greater the proportion of fixed costs, the greater the operating leverage. |
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Term
| operating leverage factor |
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Definition
| A measure of operating leverage at a particular sales volume. Computed by dividing an organization’s total contribution margin by its net income. |
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Term
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Definition
| A hybrid of job-order and process costing. Direct material is accumulated by batch of products using job-order costing methods. Conversion costs are accumulated by department and assigned to product units by process-costing methods. |
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Term
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Definition
| A set of budgets that specifies how operations will be carried out to produce an organization’s services or goods. |
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Term
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Definition
| The mindset of employees, including their shared beliefs, values, and goals. |
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Term
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Definition
| The process of building budgetary slack into a budget by overestimating expenses and underestimating revenue. |
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Term
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Definition
| The process of involving people throughout an organization in the budgeting process. |
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Term
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Definition
| The extent to which a physical unit of production has been finished with respect to direct material or conversion activity |
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Term
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Definition
| An actual item of production, fully or partially completed. |
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Term
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Definition
| A set of linked activities. |
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Term
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Definition
| A product-costing system in which production costs are accumulated by processing department and averaged over a large number of product units. Used by firms that produce large numbers of nearly identical products. |
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Term
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Definition
| The accumulation of costs that occur over the entire life cycle of a product. |
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Term
| product life-cycle costing |
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Definition
| The accumulation of costs that occur over the entire life cycle of a product. |
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Term
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Definition
| A schedule showing the number of units of services or goods that are to be produced during a budget period. |
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Term
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Definition
| A card specifying the number of parts to be manufactured in a particular work center. |
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Term
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Definition
| A graphical expression of the relationship between profit and sales volume. |
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Term
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Definition
| A method of coordinating stages in a production process. Goods are produced in each stage of manufacturing only as they are needed in the next stage. |
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Term
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Definition
| The complete redesign of a process, with an emphasis on finding creative new ways to accomplish an objective. |
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Term
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Definition
| The manufacture of large numbers of identical or very similar products in a continuous flow. |
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Term
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Definition
| A budget that is continually updated by adding another incremental time period and dropping the most recently completed period. |
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Term
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Definition
| Difference between budgeted sales revenue and break-even sales revenue. |
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Term
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Definition
| A schedule that shows the expected sales of services or goods during a budget period, expressed in both monetary terms and units. |
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Term
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Definition
| The process of predicting sales of services or goods. The initial step in preparing a master budget. |
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Term
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Definition
| Relative proportion of sales of each of an organization’s multiple products. |
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Term
| Selling, general, and administrative expense budget |
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Definition
| A schedule showing the planned amounts of selling, general, and administrative expenses during a budget period. |
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Term
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Definition
| A technique for determining what would happen in a decision analysis if a key prediction or assumption proves to be wrong. (“What if” analysis.) |
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Term
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Definition
| A combination of the cash receipts and cash disbursements budgets. |
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Term
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Definition
| The design of a product, and the processes used to produce it, so that ultimately the product can be manufactured at a cost that will enable a firm to make a profit when the product is sold at an estimated market-driven price. This estimated price is called the target price, the desired profit margin is called the target profit, and the cost at which the product must be manufactured is called the target cost. |
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Term
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Definition
| A combination of the cash receipts and cash disbursements budgets. |
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Term
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Definition
| The profit level set as management’s objective. |
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Term
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Definition
| 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. |
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Term
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Definition
| A product-quality program in which the objective is complete elimination of product defects. |
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Term
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Definition
| Costs assigned to partially completed products that are transferred into one production department from a prior department. |
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Term
| two-dimensional abc model |
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Definition
| A combination of the cost assignment view of the role of activity-based costing with its process analysis and evaluation role. Two-dimensional ABC is one way of depicting activity-based management. |
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Term
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Definition
| A cost-reduction and process improvement technique that utilizes information collected about a product’s design and production processes and then examines various attributes of the design and processes to identify candidates for improvement efforts. |
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Term
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Definition
| A method of process costing in which the cost assigned to beginning work-in-process inventory is added to the current-period production costs. The cost per equivalent unit calculated under this process-costing method is a weighted-average of the costs in the beginning work in process and the costs of the current period. |
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Term
| weighted average unit contribution margin |
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Definition
| Average of a firm’s several products’ unit contribution margins, weighted by the relative sales proportion of each product. |
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Term
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Definition
| 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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Term
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Definition
| A budgeting approach in which the initial budget for each activity in an organization is set to zero. To be allocated resources, an activity’s continuing existence must be justified by the appropriate management personnel. |
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