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| Measures and records business transactions and provides financial statement that are based on GAAP principles |
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| Measures, analyzes, and reports financial and nonfinancial information that helps managers make decisions to fulfill the goals of an organization |
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| Measures, analyzes and reports financial and nonfinancial information relating to the costs of acquiring and using the resources in an organization |
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| Describes the approaches and activities of managers to use resources to increase value to customers and to achieve organizational goals |
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| The usefulness a customer gains from a company's product or service |
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| The sequence of business functions in which customer usefulness is added to products |
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| R&D, Design, Production, Marketing, Distribution, Customer Service |
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| 4 Standards of ethical conduct for management accountants |
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Definition
| Competence, Confidentiality, Integrity, Objectivity |
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| Describes the flow of goods, services and information from the initial sources of materials and services to the delivery of products to customers |
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| 4 critical success factors |
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Definition
| Cost and efficiency, Quality, Time, Innovation |
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Term
| 5 step decision making process |
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Definition
1. Identify the problem and uncertainties
2. Obtain information
3. Make predictions about the future
4. Make decisions by choosing among alternatives
5. Implement the decision, evaluate performance, and learn |
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| Selecting organization goals and strategies, predicting results under various alternative ways of achieving those goals, deciding how to attain the desired goals, and communicating the goals and how to achieve them to the organization |
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| The quantitative expression of a proposed plan of action by management and is an aid to coordinating what needs to be done to execute the plan |
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| Comprises taking actions that implement the planning decisions deciding how to evaluate performance, and providing feedback and learning to help future decision making |
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| Resources should be spent if the expected benefits to the company exceed the expected costs |
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| Production, marketing, and distribution management directly responsible for attaining the goals of the organization |
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| Management accountants and IT/HR management that provide advice, support, and assistance to line management |
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| Executive responsible for overseeing the financial operations of an organization |
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| Providing financial info for reports to managers and shareholders and overseeing accounting system operations |
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| Banking and short-term and long-term financing, investments and cash management |
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| Managing the financial risk of interest-rate and exchange-rate changes and derivatives management |
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| Income taxes, sales taxes and international tax planning |
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| Communicating with responding to, and interacting with shareholders |
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| Reviewing and analyzing financial and other records to attest to the integrity of the organization’s financial reports and to adherence to its policies and procedures |
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| Controller (Chief Accounting Officer) |
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Definition
| Financial executive primarily responsible for management accounting and financial accounting |
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| A resource sacrificed or forgone to achieve a specific objective |
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| The cost incurred (a historical or past cost) |
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| A predicted or forecasted cost (future cost) |
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| The collection of cost data in some organized way by means of an accounting system |
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| Costs related to the particular cost object and can be traced to it in an economically feasible (cost-effective) way |
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| The assignment of direct costs to a particular cost object |
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| Related to the particular cost object but cannot be traced to it in an economically feasible (cost-effective) way |
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| Used to describe the assignment of indirect costs to a particular cost object |
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| A general term that encompasses both 1. Tracing direct costs to a cost object and 2. Allocating indirect costs to a cost object |
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| Changes in total in proportion to changes in the related level of total activity or volume |
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Definition
| Remains unchanged in total for a give time period, despite wide changes in the related level of total activity or volume |
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Definition
| A variable such as the level of activity or volume that causally affects costs over a given time span |
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| The band of normal activity level or volume in which there is a specific relationship between the level of activity or volume and the cost in question |
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| Also called average cost is calculated by dividing total costs by the related number of units |
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Term
| Direct Materials Inventory |
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Definition
| Direct materials in stock and awaiting use in the manufacturing process |
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| Work-In-Process Inventory |
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Definition
| Goods partially worked on but not yet completed |
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| Goods completed but not yet sold |
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| Acquisition costs of all materials that eventually become part of the cost object and can be traced to the cost object in an economically feasible way |
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| Direct Manufacturing Labor Costs |
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Definition
| Include the compensation of all manufacturing labor that can be traced to the cost object in an economically feasible way |
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Term
| Indirect Manufacturing Costs |
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Definition
| All manufacturing costs that are related to the cost object but cannot be traced to that cost object in an economically feasible way |
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Term
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Definition
| Are all costs of a product that are considered an asset in the balance sheet when they are incurred and that become cost of goods sold only when the product is sold |
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Definition
| All costs in the income statement other than cost of goods sold |
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Term
| Cost of Goods Manufactured |
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Definition
| Refers to the cost of goods brought to completion whether they were started before or during the current accounting period |
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Term
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Definition
| Equals total revenues from operations minus costs of good sold and operating (period) costs (excluding interest expense and income taxes) or equivalently gross margin minus period costs |
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| All direct manufacturing costs |
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Term
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Definition
| All manufacturing costs other than direct material costs which represent all manufacturing costs incurred to convert direct materials into finished goods |
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| The wage rate paid to workers (for both direct labor and indirect labor) in excess of their straight-time wage rates |
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Definition
| Wages paid for unproductive time caused by lack of orders, machine or computer breakdowns, work delays, poor scheduling, and the like |
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Definition
| The sum of the costs assigned to a product for a specific purpose |
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Term
| Cost-Volume Profit Analysis |
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Definition
| Studies the behavior and relationship among these elements as changes occur in the units sold, the selling price, the variable cost per unit, or the fixed costs of a product |
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Definition
| The difference between total revenues and total variable costs |
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| That quantity of output sold at which total revenues equal total costs—that is, the quantity of output sold that results in $0 of operating income |
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| Shows how changes in the quantity of units sold affect operating income |
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Term
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Definition
| Operating income plus nonoperating revenues (such as interest revenue) minus nonoperating costs (such as interest cost) minus income taxes |
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Definition
| “What-if” technique that managers use to examine how an outcome will change if the original predicted data are not achieved or if an underlying assumption changes |
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Definition
| Measures the distance between targeted (budgeted) sales and breakeven sales |
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| The possibility that an actual amount will deviate from an expected amount |
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Definition
| Describes the effects that fixed costs have on changes in operating income as changes occur in units sold and contribution margin |
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Definition
| The quantities (or proportion) of various products (or services) that constitute total unit sales of a company |
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| An objective that can be quantified such as maximize income or minimize costs |
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Definition
| A possible relevant occurrence - the set of events should be mutually exclusive and collectively exhaustive |
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| The likelihood or chance that an event will occur. The decision model approach to coping with uncertainty assigns probabilities to events |
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Definition
| Describes the likelihood, or the probability, that each of the mutually exclusive and collectively exhaustive set of events will occur |
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| Specify, in terms of the choice criterion, the predicted economic results of the various possible combinations of actions and events |
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| A summary of the alternative actions, events, outcomes, and probabilities of events |
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| The weighted average of the outcomes, with the probability of each outcome serving as the weight |
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Definition
| A cost driver is used as a basis upon which to build a systematic method of distributing indirect costs |
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Term
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Definition
| The cost object is a unit or multiple units of a distinct product or service called a job |
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Term
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Definition
| The cost object is masses of identical or similar units of a product or service |
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Term
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Definition
| A costing system that traces direct costs to a cost object by using the actual direct cost rates times the actual quantities of the direct cost inputs |
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Term
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Definition
Identify the job that is the chosen cost object.
Identify the direct costs of the job.
Select the cost-allocation base(s) to use for allocating indirect costs to the job.
Match indirect costs to their respective cost-allocation base(s).
Calculate an overhead allocation rate
Allocate overhead costs to the job
Compute total job costs by adding all direct and indirect costs together |
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Term
| 5 Step Process-Costing Allocation |
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Definition
Summarize the flow of physical units of output.
Compute output in terms of equivalent units.
Summarize total costs.
Compute cost per equivalent unit.
Assign total costs to units completed and to units in ending work-in-process |
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Term
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Definition
| A given quantity of material, labor and overhead (input) will produce a given quantity of units completed (output) |
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Definition
| Costs incurred in previous departments that are carried forward to a subsequent process in the production cycle |
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Definition
| Hybrid costing system applied to batches of similar, but not identical, products |
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Term
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Definition
| Allocates Mtl/Lab/OH costs based on the actual indirect-cost rate x the actual activity consumption |
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Term
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Definition
| Allocates Mtl/Lab/OH costs based on the budgeted indirect-cost rate x the actual activity consumption |
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Definition
| A carefully determined price, cost, or quantity that is used as a benchmark for judging performance – usually expressed on a per-unit basis |
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Definition
| The continuous process of comparing the levels of performance in producing products and services against the best levels of performance in competing companies |
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Definition
| A carefully determined quantity of input—such as square yards of cloth or direct manufacturing labor-hours—required for one unit of output, such as a jacket |
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| A carefully determined price that a company expects to pay for a unit of input |
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Definition
| A carefully determined cost of a unit of output—for example, the standard direct manufacturing labor cost of a jacket |
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| The degree to which a predetermined objective or target is met |
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Definition
| The relative amount of inputs used to achieve a given output level |
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Definition
| A product consumes a low level of resources but is allocated high costs per unit |
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Definition
| A product consumes a high level of resources but is allocated low costs per unit |
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Definition
| If a company undercosts one of its products, it will overcost at least one of its other products |
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Definition
| Refines a costing system by identifying individual activities as the fundamental cost objects |
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Definition
| An event, task, or unit of work with a specified purpose—for example, designing products, setting up machines, operating machines, and distributing products |
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Term
| Activity-Based Management |
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Definition
| A method of management decision making that uses activity-based costing information to improve customer satisfaction and profitability |
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Term
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Definition
| Reduces the use of broad averages for assigning the cost of resources to cost objects (such as jobs, products, and services) and provides better measurement of the costs of indirect resources used by different cost objects—no matter how differently various cost objects use indirect resources |
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Term
| Weighted-Average Process Costing Method |
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Definition
| Calculates cost per equivalent unit of all work done to date (regardless of the accounting period in which it was done) and assigns this cost to equivalent units completed and transferred out of the process and to equivalent units in ending work-in-process inventory |
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Definition
| Includes planning, coordinating, and controlling activities related to the flow of inventory into, through, and out of an organization |
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| Cost of goods acquired from suppliers, including freight |
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Definition
| Costs of preparing and issuing purchase orders, receiving and inspecting the items, matching invoices received, purchase orders, and delivery records to make payments |
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Definition
| Arise while holding an inventory of goods for sale. Include opportunity costs of investment of inventory and costs associated with storage |
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Definition
| Arise when a company runs out of a particular item for which there is customer demand. Opportunity cost of stock out is lost contribution margin on the sale plus any contribution margin lost on future sales |
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Definition
| Results when features and characteristics of a product or service are not in conformance with the customer specifications |
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Definition
| Result from theft, embezzlement, misclassifications and clerical errors |
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Definition
| Costing method that supports creating value for customers by costing the value streams, as distinguished from individual products or departments thereby eliminating waste in the accounting process |
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