ACC Exam 4
Profit Center
A segment whose manager has control over both costs and revenues but no control over investment funds.
cost center
A segment whose manager has control over costs, but not over revenues or investment funds
Investment Center
A segment whose manager has control over costs, revenues, and investments in operating assets
what is included in average operating assets
Cash, accounts receivable, inventory, plant and equipment
what are examples of external Failure Costs
Cost of field servicing and handling complaints• Warranty repairs• Lost sales
how do you find quality rate
Defect-free output/ Total output this week (including defects)
what is another name for net operating income
EBIT (income before taxes)
External Failure costs
Incurred as a result of defective products being delivered to customers
internal Failure Costs
Incurred as a result of identifying defects BEFORE they are shipped
Appraisal Costs
Incurred to identify defective products before the products are shipped to customers
how do you calculate margin
Net Operating Income / Sales
Throughput time formula
Process + Inspection + Move + Queue
what are examples of prevention costs
Quality training• Quality circles• Statistical process control activities
what are examples of Internal Failure Costs
Scrap• Spoilage• Rework
what are Prevention Costs
Support activities whose purpose is to reduce the number of defects
what are examples of appraisal costs
Testing and inspecting incoming materials• Final product testing• Depreciation of testing equipment
delivery cycle time formula
Wait time + Throughput time
what is the Operating Department in charge of
central purposes of the organization
Service Department
do not directly engage in operating activities
what are the 4 performance measures?
financial, customer, internal business processes, learning and growth
transfer price
is the price charged when one segment of a company provides goods or services to another segment of the company
what is the equation of residual income
net operating income - (average operating assets- minimum required rate of return)
responsibility center
part of an organization whose manager has control over and is accountable for cost, profit, or investments
Manufacturing Cycle Efficiency formula
process time / throughput time
how do you calculate utilization rate
time available/actual run time
ROI equation
turnover times margin
how do you calculate OEE
utilization rate x efficiency rate x quality rate
