MANAGERIAL ACCOUNTING FINAL - VOCAB

THEORY OF CONSTRAINTS

based on the insight that effectively managing the constraint is a key to success.

GLOBALIZATION

business's ability to more easily communicate with and conduct business with customers in countries outside of the business's home country

IDEAL STANDARDS

can only be attained under the best circumstances. they allow for no work interruptions and they require employees to work at 100% peak efficiency all of the time

SUPPLY CHAIN MANAGEMENT

commonly used to refer to the coordination of business processes across companies to better serve end consumers

FINISHED GOODS INVENTORY

consists of units of product that have been completed but have not yet been sold to customers.

WORK IN PROCESS INVENTORY

consists of units of products that are only partially complete and will require further work before they are ready for sale to a customer

JOINT COSTS

cost that are incurred up to the split-off point in a process that produces joint products

ADJUSTING INCOME TO GET CASH FLOW FROM OPERATING ACTIVITIES

1. add back non-cash expenses, such as depreciation or amortization 2. deduct gains and add losses that resulted from investing and financing activities (i.e., gain on sale of asset) 3. analyze changes to non-cash current assets and current liability accounts

THE MOST COMMON FRAMEWORK USE TO GUIDE SIX SIGMA PROCESS IMPROVEMENT EFFORTS:

DMAIC OR Define, Measure, Analyze, Improve, and Control

MANAGEMENT BY EXCEPTION

a system of management in which standards are set for various activities, with actual results compared to these standards. any deviation that are deemed significant are brought to the attention of management as "exceptions".

A TRUE or PROPORTIONATELY VARIABLE COST

direct materials are a ______ or ________ ___________ cost because the amount used during a period will vary in direct proportion to the level of production activity

UNFAVORABLE ACTIVITY VARIANCE

if the flexible budget for an expense is higher than what was planned then the 'activity variance' is considers to be ____________.

FAVORABLE ACTIVITY VARIANCE

if the planning budget for an expense is higher than the flexible budget then the activity variance is considered to be ______________.

ADMINISTRATIVE COSTS

include all costs associated with the "general management" of an organization rather than with manufacturing or selling

FAVORABLE REVENUE VARIANCE

indicates that revenue was larger than should have been expected, given the actual level of activity

UNFAVORABLE REVENUE VARIANCE

indicates that revenue was less than it should have been, given the actual level of activity

NON-CASH TRANSACTIONS

investing or financing activity that does not affect the cash inflows or outflows, but involves only owner's equity or long-term assets and liabilities.

CASH EQUIVALENTS

investments securities that are short-term have credit quality and are high liquid.

INVESTING ACTIVITIES

involve the acquisition and sale of long-term assets (i.e., purchase truck)

OPERATING ACTIVITIES

involve the purchase and sale of products or services (i.e., run delivery truck)

PRODUCT COSTS

involved in acquiring or making a product; _________ _______ are finally assigned to inventories are known as inventoriable cost.

CONTROLLING

involves ensuring that the plan is actually carried out and is appropriately modified as circumstances change

PLANNING

involves establishing a basic strategy, selecting a course of action, and specifying how the action will be implemented

DIRECTING AND MOTIVATING

involves mobilizing people to carry out plans and run routine operations

FINANCING ACTIVITIES

involves the issuance and repayment of long term liabilities and stock (i.e., getting the money for the truck)

VALUE CHAIN

is often used when we look at how the functional departments of an organization interact with one another to form business processes; a _________ ___________ consists of the major business functions that add value to a company's product and services

SIX SIGMA

is sometimes associated with the term "zero defects"; a process improvement method that relies on customer feedback and fact-based data gathering and analysis techniques to drive process improvement.

PROCESS COSTING

is used in situation where a single, homogeneous product, such as cement, bricks, or gasoline, is produced for long periods.

JOB-ORDERING COSTING

is used in situations in which many different products or services are produced each period

JOB COST SHEET

is used to record all costs that are assigned to a particular job.

UNDERAPPLIED OVERHEAD

occurs when the actual overhead cost exceeds the amount of overhead cost applied to Work in Process inventory during the period

OVERAPPLIED OVERHEAD

occurs when the actual overhead cost is less than the amount of overhead cost applied to Work in Process inventory during the period

LEAN PRODUCTION

organizes resources around business processes and pulls units through those processes in response to customer orders; the result is lower inventories, fewer defects, less wasted effort, and quicker customer response times.

RESPONSIBILITY ACCOUNTING

systems that link lower-level managers' decision-making authority with accountability for the outcomes of the decisions

SPLIT-OFF POINT

that point in the manufacturing process were some or all of the joint products can be recognized as individual products.

RELEVANT RANGE

that range of activity within which the assumptions made about cost behavior reasonably valid

TIME VALUE OF MONEY

the _____ _______ __ _________ is based on the concept that a dollar received today is worth more than a dollar received in the future

OPPORTUNITY COST

the benefit that is foregone as a result of pursing some course of action; these costs do not represent actual cash outlays and they are recorded in the formal accounts of an organization

STEP-VARIABLE COST

the cost of a resource that is obtained in large chunks and that increases or decreases only in response to fairly wide changes in activity is known as _______-__________ cost.

DECENTRALIZATION

the delegation of decision-making authority throughout an organization by giving managers the authority to make decisions relating to their area of responsibility

VERTICAL INTEGRATION

the involvement by a company in more than one of he activities in the entire value chain from developing through production, distribution, sales,and after-sales services

RAW MATERIALS

the materials that are used to make a product

CORPORATE GOVERNANCE

the system by which a company is directed and controlled

CUSTOMER VALUE PROPOSITIONS

these three categories are the essence of strategy; 1. customer intimacy 2. operational excellence 3. product leadership

THE PURPOSE OF AN ORGANIZATIONAL CHART

to show how responsibility is divided among managers and to show formal lines of reporting and communication, or "chain of command".

JOINTS PRODUCTS

two or more products that are produced from a common input

BUDGET

a quantitative plan for acquiring and using resources over a specified time period

BUSINESS PROCESS

a series of steps that are followed in order to carry out some task in a business.

ENTERPRISE RISK MANAGEMENT

a process used by a company to proactively identify and manage those risks

CVP ANALYSIS

____ ___________ is a planning model that's a powerful tool that helps managers understand the relationships among cost, volume, and profit; focuses on how profits are affected by the following 5 factors: 1. selling price 2. sales volume 3. unit variable costs 4. total fixed costs 5. mix of products sold

MANAGERIAL ACCOUNTING

__________ ____________ is concerned with providing information to managers -- that is, the people inside an organization who direct and control its operations.

FINANCIAL ACCOUNTING

_______________ _______________ is concerned with providing information to stockholders, creditors, and others who are outside the organization.

STRATEGY

a "game plan" that enables a company to attract customers by distinguishing itself from competitors

CONTINUOUS BUDGETS

a 12-month budget that rolls forward one month as the current is completed

BALANCED SCORECARD

a ___________ ____________ consists of an integrated set or performance measures that are derived from and support the company's strategy.

PROFIT CENTER

a business segment whose manager has control over cost and revenue but has no control over investment in operating assets

COST CENTER

a business segment whose manager has control over cost but has no control over revenue or investments in operating assets

INVESTMENT CENTER

a business segment whose manager has control over cost, revenue, and investments in operating assets

CORPORATE SOCIAL RESPONSIBILITY (CSR)

a concept whereby organizations consider the needs of all stakeholders when making decisions

AVOIDABLE COST

a cost that can be eliminated, in whole or in part, by choosing one alternative over another. _________ ______ are relevant costs.

RELEVANT COST

a cost that differs between alternatives in a decision.

BILL OF MATERIALS

a list that shows the quantity of each type of material in a unit of finished product

ACTIVITY BASE

a measure of whatever causes the incurrence of variable cost; an _______ _______ is sometimes referred to as a "cost driver"

MASTER BUDGET

a number of separate but interdependent budgets that formally lay out the company's sale, production, and financial goals and culminates in a cash budget, budgeted income statement, and budgeted balance sheet.

SELLING EXPENSES

all costs that are incurred to secure customer orders and get the finished product to the customer

PERIOD COSTS

all the cost that are not product costs; _______ ________ are expensed on the income statement in the periods in which they are incurred using the usual rules of accrual accounting

CONSTRAINT

also known as a "bottleneck", is anything that prevents you from getting more of what you want

PARTICIPATIVE BUDGETS

also known as self-imposed budget; a method of preparing budgets in which managers prepare their own budgets; these budgets are then reviewed by higher-level managers, and any issues are resolved by mutual agreement

ANNUITY

an ___________ is a series of cash flows of equal amount paid or received at regular intervals

STANDARD COST

an estimated or predetermined cost of performing an operation or producing a good or service, under normal conditions. __________ _______ are used as target cost, or basis for comparison with the actual cost. they almost always vary from actual costs, because every situation has its share of unpredictable factors.

DIFFERENTIAL COST

any cost that differs between alternatives in a decision-making situation; this term is synonymous with avoidable cost and relevant cost

SUNK COSTS

any cost that has already been incurred and that cannot be changed by any decision make now or in the future

UNAVOIDABLE COSTS

are irrelevant costs; can be broken into two categories: 1. sunk costs 2. future costs that do not differ between the alternatives

PRACTICAL STANDARDS

are tight, but attainable. they allow for normal machine downtime and employee rest periods and can be attained through reasonable, highly efficient efforts of the average worked. ___________ ___________ can be used for forecasting cash flows and planning inventory