ch4 vocab Flashcards
activity-based costing
focuses on activities as the fundamental cost objects. The costs of those activities become building blocks for compiling the indirect costs of products, services, and customers
activity-based managment
using activity-based cost information to make decisions that increase profits while satisfying customers’ needs
appraisal costs
costs incurred to detect poor-quality goods or services
batch-level activities
activities and costs incurred for every batch, regardless of the number of units in the batch
cost distortion
overcosting some products while undercosting other products
cost of quality report
a report that lists the costs incurred by the company related to quality. The costs are categorized as prevention costs, appraised costs, internal failure costs, and external failure costs
customer response time
the time that elapses between receipt of a customer order and delivery of the product or service
departmental overhead rates
separate manufacturing overhead rates established for each departement
DOWNTIME
an acronym for the eight wastes: Defects Overproduction Waiting Not utilizing people to their full potential Transportation Inventory Movement Excess processing
external failure costs
costs incurred when the company does not detect poor-quality goods or services until after delivery is made to customers
facility-level activities
activities and costs incurred no matter how many units,batches, or products are produced in the plant
5S
a workplace organization system comprised of the following steps: Sort Set in order Shine Standardize Sustain
internal failure costs
cost incurred when the company detects and corrects poor-quality goods or services before making delivery to cusotmers
just in time
an inventory management philosophy that focuses on purchasing raw materials just in time for production and completing finished goods just in time for delivery to cutomers
kaizen
a Japanese word meaning “change for the better”
lean thinking
a management philosophy and strategy focused on creating value for the customer by eliminating waste
manufacturing cycle time
the time that elapses between the start of production and the product’s completion
non-value-added activities
activities that neither enhance the customer’s image of the product or service nor provide a competitive advantage
plantwide overhead rate
when overhead is allocated to every product using the same manufacturing overhead rate
point of use storage (POUS)
a storage system used to reduce the waste of transportation and movement in which tools, materials, and equipment are stored in proximity to where they will be used most frequently
prevention costs
costs incurred to avoid poor-quality goods or services
product-level activities
activities costs incurred for a particular product, regardless of the number of units or batches of the product produced
takt time
the rate of production needed to meet customer demand yet avoid overproduction
total quality management(TQM)
a management philosophy of delighting customers with superior products and services by continually setting higher goals and improving the performance of every business funtion
unit-level activities
activities and costs incurred for every unit produced
value engineering
eliminating waste in the system by making the company’s processes as effective and efficient as possible
value-added activities
activities for which the customer is willing to pay because these activities add value to the final product or service
waste activities
activities that neither enhance the customer’s image of the product or service nor provide a competitive advantage; also known as value-added activities
