Chapter 1

Question 1

Costing method that first assigns costs to activities and then assigns them to products based on the products’ consumption of activities

Answer 1

Activity-Based Costing (ABC)

Question 2

Continuous process of measuring a company’s own product, service, or activities against competitors’ performance

Answer 2

Benchmarking

Question 3

Financial plan of the resources need to carry out activities and meet financial goals

Answer 3

Budget

Question 4

Field of accounting that measures, records, and reports information about costs

Answer 4

Cost Accounting

Question 5

Process of comparing benefits with costs associated with a proposed change within the organization

Answer 5

Cost-Benefit Analysis

Question 6

Factor that causes costs

Answer 6

Cost Driver

Question 7

System that identifies the costs of producing low-quality items, including rework, returns, and lost sales

Answer 7

Cost of Quality (COQ)

Question 8

System that allows firms to target profitable customers by assessing customer revenues and costs

Answer 8

Customer Relationship Management (CRM)

Question 9

With two or more alternatives, costs that differ among or between alternatives

Answer 9

Differential Costs

Question 10

Revenues that change in response to a particular course of action

Answer 10

Differential Revenues

Question 11

Set of firms and individuals that busy and distributes goods and services from the firm

Answer 11

Distribution Chain

Question 12

Information technology that links the various systems of the enterprise into a single comprehensive information system

Answer 12

Enterprise Resource Planning (ERP)

Question 13

Field of accounting that reports financial position and income according to accounting rules

Answer 13

Financial Accounting

Question 14

Rules, standards, and conventions that guide the preparations of financial accounting statement for shareholders

Answer 14

GAAP

Question 15

Rules, standards and conventions that guide the preparation of the financial accounting statements in many other countries

Answer 15

IFRS

Question 16

In production or purchasing, each unit is purchased or produced just in time for its use

Answer 16

Just-in-Time (JIT) Method

Question 17

A cost accounting system that provides measures at the work cell or process level; designed around the value chains of major products and services to support lean manufacturing

Answer 17

Lean Accounting

Question 18

Activities that do no add value to the good or service

Answer 18

Nonvalue-Added Activities

Question 19

Having one or more of the firm’s activities performed by another firm or individual in the supply or distribution chain

Answer 19

Outsourcing

Question 20

Performance measurement system relying on multiple financial and nonfinancial measures of performance

Answer 20

Balanced Scorecard

Question 21

Specific unit of an organization assigned to a manager who is held accountable for its operations and resources

Answer 21

Responsibility Center

Question 22

Linked set of firms that exchange goods and services in combination to provide a final product or service to the consumer

Answer 22

Supply Chain

Question 23

Management method where the organization seeks to excel on all dimensions, with the customer ultimately defining quality

Answer 23

Total Quality Management (TQM)

Question 24

Those activities that customers perceive as adding utility to the goods or services they purchase

Answer 24

Value-Added Activities

Question 25

Linked set of activities that increase the usefulness (or value) of the goods or services of an organization

Answer 25

Value Chain