Chapter 17

Question 1

activity-based costing

Answer 1

(ACB) A costing system for situations where overhead is high and/or a variety of products are produced; costs are traced to activities and then ativities are allocated to production

Question 2

B2B

Answer 2

(Business to Blusiness) A system that enables data interchange between companies; sometimes sufficiently robust to permit automatic inventory replenishment, etc.

Question 3

budget

Answer 3

A planning tool that outlines the financial plans for an organization; there are various types of budgets – operating, capital, and financial.

Question 4

CFM

Answer 4

Certified Financial Manager; a professional designation of competency in the field of financial management that is issued by the Institute of Management Accountants.

Question 5

CMA

Answer 5

Certified Management Accountant; a professional designation of competency in the field of management accounting that is issued by the Institute of Management Accountants.

Question 6

controller

Answer 6

The primary person responsible for the cost and managerial accounting functions.

Question 7

conversion cost

Answer 7

Cost components needed to change raw materials to finished goods, specifically direct labor and manufacturing overhead.

Question 8

cost accounting

Answer 8

The process by which an organization’s cost is collected, assigned, and interpreted.

Question 9

cost of goods manufactured

Answer 9

The amount of cost attributable to goods reaching the end of production; beginning work in process (wip) + (direct materials, direct labor, manufacturing overhead) - ending wip.

Question 10

direct labor

Answer 10

Gross wages paid to those who physically and directly work on the goods being produced.

Question 11

direct material

Answer 11

The costs of all materials that are an integral part of a finished product and that have a physical presence that is readily traced to that finished product.

Question 12

ERP

Answer 12

(Enterprise Resource Package) Comprehensive database software that tracks an almost endless array of business and accounting data.

Question 13

finished goods

Answer 13

Finished goods represent the cost of completed products awaiting sale to a customer.

Question 14

IMA

Answer 14

Institute of Management Accountants; a professional association for management accountants that sponsors the CMA and CFM designations.

Question 15

inventoriable cost

Answer 15

product costs that attach to inventory.

Question 16

job costing method

Answer 16

A costing approach whereby actual labor and material is tracked for each job or product.

Question 17

M2M

Answer 17

(Machine to Machine) enables connected devises to communicate with each other.

Question 18

manufacturing overhead

Answer 18

All costs of manufacturing other that direct materials and direct labor (also called factory overhead)

Question 19

period cost

Answer 19

A cost not attributable to the acquisition or manufacture of inventory; expensed as incurred

Question 20

prime cost

Answer 20

Product costs that are direct in nature; direct materials and direct labor.

Question 21

process costing methods

Answer 21

A product costing method particularly well suited to situations where production occurs in a continuous process; costs are pooled and assigned to aggregate output.

Question 22

product cost

Answer 22

Costs that attach to a product; the summation of direct materials, direct labor, and factory overhead.

Question 23

raw materials

Answer 23

the components that will be used in manufacturing units that are not yet started – also know as direct materials.

Question 24

RFID

Answer 24

(radio frequency identification) Micro processes embedded in inventory that emit radio frequency signals that enable a computer to automatically track inventory.

Question 25

scorecards (balanced)

Answer 25

A system for evaluating elements that are important to the organization and under the control of an employee holding that position.

Question 26

SG&A

Answer 26

Selling, general, and administrative costs; the period costs of the business.

Question 27

standards

Answer 27

Benchmarks against which actual productive activity is compared.

Question 28

theory of constraints

Answer 28

(TOC) Efficiency is improved by seeking out and eliminating constraints within the organization.

Question 29

total quality management

Answer 29

(TQM) A process for continuous improvement by focusing on customer service and systematic problem solving via teams made up of front-line employees.

Question 30

variances

Answer 30

Deviations from the norm that may provide warning signs of situations requiring corrective action by managers.

Question 31

work in process

Answer 31

Goods that are in production but not yet complete; an accumulation of monies spent on direct material, direct labor, and applied manufacturing overhead.