Chapter 22 Flashcards
achievable standards
A standard that takes into account normal spoilage and inefficiency; intended to allow workers to reach the established benchmarks.
balanced scorecard
A set of performance measures that are congruent with assessing improvement in financial, customer, and business process outcomes.
centralized decision making
A business style where top leaders make and direct most important decisions
common fixed costs
Fixed costs that are incurred to support more than one business unit
cost center
An area of responsibility under the control of a manager who is responsible for costs incurred within the unit generally has little revenue function
decentralized decision making
A business style where top leaders concentrates on strategy, and leaves day-to-day operation and decision-making tasks to lower-level personnel
direct labor efficiency variance
A variance comparing standar hours of direct labor to the actual hours worked; measured at the standard rate per hour [9standar hours - actual hours) X standard rate]
direct labor rate variance
A variance that reveals the difference between the standard rate and actual rate for the actual labor hours worked [(standar rate - actual rate) X actual hours]
fixed overhead spending variance
A fixed overhead variance that compares actual fixed overhead to the budgeted fixed overhead.
fixed overhead volume variance
A fixed overhead variance that compares the budgeted fixed overhead to the fixed overhead that is applied to production based on standard fixed overhead per unit of output.
ideal standards
A standard that could only be achieved under perfect operating conditions; such standards are rarely expected to be achieved.
investment center
A evaluative unit where managers are accountable for cost and profit outcomes, including consideration of the amount of capital that is deployed to achieve those outcomes.
management by exception
A management focus of attention on areas where corrective measures appear necessary.
materials price variance
A variance that reveals the difference between standard price for materials purchased and amounts actually paid for those materials [(standard price - actual price) X actual quantity].
materials quantity variance
A variance comparing standard quantity to actual quantity of materials; variation is measured at the standard price per unit [(standard quantity - actual quantity) X standard price].
profit center
Business unit that has control over both costs and revenues and is therefore evaluated on the profit outcomes.
responsibility center
The part of an organization under the control of a manager.
return on investment
ROI: A model consisting of a margin component (Operating Income/Sales) and turnover component (Sales/Average Assets); reduces to Operating Income/Average Assets.
standard cost
A measure of what costs should be incurred to achieve the observed output
traceable fixed costs
Fixed costs that would not exist if the unit under evaluation ceased to exist
variable overhead efficiency variance
A variance that reflects the level of efficiency associated with the application of variable overhead to production
variable overhead spending variance
A variance that reflects the difference between actual variable overhead and standard variable overhead associated with the actual units of the application base.
