Cost Management Techniques Flashcards
What is activity based costing?
This is a development of absorption costing, using a sophisticated system to deal with indirect costs by examining what causes them and charging costs to units of output appropriately.
What is value engineering?
Ensuring that new products or services are designed for quality at low cost by analyzing how every part of the design enhances value.
What is value analysis?
Analyzing the value of every part of the design of an existing product or service and questioning if its function can be achieved in a lower cost manner.
What are value added activities?
Activities that create an aspect of a product or service that customers are willing to pay for.
What are non-value added activities?
Wasteful activities that do not contribute to the value of the product or service.
What are lean organisations?
Organisations that have mainly eliminated non-value added activities.
What is target costing?
Setting targets for costs as selling price less required profit and using cost reduction to meet the target cost if necessary.
What is life cycle costing?
Accounting for the costs of a product over its entire life from the start of development to the end of customer support.
What is cloud accounting?
The use of an external IT provider to store accounting data and software, accessible remotely via the internet.
What is artificial intelligence?
The ability of software to ‘learn’ from historical data to become more efficient and effective.
What is data analytics?
The analysis of structured and unstructured data from inside and outside the organisation to provide information.
What is visualisation?
The use of graphics, pictures, and animation to present data for easier understanding.
