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BUSI 601 > Week 2 Busi 601 > Flashcards

Week 2 Busi 601 Flashcards

1
Q

Cost

A

Incurred when a resource is used for some purpose.

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2
Q

Cost Pools

A

The meaningful groups into which costs are collected.

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3
Q

Cost Driver

A

A factor that causes or relates to a change in the total cost of an activity.

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4
Q

Cost Object

A

any product, service, customer activity, or organizational unit to which costs are accumulated for some management purpose.

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5
Q

Value stream

A

a group of related products; useful for preparing profitability reports as part of lean accounting; all the activities required to create customer value for a daily of products or services.

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6
Q

Cost Assignment

A

The process of assigning costs to cost pools or rom cost pools to cost objects.

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7
Q

Direct cost

A

A cost that can be conveniently and economically traced directly to a cost pool or a cost object.

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8
Q

Indirect cost

A

a cost that is not conveniently or economically traceable to a specific cost pool or cost object.

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9
Q

Cost allocation

A

the process of assigning indirect costs to cost pools and cost objects

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10
Q

Allocation bases

A

the cost drivers used to allocate or assign costs to cost objects.

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11
Q

Direct materials cost

A

the cost of the materials in the product and a reasonable allowance for scrap and defective units.

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12
Q

Indirect materials cost

A

the cost of materials used in manufacturing that are not part of the product or are not easily or economically traceable to the finished product; a component of total manufacturing overhead.

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13
Q

Direct labor cost

A

the labor used to manufacture the product or to provide the service.

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14
Q

Indirect labor cost

A

Labor costs associated with production that are not considered direct labor. Examples include supervision, quality control, inspection, purchasing and receiving, ad other labor related manufacturing support costs; a component of total manufacturing overhead.

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15
Q

Overhead

A

All the indirect costs commonly combined into a single cost pool’ called factory overhead in a manufacturing firm.

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16
Q

Factory Overhead

A

All the indirect manufacturing costs commonly combined into a single cost pool in a manufacturing firm.

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17
Q

Prime costs

A

the sum of direct materials and direct labor.

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18
Q

Conversion costs

A

Direct labor and factory overhead combined into a single amount.

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19
Q

Relevant Range

A

The range of the cost driver in which the actual value of the cost driver is expected to fall, and for which the relationship between the cost and the cost driver is assumed to be approximately linear.

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20
Q

Variable cost

A

A cost that changes in total in repose to changes in one or more cost drivers.

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21
Q

Fixed cost

A

The portion of the total cost that, within the relevant range, does not change with a change in the quality of a designated driver.

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22
Q

Mixed cost

A

A cost that, within the relevant range, includes both variable and fixed cost and components.

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23
Q

Step cost

A

A cost that varies with the cost driver, but in discrete steps within the relevant range (Also called semi-fixed cost).

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24
Q

Unit Cost

A

the total cost (materials, labor, and overhead) divided by the number of units of output.

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25
Q

Average cost

A

The total cost of resources consumed (materials, labor, and overhead) divided by the units of output.

26
Q

Structural cost drivers

A

Strategic plans and decisions that have a longterm effect with regard to issues such as scale, experience, technology, and complexity.

27
Q

Executional Cost drivers

A

Factors that the firm can manage in the short term to reduce costs such as workforce involvement, design of the production process, and supplier relationships.

28
Q

Cost of goods sold

A

The cost of the product transferred to the income statement when inventory is sold.

29
Q

Product costs

A

only the cost necessary to complete the product (direct labor, direct materials, and factory overhead).

30
Q

Period costs

A

All nonprudct expenditures for managing the firm and selling the product; also referred to as selling, general, and administrative expenses.

31
Q

Materials inventory

A

Cost of the supply of materials used in the manufacturing process or to provide the service.

32
Q

Work in process inventory

A

An inventory account that contains all costs put into the manufacture of products that are started but not complete at the financial statement date.

33
Q

Finished goods inventory

A

The cost of good that are ready for sale.

34
Q

Total manufacturing cost

A

The sum of materials used, labor, and overhead for the period.

35
Q

`Cost of goods manufactured

A

The cost of goods that were finished and transferred out of the work in process inventory account during a given period.

36
Q

Internal accounting controls

A

A set of policies and procedures that restrict and guide activities in the processing of financial data with the objective of preventing or detecting errors and fraudulent acts.

37
Q

Perpetual inventory system

A

A method that updates the finished goods inventory account for each purchase or sales transaction.

38
Q

Periodic Inventory system

A

a method that involves a count of inventory at the end of each accounting period to determine the ending balance in inventory.

39
Q

Activity

A

A specific task, action, or unit of work done.

40
Q

Resource

A

An economic element needed or consumed to perform activities

41
Q

Cost driver

A

a factor that causes or relates to a change in the total cost of an activity.

42
Q

Resource consumption cost driver

A

A measure of the frequency and intensity of demand placed on a resource by an activity.

43
Q

Activity Consumption Cost Driver

A

A measure of the demand placed on the resourced by products, services, or customers.

44
Q

Activity based Costing (ABC)

A

A costing approach that assigns resource costs to cost objects based on activities performed for the cost objects.

45
Q

Two stage cost assignment

A

A procedure that assigned a firm’s resource cost to cost pools and then to cost objects.

46
Q

Unit level activity

A

an activity performed for each unit of the cost object.

47
Q

Batch level activity

A

An activity performed for each batch of products or services

48
Q

Product level activity

A

an activity performed to support the production of a specific type of product or service.

49
Q

Facility level activity

A

An activity performed to support operations in general (that is, an activity not related to volume of output, number of batches produced, or the support of individual products).

50
Q

Idle Capacity

A

The difference between the available capacity and the planned level of utilization.

51
Q

Idle capacity cost

A

The economic value of resources not utilized to produce products or provide services.

52
Q

Activity Based Management (ABM)

A

Uses activity analysis and activity based costing to help managers identify the value of activities and to make strategic performances management decisions - adding and deleting products, adjusting process capacities, adjusting prices, removing costs and complexities, and more.

53
Q

Process Map

A

A diagram that identifies each step in making a product or providing a service.

54
Q

High value added activity

A

Something that, in the eyes of the consumer. Adds value to a product or service.

55
Q

Low value added activity

A

Consumes time, resources, or space but adds little in regard to satisfying customer needs.

56
Q

Customer profitability analysis

A

identifies customer service activities, cost drivers, and the profitability of each individual customer or customer group.

57
Q

Customer cost analysis

A

identifies cost activities and cost drivers related to servicing customers

58
Q

Customer lifetime value (CLV)

A

The net present value of estimated future profits from a given customer; in practice, a firm is likely to estimate this value over the next three to five years.

59
Q

Multistage ABC

A

The assignment of resource costs to retain other Activites that, in turn, are assigned to other activities before being assigned to the final cost objects.

60
Q

Resource consumption accounting (RCA)

A

A comprehensive and fully integrated management accounting approach that provides management with decision support information based on an operation view of the organization.

BUSI 601 (2 decks)

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