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90 Cards in this Set
- Front
- Back
5 successful strategies |
1. cost efficiency 2. quality 3. timliness 4. innovation 5. sustainability |
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6 steps of the value chain |
1. basic R&D / applied R&D 2. testing and design 3. production 4. marketing 5. transportation 6. customer service |
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cost-benefits |
behavioral impact ethical impact different costs/purposes |
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office politics |
line position staff position |
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"staff/line" can never tell "staff/line" what to do |
staff
line |
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involved with the mission of the business ex. nurses, doctors, teachers, product makers |
line position |
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provides the line with reports and such |
staff position |
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4 themes of ethics |
competency confidentiality credibility integrity |
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traceable object |
direct |
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non traceable object |
indirect |
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cost: constant per unit variable total cost |
variable cost |
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cost: variable per unit constant total cost |
fixed cost |
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product costs |
direct materials direct labor variable MOH fixed MOH |
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order of manufacturing |
raw materials > WIP > finished goods > COGS |
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on which statement are product costs found? |
balance sheet |
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on which statement are period costs found? |
income statement |
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period costs |
R&D S&A |
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why is R&D a period cost? |
b/c you cannot quantify/predict commercialism |
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characteristics of job order costing |
high customer input high variability low volume focus is on the job |
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examples of job order costing |
home building (architect), custom items, accounting firms, lawyers |
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characteristics of process costing |
little customer input standard product high volume focus is on each department |
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examples of process costing |
processed food products (Campbell's) |
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does depreciation affect overhead? |
yes |
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journalization for materials requisition form |
WIP (dr), Direct Materials (cr) |
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journalization for tracking time (time ticket) |
WIP (dr), Direct Labor (cr) |
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journalization for manufacturing overhead |
WIP (dr), MOH (cr) |
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budgeted MOH rate |
budgeted MOH costs / budgeted total quantity of cost allocation base |
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should normal costing or actual costing be used? |
normal costing |
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how to find the amount "cost allocated to job" |
MOHR x Actual Allocation Base |
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3 ways to adjust for under/over allocation |
1. Proration 2. Write off to COGS 3. Adjusted Allocation Rate |
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which adjustment for under/over allocation is used most for publicly held companies and larger accounts? |
proration |
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ledger that defines the account in depth/details |
subsidiary ledgers |
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5 steps of process costing |
1. summarize the flow of physical units of output 2. compute output in terms of equivalent units 3. summarize total costs to account for 4. compute cost per equivalent unit 5. assign total costs to units completed and to units in ending |
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when are raw materials added? |
at the beginning |
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when are conversion costs added? |
during/throughout the process |
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as a managerial accountant, they use info to tell departments... |
if they're "in" or "out" of control |
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ABC Indidcators |
1. Increase in product diversity 2. Increase in indirect costs (robots over humans) 3. Competition in product markets |
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Guidelines for refining a costing system |
1. direct cost tracing 2. indirect cost pools 3. cost allocation base |
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breaking overhead cost pool into cost hierarchy |
1. unit level pool (indirect mat, indirect labor) 2. batch level costs (purchasing, receiving, scheduling, shipping) 3. product sustaining costs (R&D, design) 4. facility sustained levels (depr, tax, insurance, security, maintenance, secretary) |
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to have ABM, must have ____ |
ABC |
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strategy |
how the organization matches its own capabilities with the opportunities in the marketplace |
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strategic cost management |
cost management that specifically focuses on strategic issues |
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R&D |
generating and experimenting with ideas related to new products, services, or processes |
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design of products and processes |
detailed planning, engineering, and testing of products and processes |
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procuring, transporting, and storing and coordinating and assembling resources to produce a product or deliver a service |
production |
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promoting and selling products or services to customers or prospective customers |
marketing (including sales) |
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processing orders and shipping products or services to customers |
distribution |
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providing after sales service to customers |
customer service |
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strategy that integrates people and technology in all business functions to deepen the relationships with customers, partners and distributors |
customer relationship management |
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describes the flow of goods, services, and information from the initial sources of materials and services to the delivery of products to customers regardless of whether those activities occur in one organization or multiple organizations |
supply chain |
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the quantative expression of a proposed plan of action by management and is an aid to coordinating what needs to be done to execute the plan |
budget |
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the assignment of indirect costs to a particular cost object |
cost allocation |
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used to describe the assignment of direct costs to a particular cost object |
tracing |
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a variable that casually affects costs over a given span of time |
cost driver |
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the band or range of normal activity level or volume in which there is a specific relationship between the level of activity or volume and the cost in question |
relevant range |
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cost that is calculated by dividing the total cost by the related number of units produced |
unit cost = average cost |
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all costs in the income statement other than cogs |
period costs |
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all manufacturing costs that are related to the cost object but cannot be traced to that cost object in an economically feasible way |
indirect manufacturing costs |
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the compensation of all manufacturing labor that can be traced to the cost object in an economically feasible way |
direct manufacturing labor costs |
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the acquisition costs of all materials that eventually become part of the cost object in an economically feasible way |
direct materials costs |
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companies that purchase and then sell tangible products without changing their basic form |
merchandising sector companies |
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operating income = |
total rev - cogs - period costs |
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a grouping of individual indirect cost items; range from broad to narrow |
cost pool |
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a systematic way to link an indirect cost or group of indirect costs to cost objects |
cost allocation base |
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when the cost object is a job, product, or customer, the cost allocation base is also called |
cost application base |
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costing system in which the cost object is a unit or multiple units of a distinct product or service called a job |
job costing system |
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costing system in which the cost object is masses of identical or similar units of a product or service |
process costing system |
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a costing system that traces direct costs to a cost object based on the actual direct cost rates times the actual quantities of the direct cost inputs used |
actual costing |
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indirect costs are allocated based on... |
(the actual indirect cost rate) x )actual quantities of cost allocation base) |
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a costing system that traces direct costs to a cost object by using the actual direct cost rates times the actual quantities of the direct cost inputs and that allocates indirect costs based on the budged indirect cost rates times the actual quantities of the cost allocation base |
normal costing |
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an original record that supports journal entries in an accounting system |
source document |
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example of source document |
time card |
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used to record and accumulate all the costs assigned to a specific job, starting when work begins |
job cost sheet / job cost record |
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the amount of manufacturing overhead costs allocated to individual jobs based on the budged rate multiplied by the actual quantity of the allocation base used for each job |
manufacturing overhead allocated/ manufacturing overhead applied |
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the spreading of under allocated manufacturing overhead or over allocated manufacturing overhead among ending work in process, finished goods, and cogs proportionately |
proration |
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allocated amount of indirect costs in an accounting period is greater than the actual (incurred) amount in that period |
over allocated/ over applied / over absorbed indirect costs |
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allocated amount of indirect costs in an accounting period is less than the actual (incurred) amount in that period |
under allocated/ under applied/ under absorbed indirect costs |
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a product consumes a high level of resources per unit but is reported to have a low cost per unit |
product undercosting |
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a product consumes a low level of resources per unit but is reported to have a high cost per unit |
product overcosting |
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costing outcome where one undercoated (overcosted) product results in at least one other products being overcosted (undercoated) |
product cost cross subsidization |
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reduces the use of broad averages for assigning the cost of resources to cost objects (jobs/products/services) and provides better measurement of the cots of indirect resources used by different cost objects, no matter how differently various cost objects use indirect resources |
refined costing system |
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refines a costing system by identifying individual activities as the fundamental cost objects |
activity based costing (ABC) |
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an event, task, or unit of work with a specific purpose |
an activitiy |
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categorizes various activity cost pools on the basis of the different types of cost drivers, cost allocation bases, or different degrees of difficulty in determining cause and effect relationships |
cost hierarchy |
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costs of activities performed on each individual unit of a product or service |
output unit level costs |
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costs of activities related to a group of units of a product or service rather than each individual unit of product or service |
batch level costs |
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the costs of activities undertaken to support individual products or services regardless of the number of units or batches in which the units are produced |
product(service) sustaining costs |
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the costs of activities that managers cannot trace to individual products or services but that support the organization as a whole |
facility sustaining costs |
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a method of management decision making that uses activity based costing information to improve customer satisfaction and profitability |
activity based management (ABM) |
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costs incurred in previous departments that are carried forward as the product's cost when it moves to a subsequent process in the production cycle |
transferred in costs/ previous department costs |