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continuous process improvement

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A management approach that is part of the overall total quality management philosophy. The approach requires all employees to constantly improve processes of which they are a part or for which they have managerial responsibility.

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controller

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The chief management accountant of a division or other segment of a business.

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controlling

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A phase in the management process that consists of monitoring the operating results of implemented plans and comparing the actual results with the expected results.

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conversion costs

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The combination of direct labor and factory overhead costs

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cost

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A payment of cash (or a commitment to pay cash in the future) for the purpose of generating revenues.

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cost object

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The object or segment of operations to which costs are related for management's use, such as a product or department.

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cost of finished goods available for sale

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The beginning finished goods inventory added to the cost of goods manufactured during the period.

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cost of goods manufactured

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The total cost of making and finishing a product.

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cost of goods sold

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The cost of finished goods available for sale minus the ending finished goods inventory.

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cost of merchandise sold

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The cost that is reported as an expense when merchandise is sold.

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decision making

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A component inherent in the other management processes of planning, directing, controlling, and improving.

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direct costs

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Costs that can be traced directly to a cost object.

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direct labor cost

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The wages of factory workers who are directly involved in converting materials into a finished product.

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direct materials cost

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The cost of materials that are an integral part of the finished product.

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directing

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The process by which managers, given their assigned level of responsibilities, run day-to-day operations.

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factory burden

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Another term for manufacturing overhead or factory overhead.

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factory overhead cost

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All of the costs of producing a product except for direct materials and direct labor.

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feedback

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Measures provided to operational employees or managers on the performance of subunits of the organization. These measures are used by employees to adjust a process or a behavior to achieve goals. See management by exception.

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financial accounting

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The branch of accounting that is concerned with recording transactions using generally accepted accounting principles (GAAP) for a business or other economic unit and with a periodic preparation of various statements from such records.

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finished goods inventory

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The direct materials costs, direct labor costs, and factory overhead costs of finished products that have not been sold.

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indirect costs

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Costs that cannot be traced directly to a cost object.

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line department

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A unit that is directly involved in the basic objectives of an organization.

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management (or managerial) accounting

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The branch of accounting that uses both historical and estimated data in providing information that management uses in conducting daily operations, in planning future operations, and in developing overall business strategies.

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management by exception

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The philosophy of managing which involves monitoring the operating results of implemented plans and comparing the expected results with the actual results. This feedback allows management to isolate significant variations for further investigation and possible remedial action.

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management process

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The five basic management functions of (1) planning, (2) directing, (3) controlling, (4) improving, and (5) decision making.

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managerial accounting

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The branch of accounting that uses both historical and estimated data in providing information that management uses in conducting daily operations, in planning future operations, and in developing overall business strategies.

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manufacturing overhead

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Costs, other than direct materials and direct labor costs, that are incurred in the manufacturing process.

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materials inventory

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The cost of materials that have not yet entered into the manufacturing process.

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objectives (goals)

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Developed in the planning stage, these reflect the direction and desired outcomes of certain courses of action.

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operational planning

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The development of short-term plans to achieve goals identified in a business's strategic plan. Sometimes called tactical planning.

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period costs

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Those costs that are used up in generating revenue during the current period and that are not involved in manufacturing a product, such as selling, general, and administrative expenses.

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planning

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A phase of the management process whereby objectives are outlined and courses of action determined.

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predetermined factory overhead rate

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The rate used to apply factory overhead costs to the goods manufactured. The rate is determined by dividing the budgeted overhead cost by the estimated activity usage at the beginning of the fiscal period.

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prime costs

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The combination of direct materials and direct labor costs.

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product costs

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The three components of manufacturing cost: direct materials, direct labor, and factory overhead costs.

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staff department

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A unit that provides services, assistance, and advice to the departments with line or other staff responsibilities.

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statement of cost of goods manufactured

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The income statement of manufacturing companies.

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strategic planning

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The development of a long-range course of action to achieve business goals.

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strategies

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The means by which business goals and objectives will be achieved.

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work in process inventory

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The direct materials costs, the direct labor costs, and the applied factory overhead costs that have entered into the manufacturing process but are associated with products that have not been finished.

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activity base (driver)

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A measure of activity that is related to changes in cost. Used in analyzing and classifying cost behavior. Activity bases are also used in the denominator in calculating the predetermined factory overhead rate to assign overhead costs to cost objects.

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activity-based costing (ABC) method

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A cost allocation method that identifies activities causing the incurrence of costs and allocates these costs to products (or other cost objects), based on activity drivers (bases).

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cost accounting system

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A branch of managerial accounting concerned with accumulating manufacturing costs for financial reporting and decision-making purposes.

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cost allocation

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The process of assigning indirect cost to a cost object, such as a job.

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finished goods ledger

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The subsidiary ledger that contains the individual accounts for each kind of commodity or product produced.

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job cost sheet

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An account in the work in process subsidiary ledger in which the costs charged to a particular job order are recorded.

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job order cost system

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A type of cost accounting system that provides for a separate record of the cost of each particular quantity of product that passes through the factory.

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materials ledger

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The subsidiary ledger containing the individual accounts for each type of material.

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materials requisition

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The form or electronic transmission used by a manufacturing department to authorize materials issuances from the storeroom.

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overapplied factory overhead

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The amount of factory overhead applied in excess of the actual factory overhead costs incurred for production during a period.

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period costs

answer

Those costs that are used up in generating revenue during the current period and that are not involved in manufacturing a product, such as selling, general, and administrative expenses.

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process cost system

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A type of cost system that accumulates costs for each of the various departments within a manufacturing facility.

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receiving report

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The form or electronic transmission used by the receiving personnel to indicate that materials have been received and inspected.

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time tickets

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The form on which the amount of time spent by each employee and the labor cost incurred for each individual job, or for factory overhead, are recorded.

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underapplied factory overhead

answer

The amount of actual factory overhead in excess of the factory overhead applied to production during a period.

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cost of production report

answer

A report prepared periodically by a processing department, summarizing (1) the units for which the department is accountable and the disposition of those units and (2) the costs incurred by the department and the allocation of those costs between completed and incomplete production.

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cost per equivalent unit

answer

The rate used to allocate costs between completed and partially completed production.

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equivalent units of production

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The number of production units that could have been completed within a given accounting period, given the resources consumed.

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first-in, first-out (FIFO) inventory cost flow method

answer

The method of inventory costing based on the assumption that the costs of merchandise sold should be charged against revenue in the order in which the costs were incurred.

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just-in-time (JIT) processing

answer

A processing approach that focuses on eliminating time, cost, and poor quality within manufacturing and nonmanufacturing processes.

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manufacturing cells

answer

A grouping of processes where employees are cross-trained to perform more than one function.

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process cost system

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A type of cost system that accumulates costs for each of the various departments within a manufacturing facility.

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process manufacturers

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Manufacturers that use large machines to process a continuous flow of raw materials through various stages of completion into a finished state.

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whole units

answer

The number of units in production during a period, whether completed or not.

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yield

answer

A measure of materials usage efficiency.

MANAGERIAL ACCOUNTING – CHAPTER 16, 17, 18 – Flashcards

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