Braun & Tietz Managerial Accounting: Chapter 10 – Flashcards

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A performance evaluation system that integrates financial and operational performance measures along four perspectives: financial, customer, internal business, and learning and growth
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Balanced scorecard
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Sales revenue divided by total assets and shows how much sales revenue is generated with every $1 of assets
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Capital turnover
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Fixed expenses that cannot be traced to the segment
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Common fixed expenses
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A responsibility center in which managers are responsible for controlling costs
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Cost center
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A process where companies split their operations into different operating segments
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Decentralize
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Fixed expenses that can be traced to the segment
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Direct fixed expenses
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A variance that causes operating income to be higher than budgeted
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Favorable variance
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A summarized budget prepared for different levels of volume
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Flexible budget
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The difference between the flexible budget and actual results with variances due to something other than volume
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Flexible budget variance
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When the goals of the segment managers align with the goals of top management
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Goal congruence
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Historical cost of assets
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Gross book value
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A responsibility center in which managers are responsible for generating revenues, controlling costs, and efficiently managing the division's assets
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Investment center
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Summary performance metrics used to assess how well a company is achieving its goals
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Key performance indicators
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Performance indicators that reveal the results of past actions and decisions
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Lag indicators
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Performance measures that predict future performance
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Lead indicators
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A management technique in which managers only investigate budget variances that are relatively large
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Management by exception
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The difference between actual results and the master budget
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Master budget variance
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Historical cost of assets less accumulated depreciation
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Net book value
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Reports that compare actual results against budgeted figures
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Performance reports
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A report displaying the measurement of KPIs, as well as their short term and long term targets
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Performance scorecard or dashboard
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A responsibility center in which managers are responsible for both revenues and costs, and therefore profits
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Profit center
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Operating income minus the minimum acceptable operating income given the size of the division's assets
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Residual income
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A system for evaluating the performance of each responsibility center and its managers
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Responsibility accounting
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A part of an organization whose manager is accountable for planning and controlling certain activities
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Responsibility center
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Operating income divided by total assets that measures the profitability of a division relative to the size of its assets
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Return on investment (ROI)
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A responsibility center in which managers are responsible for generating revenue
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Revenue center
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Operating income divided by sales revenue that shows how much income is generated for every $1 of sales
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Sales margin
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The operating income generated by a profit or investment center before subtracting the common fixed costs that have been allocated to the center
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Segment margin
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The price charged for the internal sale of product between two different divisions of the same company
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Transfer price
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A variance that causes operating income to be lower than budgeted
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Unfavorable variance
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The difference between an actual amount and the budgeted amount
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Variance
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The acquisition of companies within one's supply chain
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Vertical integration
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The difference between the master budget and the flexible budget. The volume variance arises only because the actual volume differs from the volume originally anticipated in the master budget
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Volume variance
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