M_ACCT Ch.4 – Flashcards

refined costing systems, lean operations, total quality management and the costs of quality

different departments incur different amounts and types of MOH; different jobs or products use the departments to a different extent

each department incurs different types and amounts of MOH; each product, or job, uses the departments to a different extent

1. Co. estimates total MOH costs that will be incurred in each dept. in the coming year. These estimates are known as *departmental overhead cost pools.* 2. Co. selects an allocation base for each dept. & estimates the total amount that will be used during the year. 3. Co. calculates departmental overhead rates using the info. estimated in steps 1 & 2. 4. Co. allocates some MOH from each dept. to the individual jobs that use those depts.

total estimated departmental overhead cost pool divided by total estimated amount of the departmental allocation base

departmental overhead rate multiplied by actual amount of departmental allocation base used by job

focuses on activities as the fundamental cost objects. the costs of those activities become building blocks for compiling the indirect costs of products, services, and customers.

using activity-based cost information to make decisions that increase profits while satisfying customers' needs

costs incurred to detect poor-quality goods or services

activities and costs incurred for every batch, regardless of the number of units in the batch

overcosting some products while undercosting other products

a report that lists the costs incurred bu the company related to quality. the costs are categorized as prevention costs, appraised costs, internal failure costs, and external failure costs

the time that elapses between receipt of a customer order and delivery of the product or service

separate manufacturing overhead rates established for each department

acronym for the eight wastes: Defects, Overproduction, Waiting, Not utilizing people to their full potential, Transportation, Inventory, Movement, Excess processing.

Defects, Overproduction, Waiting, Not utilizing people to their full potential, Transportation, Inventory, Movement, Excess processing

costs incurred when the company does not detect poor-quality goods or services until after delivery is make to customers

activities and costs incurred no matter how many, units, batches, or products are produced in the plant

A workplace organization system comprised of the following steps: Sort, Set in order, Shine, Standardize, and Sustain

costs incurred when the company detects and corrects poor-quality goods or services before making delivery to customers

inventory management philosophy that focuses on purchasing raw materials just in time for production and completing finished goods just in time for delivery to customers

a Japanese word meaning "change for the better"

management philosophy and strategy focused on creating value for the customer by eliminating waste

the time that elapses between the start of production and the product's completion

activities that neither enhance the customer's image of the product or service nor provide a competitive advantage; also known as waste activities

when overhead is allocated to every product using the same manufacturing overhead rate

storage system used to reduce the waste of transportation and movement in which tools, materials, and equipment are stored in proximity to where they will be used most frequently

costs incurred to avoid poor-quality goods or services

activities and costs incurred for a particular product, regardless of the number of units or batches of the product produced

the rate of production needed to meet customer demand yet avoid overproduction

management philosophy of delighting customers with superior products and services by continually setting higher goals and improving the performance of every business function

activities and costs incurred for every unit produced

eliminating waste in the system by making the company's processes as effective and sufficient as possible

activities for which the customer is willing to pay because these activities add value to the final product or service

activities that neither enhance the customer's image of the product or service nor provide a competitive advantage; also known as non-calue-added activities