A business that provides an intangible benefit and has little or no inventory.
What is a service business?
100
Costs that can be incurred on a job and that can be specifically related and tracked so that they do not have to be allocated using an overhead rate.
What are "other direct costs"?
100
Attempts to shift as many costs as possible out of the indirect cost pool that has to be allocated to jobs and into direct cost pools that can be specifically traced to the individual jobs that caused the cost to occur.
What is activity based costing? (ABC)
100
An approach to measuring a business' success by considering both financial and nonfinancial performance measures.
What is a balanced scorecard?
100
The degree to which a product or service satisfies customer needs.
What is design quality?
200
The percentage of U.S. nonfarm workers employed by service businesses.
What is roughly 86%?
200
A report that compares budgeted costs for a job to the actual costs incurred and indicates a variance for each item.
What is a cost performance report?
200
The practice of assigning costs evenly to jobs using an overhead rate, even though different jobs actually consume resources in different proportions.
What is "peanut butter costing"?
200
The four categories of balanced scorecard performance measures.
What are financial, customer, internal business processes, and learning and growth?
200
How well a product or service performs relative to its intended design.
**DAILY DOUBLE**
What is conformance quality?
300
The basic document used to accumulate costs for a service business.
**DAILY DOUBLE**
What is the job order cost sheet? (much like those used by manufacturers)
300
A firms best estimate of what it will charge clients for the various categories of professional labor in the coming year.
What are billing rates?
300
Separating indirect costs into homogeneous pools with individual cost drivers or cost allocation bases for each pool.
***DAILY DOUBLE***
What are multiple cost pools?
300
The reason to bother with other performance measurements than financial if the business is meeting financial targets and satisfying its owners.
***DAILY DOUBLE***
What is the concern that a company might take actions to increase short-term profits that could be harmful to long-term profitability?
300
Consist of the cost of the activities that are incurred to preclude the production of a product or the execution of a service that does not conform to its design specification.
What are prevention costs?
400
Usually the largest component of cost in a service business.
What is labor cost?
400
Consists of the indirect expenses incurred to support the activities of a professional services firm.
What is overhead as it relates to a service business?
400
The decision basis that should be used when considering implementation of a more sophisticated costing system versus a more basic system.
What is a cost/benefit decision? (Is the value of the more refined information more than the cost to get it)
400
- Employees should be able to understand and have control over the performance measures by which they are evaluated.
What is the 3rd guideline to observe when choosing performance measures?
400
The cost of activities that are incurred to identify which products do not conform to specifications before they are sent to customers.
What are appraisal costs?
500
The usual bases used for allocating overhead costs in a service business.
What are direct labor hours or direct labor dollars?
500
The overhead rate for a professional services firm based on direct labor dollars if it had budgeted professional salaries of $500,000 and other indirect costs of $250,000.
***DAILY DOUBLE***
What is 50%? (250,000 / 500,000)
500
A management method that relies on activity based costing to improve business performance. (Hint-chapter 4)
What is activity based management? (ABM)
500
To be effective, performance measures must be consistent with the company strategy...and...There should not be too many performance measures.
What are the 1st and 2nd guidlines to observe when choosing performance measures?
500
The cost of activities incurred to correct defective products prior to shipment and the cost to remedy the situation when they have already been shipped to customers.