Management Acc & Cost Terms
quantitative expression of a proposed plan of action by management and is an aid to coordinating what needs to be done to execute that plan.
Budget
Total Revenues - Total Variable Costs =
Contribution Margin
grouping of individual indirect cost items
cost pool
When a product consumes a high level of resources per unit, but is reported to have a low cost per unit.
Product undercosting
system in which the cost object is masses of identical or similar units of a product or service.
process-costing
process businesses use to analyze decisions by summing the benefits of a situation or action and then subtracts the costs associated with taking that action.
cost-benefit analysis
Where quantity of output sold (total revenue) is equal to total costs
breakeven point
when the cost object is a unit or multiple units of a distinct product or service this is called a
job
Term for: when a company undercosts one product, it will overcost at least one of its other products
product cross-subsidization
Main difference between process and job costing.
extent of averaging
collection of cost data in some organized way by means of an accounting system.
cost accumulation
Budgeted (or actual) revenues - BE revenues =
margin of safety
costing system (used in job costing) that 1) traces direct costs to a cost object by using the actual direct-cost rate times the actual quantities of inputs and 2) allocates the indirect costs based on the budgeted indirect-cost rates times the actual quantities of the cost allocation bases.
Normal costing
Name one reason for demand for refinements to the costing system.
Increase in productivity, increase in indirect cots, competition in product markets
What is the per unit cost given the following info:
No beg or ending WIP
Started and Completed 10 units
DM costs added: $100
Conversion costs added: $400
50
variable, such as the level of activity or volume, that causally affects costs over a given time span.
cost driver
What is this an example of: Y = $300 + $.20X
linear cost function
When the allocated amount of indirect costs is less than the actual amount incurred.
Batch-level costs
What is the equivalent unit of work done for conversion costs given the following:
No beg WIP
Started 10 units
Completed 8 units
End WIP 2 units
DM costs added: $200
Conversion costs added: $300
degree of completion of end WIP 50%
9
all costs in the income statement other than COGS. Ex; marketing, distribution, customer service
period costs
Most widely used quantitative analysis cost estimation method
Regression analysis
Proration approach
Name 2 tell-tale signs that ABC is likely to provide the most benefit.
Significant amount of indirect costs are allocated using only 1 or 2 cost pools.
All or most indirect costs are identified as output-unit level costs.
Products make diverse demands on resources bc of differences in volume, process steps, batch size, or complexity
Products that a company is well-suited to make and sell show small profits, whereas products that a company is less-suited to make show large profits.
Operations staff has substantial disagreement with the reported costs of manufacturing and marketing products and services.
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