Understanding Cost Accounting and Management: Key Terms and Concepts, Quizzes of Management Accounting

Download Understanding Cost Accounting and Management: Key Terms and Concepts and more Quizzes Management Accounting in PDF only on Docsity! TERM 1 Control decision DEFINITION 1 Decisions related to motivating monitoring and evaluating performance TERM 2 Decision Framework DEFINITION 2 A four step process that consists of specifying the decision goals, identifying available options, evaluating these options, and then selecting the best options TERM 3 Planning decisions DEFINITION 3 decisions about acquiring and using resources to deliver products and service TERM 4 decision cycle DEFINITION 4 Plan Implement Evaluate Revise TERM 5 Controllable Cost/Benefit DEFINITION 5 Cost or benefit decision maker chooses to incur relative to doing nothing TERM 6 Cost hierarchy DEFINITION 6 Unit Batch Product Facility TERM 7 Relevant Cost/Benefit DEFINITION 7 Cost or benefit that differs across decision options TERM 8 Traceability DEFINITION 8 Degree to which we can directly relate a cost or revenue to a decision option TERM 9 Variability DEFINITION 9 Relation between cost or benefit and an activity TERM 10 Principles of estimating costs DEFINITION 10 Variability Tracebility TERM 21 Cost Structure DEFINITION 21 Proportion of total costs that are fixed and variable TERM 22 Margin of Safety DEFINITION 22 =(Sales($) - Breakeven Sales)/Sales TERM 23 Operating Leverage DEFINITION 23 Fixed Costs/ Total Costs TERM 24 Weighted UCM DEFINITION 24 UCM averaged across multiple products, with each product's UCM being weighted by the product mix TERM 25 Incremental (differential) Approach DEFINITION 25 Involves expressing cost and benefits of the various decision options relative to one of the options TERM 26 Totals approach DEFINITION 26 Construct CM statement for each decision option TERM 27 Primary Budget Roles DEFINITION 27 Planning Coordination Control TERM 28 Cash budget DEFINITION 28 1) Inflows from operations 2) Outflows from operations 3) Special Items TERM 29 Responsibility Centers DEFINITION 29 Cost, Profit, Investment TERM 30 Centralized Decision Making DEFINITION 30 Top managers make decisions TERM 31 Decentralized decision Making DEFINITION 31 Decentralized decision making is any process where the decision making authority is distributed throughout a larger group. TERM 32 Total Profit Variance DEFINITION 32 Difference between actual profit and master budget profit TERM 33 Sales Volume Variance DEFINITION 33 difference between flexible budget profit and master budget profit or (Actual Sales quantity-Budgeted sales quantity) x BUCM or [(actual market size x actual market share)- (budgeted x budgeted market share)] x BUCM or (Actual total sales x Flexible WUCM) - (Budgeted total sales - Master WUCM) TERM 34 Flexible budget variance DEFINITION 34 difference between flexible budget profit and actual budget profit Comprised of: Sales Price Variance Variable Costs Variances Fixed cost spending variance TERM 35 Sales Price Variance DEFINITION 35 Difference between actual revenue and flexible budget revenue TERM 46 Plantwide Rate DEFINITION 46 Use of one rate for entire firm when allocating OH costs TERM 47 Whale Curve DEFINITION 47 Curve that plots customer profitability TERM 48 Measures of Investment center performance DEFINITION 48 Return on Invest Residual Income Economic Value added TERM 49 Transfer Price DEFINITION 49 Method firms use to recognize economic effects of an intra- company sale TERM 50 Cost Allocation Limitations DEFINITION 50 Time Value of Money "Lumpy" nature of resources TERM 51 Real options analysis DEFINITION 51 Models that place quantitative value on flexibility TERM 52 Role of Activity Based Costing DEFINITION 52 Evaluate profitability of: Customer Planning Resource Planning Product Planning TERM 53 5 Capital Budgeting Methods DEFINITION 53 Accounting Rate of Return Internal Rate of Return Net Present Value Payback Period Modified Payback Period TERM 54 Methods to align Individual and Firm goals DEFINITION 54 Policies and Procedures Incentives Monitoring TERM 55 3 Types of Organizations DEFINITION 55 Service Retail Manufacturing TERM 56 Balanced Scorecard Group Measures DEFINITION 56 Internal Innovative Financial Customer