Ch 1 - Managerial Acct Basics Vocab

Question 1

Managerial accounting

Answer 1

area of accounting aimed mainly at serving the decision-making needs of internal users; also called management accounting

Question 2

Planning

Answer 2

process of setting goals and preparing to achieve them

Question 3

Control

Answer 3

process of monitoring planning decisions and evaluating the organization’s activities and emploees

Question 4

continuous improvement

Answer 4

concept requiring every manager and employee continually to look to improve operations

Question 5

controllable or not controllable cost

Answer 5

costs that a manager does not have the power to control or strongly influence

Question 6

conversion costs

Answer 6

expenditures incurred in converting raw materials to finished goods; includes direct labor costs and overhead costs

Question 7

cost object

Answer 7

product, process, department, or customer to which costs are assigned

Question 8

customer orientation

Answer 8

company position that its managers and employees be in tune with the changing wants and needs of consumers

Question 9

cycle efficiency (CE)

Answer 9

measure of production efficiency, which is defined as value-added (process) time divided by total cycle time

Question 10

cycle time (CT)

Answer 10

measure of time to produce a product of service, which is the sum of process time, inspection time, move time, wait time,
also called throughput time

Question 11

direct costs

Answer 11

costs incurred for the benefit of one specific cost object

Question 12

direct labor

Answer 12

efforts of employees who physically covert materials to finished product

Question 13

direct labor costs

Answer 13

wages and salaries for direct labor that are seperately and readily traced through the production process to finished goods

Question 14

direct material

Answer 14

raw material that physically becomes part of the product and is clearly identified with specific products or batches of product

Question 15

direct material costs

Answer 15

expenditures for direct material that are separately and readily traced through the production process to finished goods

Question 16

ethics

Answer 16

codes of conduct by which actions are judged as right or wrong, fair or unfair, honest or dishonest

Question 17

factory overhead

Answer 17

factory activities supporting the production process that are not direct material or direct labor,
also called overhead and manufacturing overhead

Question 18

factory overhead costs

Answer 18

expenditures for factory overhead that cannot be separately or readily traced to finished goods;
also called overhead costs

Question 19

finished goods inventory

Answer 19

account that controls the finished goods files, which acts as a subsidiary ledger (of the inventory account) in which the costs of finished goods that are ready for sale are recorded

Question 20

fixed cost

Answer 20

cost that does not change with changes in volume of activity

Question 21

goods in process inventory

Answer 21

account in which costs are accumulated for products that are in the process of being produced but are not yet complete;
also called work in process inventory

Question 22

indirect costs

Answer 22

costs incurred for the benefit of more than one cost object

Question 23

indirect labor

Answer 23

efforts of production employees who do not work specifically on converting direct materials into finished products and who are not clearly identified with specific units or batches of product

Question 24

indirect labor costs

Answer 24

labor costs that cannot be physically traced to production of a product or service;
included as part of overhead

Question 25

indirect material

Answer 25

material used to support the production process but not clearly identified with products of batches of product

Question 26

Institute of Management Accountants (IMA)

Answer 26

professional association of mgmt accountants

Question 27

internal control system

Answer 27

all policies and procedures used to protect assets, ensure reliable accounting, promote efficient operations, and urge adherence to company policies

Question 28

Just-in-time (JIT) manfacturing

Answer 28

process of acquiring or producing inventory only when needed

Question 29

Lean business model

Answer 29

practice of eliminating waste while meeting customer needs and yielding positive company returns

Question 30

managerial accounting

Answer 30

area of accounting aimed mainly at serving decision-making-needs of internal users; aka: mgmt accounting

Question 31

manufacturing statement

Answer 31

report that summarizes the types and amounts of costs incurred in a company's production process for a period; also called COGS manufacturing statement

Question 32

non-value-added time

Answer 32

portion of cycle time that is not directed at producing a product or service; equals the sum of inspection time, move time, and wait time

Question 33

opportunity cost

Answer 33

potential benefit lost by choosing a specific action from two or more alternatives

Question 34

out-of-pocket cost

Answer 34

cost incurred or avoided as a result of mgmt's decisions

Question 35

period costs

Answer 35

expenditures identified more with a time period than with finished product costs; includes spelling and general admin expenses

Question 36

planning

Answer 36

process of setting goals and preparing to achieve them

Question 37

prime costs

Answer 37

expenditures directly identified with the production of finished goods; include direct materials costs and direct labor costs

Question 38

product costs

Answer 38

costs that are capitalized as inventory because they produce benefits expected to have future value; include direct materials, direct labor, and overhead

Question 39

raw materials inventory

Answer 39

goods a company acquires to use in making products

Question 40

sunk cost

Answer 40

cost already incurred and cannot be avoided or changed

Question 41

total quality management (TQM)

Answer 41

concept calling for all mgrs and employees at all stages of operations to strive toward higher standards and reduce number of defects

Question 42

value-added time

Answer 42

portion of cycle time that is directed at producing a product or service; equals process time

Question 43

value chain

Answer 43

sequential activities that add value to an entity's products or services; includes design, production, marketing, distribution, and service

Question 44

variable cost

Answer 44

cost that changes in proportion to changes in activity output volume