Chapter 14 Terms

Question 1

Planning

Answer 1

Process of setting goals and making plans to achieve them

Question 2

Control

Answer 2

Process of monitoring and evaluating an organization’s activities and employees

Question 3

Direct Cost

Answer 3

Costs that can be cost-effectively traced to a cost object

Question 4

Indirect Cost

Answer 4

Costs that CANNOT be cost-effectively traced to a cost object

Question 5

Direct Materials

Answer 5

Materials that are crucial parts of a finished product. Can be cost-effectively traced to fished product.

Question 6

Direct Labor

Answer 6

Refers to employees who directly convert materials to finished goods. Can be cost-effectively traced to fished product.

Question 7

Factory Overhead

Answer 7

Includes all costs that are not direct materials or direct labor (indirect materials, indirect labor, other indirect cost).

Question 8

Prime Cost

Answer 8

Consist of direct materials and direct labor cost

Question 9

Conversion Cost

Answer 9

Cost of converting raw materials to finished goods. Consist of direct labor and factory overhead

Question 10

Product Cost

Answer 10

Production cost necessary to create a product. Consists of direct materials, direct labor, and factory overhead.

Question 11

Period Cost

Answer 11

Non-production costs linked to a time period.

Question 12

Lean Business Model

Answer 12

Goal is to eliminate waste and satisfy the customer

Question 13

Continuous Improvement

Answer 13

Rejects the notion of “good enough”

Question 14

Just-in-Time Manufacturing

Answer 14

Produces inventory after receiving order

Question 15

Value Chain

Answer 15

A series of activities that add to a companies’s products or services

Question 16

Corporate Social Responsibility

Answer 16

Corporations must consider the demands of other stockholders, employees, suppliers, and society to reduce its impact on the environment