Flashcards in Final Deck (56)
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1
What is product undercoating
A product consumes a high level of resources but is reported to have a low cost per unit
2
What is product overcosting
A product consumes a low level of resources but is reported to have a high cost per unit
3
Product-cost cross subsidization means?
That if a company undercosts one of its products, it will overcoat at least one of its other products. And vice versa
4
What's is activity based costing (abc)?
Refines a costing system by identifying individual activities as the fundamental cost objects
5
What is a cost hierarchy
Categorizes various activity cost pools in the basis of different types of cost drivers, or cost allocation based, or different degrees of difficulty in determining cause-and-effect relationships
6
What are output unit-level costs
Costs of activities performed on each individual unit of a product or service
7
What are batch level costs
Costs of activities related to a group of units of a product or service rather than each individual unit of product or service
8
What are product sustaining costs
Also know as service sustaining costs. Costs of activities u see taken to support individual products or services regardless of the number of units or batches in which the units are produced
9
What are facility sustaining costs
Costs of activities that cannot be traced to individual products or services but that support the organization s a whole
10
What is activity based management (ABM)
Using abc info to guide management decisions
11
What are value added activities
The costs plus some predictable profit will be fully recovered when the output is sold
12
What are non value added activities
Added costs that fail to improve desirability and for which customers will not pay
13
What is a budget
A quantitative expression of a proposed plan of action by management for a set time period
14
Why are budget constraints
The combination of limitations on bonfinancial and financial resources within a company's management control
15
What is the master budget
It summarizes all the financial and nonfinancial plans into a single document
16
WhT is a standard
A carefully predetermined price, cost or quantity used for judging performance
17
What is a benchmark
A type of standard using information from outside of the firm
18
What are stretch goals
They challenge managers to achieve excellent performance rather than maintain the status quo
19
What are the advantages of budgets
1. Compel planning and monitoring of the implementation of plans
2. Provide reliable performance assessment criteria
3. Promote communication and coordination within the organization
20
What is strategic analysis?
The evaluation of how well the organization has matched its own capabilities with the relevant features of the competitive environment to progress toward its future success
21
What are the approaches to budgeting
1. Traditional incremental/decremental
2.priority
3. Zero-based
4. Activity based
5. Kaizen
22
What is traditional incremental/decremental approach
Classic every department gets the same percentage increase or decrease next year
23
What is the priority approach
Direct contrast to traditional approach. The organization uses its strategic plan to establish the priorities for allocating new resources or areas that need to be protected if resources have to be cut
24
What is zero based budgeting
Involves all areas of the organization building their budgets from the ground up or from starting point of zero
25
What is activity based budgeting
(ABB) develops budgets based on the level of the various activities needed to fulfill the organizational goals
26
What is kaizen budgeting
Concept of continuous improvement and lean manufacturing. Steadily decreases or increases in budget instead of sudden changes
27
What is a rolling budget
A budget or plan that is always available for a specified future period by adding a month, quarter, or year in the future as the current month, wuarter or year is completed.
28
Why is the operating budget
It presents the results of operations in many value-chain business functions prior to financing and taxes
29
What is padding or budgetary slack
Underestimating budgeted revenue or overestimating budgeted costs to make budgeted targets easier to achieve
30
