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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

What is the cash budget

A schedule of expected cash receipts and disbursements, and is essential for forecasting any expected interest expense as a result of borrowing