WGU C213 Accounting Topic 9

Capital Budgeting

Systematic planning for long-term investments in operating assets

Controlling

Implementing management plans and identifying how plans compare with actual performance

Cost-volume-profit (C-V-P) Analysis

Techniques for determining how changes in revenues, costs, and level of activity affect the profitability of an organization

Differential Costs

Future costs that change as a result of a decision; also called incremental or relevant costs

Direct Costs

Costs that are specifically traceable to a unit of business or segment being analyzed.

Direct Labor

Wages paid to those who physically work on direct materials to transform them into a finished product and are traceable to specific products

Direct Materials

Materials that become part of the product and are traceable to it

Evaluating

Analyzing results, rewarding performance, and identifying problems.

Fixed Costs

Costs that remain constant in total, regardless of activity level, over a certain range of activity

Indirect Costs

Costs normally incurred for the benefit of several segments within the organization; sometimes called common costs or joint costs.

Indirect Labor

Labor that is necessary to a manufacturing or service business but is not directly related to the actual production of the product.

Indirect Materials

Materials that are necessary to a manufacturing or service business but are not directly included in or are not a significant part of the actual product.

Manufacturing Overhead

All costs incurred in the manufacturing process other than direct materials and direct labor

Operational Budgeting

Managerial planning decisions regarding current and immediate future (a year or less) operations that are characterized by regularity and frequency

Opportunity Costs

The benefits lost or forfeited as a result of selecting one alternative course of action over another

Out-of-pocket Costs

Costs that require an outlay of cash or other resources

Period Costs

Costs not directly related to a product, service, or asset. They are charged as expenses to the income statement in the period in which they are incurred.

Planning

Outlining the activities that need to be performed for an organization to achieve its objectives

Product Costs

Costs associated with products or services offered

Production Prioritizing

Management's continual evaluation of various product lines and divisions' profitability in order to analyze and identify opportunities to improve profits

Return On Investment

A measure of operating performance and efficiency in utilizing assets; computed in its simplest form by dividing net income by average total assets (also known as return on assets or ROA).

Strategic Planning

Broad, long-range planning usually conducted by top management

Sunk Costs

Costs that are past costs and do not change as a result of a future decision.

Variable Costs

Costs that change in total in direct proportion to changes in activity level