Acct 2250 Final Vocab

Eric Knight

Budget

Quantitative expression of a plan that helps managers coordinate and implement the plan.

Controller

The position responsible for general financial accounting, managerial accounting, and tax reporting.

Management Accounting

A profession that involves partnering in management decision making, devising planning and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization’s strategy.

Six Sigma

The goal of producing near perfection, with less than 3.4 defects per million opportunities

Sustainability

The ability to meet the needs of the present without compromising the ability of future generations to meet their own needs

Allocate

To assign an indirect cost to a cost object

Controllable Costs

Costs that can be influenced or changed by management

Conversion Costs

The combination of direct labor and manufacturing overhead costs

Differential Cost

The difference in cost between two alternative courses of action

Direct Material

Primary raw materials that become a physical part of a finish product and whose costs are traceable to the finsihed product

Direct Labor

The cost of compensating employees who physically convert raw materials into the company’s products; labor costs that are directly traceable to the finished product

Manufacturing Overhead

All manufacturing costs other than direct materials and direct labor

Period Costs

The costs incurred by the company to operate the business that do not get treated as inventory but rather are expensed immediately in the period in which they are incurred. Do not relate to manufacturing or purchasing product.

Raw Material Inventory

All raw materials (direct and indirect) not yet used in manufacturingsun

Sunk Cost

A past cost that has already been incurred and cannot be changed

Variable Cost

Costs that change in total in direct proportion to changes in volume

Fixed Cost

Costs that stay constant in total despite wide changes in volume

Work In Process Inventory

Goods that are partway through the manufacturing process but not yet complete

Finished Goods Inventory

Complete goods that have not yet been sold

Cost Driver

Any activity or factor that directly causes a change in the cost of a specific activity or operation

Job Costing

A system for assigning costs to products or services that differ in the amount of materials, labor, and overhead required. Typically used by small businesses, manufacturers that produce unique or custom ordered products

Job Cost Record

A written or electronic document that lists the direct materials, direct labor, and manufacturing overhead costs assigned to each individual job

Relevant Range

The band of volume where total fixed costs remain constant at a certain level and where the variable cost per unit remains constant at a certain level

Break Even Point

The sales level at which operating income is zero:

Total reveues = Total expenses

Contribution Margin

Sales revenue - Variable expenses

Cost-Volume-Profit Analysis

Expresses the relationships among costs, volume, and profit or loss.

Opportunity Cost

The benefit forgone by choosing a particular alternative course of action

Flexible Budget

A summarized budget prepared for different levels of volume

Master Budget

A comprehensive financial plan for the entire organization; consists of all supporting budgets

Operating Budget

Budgets needed to run the daily operations of the company

Variance

The difference between actual and budgeted figures (revenues and expenses)

Strategic Planning

Setting long-term goals that may extend 5 to 10 years into the future

Profit Center

A responsibility center in which managers are responsible for both revenues and costs and therefore profits

Cost Center

A responsibility center in which managers are responsible for controlling costs

Investment Center

A responsibility center in which managers are responsible for generating revenues, controlling costs, and efficiently managing the division’s assets

Standard Cost

The budgeted cost for a single unit of product.

Capital Budgeting

The process of making capital investment decisions.

Required Rate of Return

Management;s minimum desired rate of return on an investment