Managerial Accounting Chapter 4: Activity-Based Costing

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Drizzle
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286009
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Managerial Accounting Chapter 4: Activity-Based Costing
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2014-10-16 21:00:42
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Accounting
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Chapter 4
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  1. Activity-Based Costing (ABC)
    Focuses on activities as the fundamental cost objects.  The costs of those activities become building blocks for compiling the indirect costs of products, services, and customers.
  2. Activity-Based Management (ABM)
    Using activity based cost information to make decisions that increase profits while satisfying customers' needs.
  3. Appraisal Costs
    Costs incurred to detect poor-quality goods or services.
  4. Batch-Level Activites
    Activities and costs incurred for every batch, regardless of the number of units in the batch.
  5. Cost Distortion
    Overcosting some products while undercosting other products.
  6. Costs of Quality Report
    A report that lists the costs incurred by the company related to quality.  The costs are categorized as prevention costs, appraised costs, internal failure costs, and external failure costs.
  7. Customer Response Time
    The time that elapses between receipt of a customer order and delivery of the product or service.
  8. Department Overhead Rates
    Separate manufacturing overhead rates established for each department.
  9. DOWNTIME
    An acronym for the eight wastes: Defects, Overproduction, Waiting, Not utilizing people to their full potential, Transportation, Inventory, Movement, Excess processing.
  10. Eight Wastes
    Defects, Overproduction, Waiting, Not utilizing people to their full potential, Transportation, Inventory, Movement, Excess processing.
  11. External Failure Costs
    Costs incurred when the company does not detect poor-quality goods or services until after delivery is made to customers.
  12. Facility-Level Activites
    Activities and costs incurred no matter how many units, batches, or products are produced in the plant.
  13. 5S
    A workplace organization system comprised of the following steps: Sort, Set in order, Shine, Standardize, and Sustain.
  14. Internal Failure Costs
    Costs incurred when the company detects and corrects poor-quality goods or services before making delivery to customers.
  15. Just in Time
    An inventory management philosophy that focuses on purchasing raw materials just in time for production and completing finished goods just in time for delivery to customers.
  16. Kaizen
    A Japanese word meaning "change for the better."
  17. Lean Thinking
    A management philosophy and strategy focused on creating value for the customer by eliminating waste.
  18. Manufacturing Cycle Time
    The time that elapses between the start of production and the product's completion.
  19. Non-Value-Added Activities
    Activities that neither enhance the customer's image of the product or service nor provide a competitive advantage; also known as waste activities.
  20. Plantwide Overhead Rate
    When overhead is allocated to every product using the same manufacturing overhead rate.
  21. Point of Use Storage (POUS)
    A storage system used to reduce the waste of transportation and movement in which tools, materials, and equipment are stored in proximity to where they will be used most frequently.
  22. Prevention Costs
    Cost incurred to avoid poor-quality goods or services.
  23. Product-Level Activities
    Activities and costs incurred for a particular product, regardless of the number of units or batches of the product produced.
  24. Takt Time
    The rate of production needed to meet customer demand yet avoid overprodtuction.
  25. Total Quality Management (TQM)
    A management philosophy of delighting customers with superior products and services by continually setting higher goals and improving the performance of every business function.
  26. Unit-Level Activities
    Activities and costs incurred for every unit produced.
  27. Value Engineering
    Eliminating waste in the system by making the company's processes as effective and efficient as possible.
  28. Value-Added Activities
    Activities for which the customer is willing to pay because these activities add value to the final product or service.
  29. Waste Activities
    Activities that neither enhance the customer's image of the product or service nor provide a competitive advantage; also known as non-value-added activities.

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