ACC 5362

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ACC 5362
2015-09-06 16:42:14
TxState CostAccting MgmtAccting

Important information from Texas State University "Cost and Management Accounting" ACC 5362
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  1. Enterprise Resource Planning (ERP)
    A system using a single database that collects data and feeds the data into applications that support a company's various business activities.
  2. Strategy
    Describes how an organization will compete and the opportunities its managers should seek and pursue.
  3. Cost Leadership Strategy
    This type of strategy focuses on providing quality products or services at low prices.
  4. Product Differentiation Strategy
    This type of strategy attempts to separate their products from those of competitors, focusing on the uniqueness that appeals to their customers, even if the price is higher than competitors
  5. Value-Chain Components
    • This analysis concept has 7 elements:
    • Research & Development
    • Design of Products and Processes
    • Production
    • Marketing
    • Distribution
    • Customer Service
  6. Research & Development (R&D)
    The component of the value chain focuses on generating and experimenting with ideas related to new products, services, or processes.
  7. Design of Products and Processes
    This component of the value chain focuses on detailed planning, engineering, and testing of products and processes.
  8. Production
    This component of the value chain focuses on procuring, transporting, and storing ("inbound logistics") and coordinating and assembling ("operations") resources to produce a product or deliver a service.
  9. Marketing (including sales)
    This component of the value chain involves promoting and selling products or services to customers or prospective customers.
  10. Distribution
    This component of the value chain involves processing orders and shipping products or services to customers ("outbound logistics").
  11. Customer Service
    This component of the value chain involves providing after-sales service to customers.
  12. Administration
    This component of the value chain includes the overarching functions required to run a company:  accounting and finance, HR management, and IT.
  13. Supply-Chain
    This analysis concept describes the flow of goods, services, and information from the initial sources of matierals and services to the delivery of products to customers regardless of whether those activities occur in one or multiple organizations.
  14. Key Success Factors
    • This category involves focus on improving performance in these areas to improve the overall product or service
    • Cost and Efficiency
    • Quality
    • Time
    • Innovation
    • Sustainability
  15. Benchmark
    This process seeks out competitive information to determine areas for improvement in current operations.
  16. Five-Step Decision Making Process
    • This concept involves the following steps:
    • Identify the problem and uncertainties
    • Obtain information
    • Make predictions about the future
    • Make decisions by choosing among alternatives
    • Implement the decision, evaluate performance, and learn
  17. Planning
    • This process consists of
    • selecting an organiation's goals and strategies,
    • predicting results under various alternative ways of achieving those goals,
    • deciding how to attain the desired goals
    • communicating the goals and processes to the organization
  18. Budget
    This item is the quantitative expression of a proposed plan of action by management and is an aid to coordinating what needs to be done to execute that plan by allocating dollar amounts to specific tasks / areas of the organization.
  19. Actual Cost
    A historical or past cost incurred
  20. Budgeted Cost
    A predicted, or forecasted, cost (a future cost)
  21. Cost Object
    Anything for which a cost measurement is desired
  22. Direct Costs
    These purchased items or services performed are related specifically to a particular cost object and can be traced to it in an economically feasible way.  Overtime is included here if and only if all time spent is devoted to one product and not a mixture of products.
  23. Indirect Costs
    These costs are related to a particular cost object but cannot be traced to it in an economically feasible way.  Ex:  A machine, supplies such as sandpaper, or general overhead that may be used for than one product; overtime costs (even on direct labor) [but only the overtime portion.  Ex: worker earns $40/hr, $60 for overtime, the $20 difference the overtime cost); idle time costs (not working on a particular project)
  24. Cost Allocation
    The assignment of indirect costs to a particular cost object.  This is a subcomponent or Cost Assignment.
  25. Cost Assignment
    The general term that encompasses both allocating indirect costs, and tracing direct costs, to a cost object.
  26. Variable Costs
    A cost specifically for a product where the total of those costs increase or decrease directly related to the number of items.  Ex: steering wheels for a BMW X6 -- the total cost of how many steering wheels increases as more cars are produced
  27. Fixed Costs
    A cost for a product where the total cost remains the same no matter how many items are produced.  Ex:  rent on a building whether 1 or 100 items are made.
  28. Cost Driver
    This is a variable, such as the level or volume of activity, that sausally affects costs over a given time span.  Think of this as the independent variable of the equation.  Ex: if product-design costs change with the number of parts, the number of parts is the ____ _____ of product-design costs.
  29. Relevant Range
    The band of activity that relates specifically to the costs in consideration.  Circumstances that could affect the range include:  a discount that goes into effect when a certain number of parts are ordered, or when another employee must be hired (or fired) if a particular production level occurs.
  30. Unit Cost
    • The calculation for this term:
    • Total Cost / # Units Produced
  31. 3 Categories of Inventory
    • Direct Materials Inventory: in stock, but not used in production
    • Work-In-Process:  partially complete products, but not ready for sale
    • Finished Goods:  products completed but not yet sold
  32. Inventoriable Costs
    • All costs of a product that are considered assets in a company's balance sheet, or COGS when sold.  It does not include period costs.  Items in this category include:
    • direct materials
    • direct labor costs
    • indirect costs allocated to manufacturing
  33. Period Costs
    • All costs in the income statement other than COGS. Items in this category include:
    • marketing
    • distribution
    • customer service
    • R&D costs
    • Design
    • Shipping (outbound)
  34. Prime Costs
    This term describes Direct Materials Costs + Direct Manufacturing Labor Costs.
  35. Conversion Costs
    This term describes Direct Manufacturing Labor Costs + Manufacturing Overhead Costs that are required to take direct materials to the finished product.
  36. Product Cost
    This cost structure has an ambiguous definition based on who uses the info.  It may include only production costs, or if working with the government would include some R&D, design costs, and production costs.