| Terms |
Definitions |
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Pareto Principle
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...
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Structural Activities
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Building plants
Management Structuring
Grouping employees
Complexity
Vertically Integrating
Selecting and using process technologies
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pretax profit*(1-tax rate)
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after tax profit
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foh volume variance
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foh predetermined rate(denom. level-std. allowance for production)
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Budget
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quantitative expression of a proposed plan of action by management for a specified period and is an aid to coordinating what needs to be done to implement the plan
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Cost Center
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RESPONSIBILITY CENTER where the manager is ACCOUNTABLE FOR COSTS only
C_____ C_____
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marketing
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promoting and selling products or services to coustmers or prospective customers
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Finished-goods Inventory
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goods completed but not yet sold
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How do manufacturing companies categorize inventories?
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DM, WIP, FG
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Sales Mix
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quantities of various products or services that constitute total unit sales
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Decentralization
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The freedom for managers at lower levels of the organization to make decisions.
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Cost structure
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The relative proportion of fixed, variable, and mixed costs found within an organization.
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sales-quantity variance
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difference between budgeted CM based on actual units sold of all products and CM based on budgeted units of all products sold at budgeted mix
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Organizational Core Competencies
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the organizations strengths relative to competitors.
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Theoretical Capacity
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the level of capacity based on producing at full efficiency all the time
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Value Chain
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the sequence of business functions in which customer usefulness is added to products or services of a company
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Value-Added Cost
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A cost that, if eliminated, would reduce the actual or perceived value or utility (usefulness) customers obtain from using the product or service
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Cost Driver
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Variable - casually affects costs over a given time span
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four errors in decision making are
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considering:
sunk costs
unitized FC
overlooking Opportunity costs
not identifying avoidable costs
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multiple regression analysis
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develops a cost function by calculating values for the statistical relationship between total cost and two or more cost drivers
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experience curve
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function that measures the decline in cost per unit in various business functions of the value chain, such as manufacturing, marketing, distribution, and so on as the amount of these activities increases
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Fixed Cost
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costs that do not change regardless of the level of activity as long as it is with in the relevant range. (FO)
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Product cost
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Is Normal Spoilage a product or period cost?
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Transfer price
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The price that one subunit or division charges for a product or service supplied to another division within the same organization.
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Processing department
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Any part of an organization where work is performed on a product and where materials, labor, or overhead costs are added to the product.
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market-share variance equation
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actual market size x (actual market share-budgeted market share) x budgeted contribution margin per composite unit for budgeted mix
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Operating Income
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Gross Profit - Sales & Admin Exp -or- Rev - VC - FC
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Break-even in sales dollars
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Dollar sales to break even= Fixed expenses/ CM ratio
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CRM Customer Relationship Management
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a strategy that integrates people and technology in all business functions to enhance relationships with coustmers, partners, and distributors.
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Budgeted MOH rate per unit
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Budgeted MOH / Budgeted Direct labor hours
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Types of Products that use job order costing
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auto mechanics, carpenters, painters, print shops, computer repair
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What is a linear cost function
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Is a cost function wich, within the relevant range, the graph is a straight line
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