continuous process improvement
A management approach that is part of the overall total quality management philosophy. The approach requires all employees to constantly improve processes of which they are a part or for which they have managerial responsibility.
controller
The chief management accountant of a division or other segment of a business.
controlling
A phase in the management process that consists of monitoring the operating results of implemented plans and comparing the actual results with the expected results.
conversion costs
The combination of direct labor and factory overhead costs
cost
A payment of cash (or a commitment to pay cash in the future) for the purpose of generating revenues.
cost object
The object or segment of operations to which costs are related for management's use, such as a product or department.
cost of finished goods available for sale
The beginning finished goods inventory added to the cost of goods manufactured during the period.
cost of goods manufactured
The total cost of making and finishing a product.
cost of goods sold
The cost of finished goods available for sale minus the ending finished goods inventory.
cost of merchandise sold
The cost that is reported as an expense when merchandise is sold.
decision making
A component inherent in the other management processes of planning, directing, controlling, and improving.
direct costs
Costs that can be traced directly to a cost object.
direct labor cost
The wages of factory workers who are directly involved in converting materials into a finished product.
direct materials cost
The cost of materials that are an integral part of the finished product.
directing
The process by which managers, given their assigned level of responsibilities, run day-to-day operations.
factory burden
Another term for manufacturing overhead or factory overhead.
factory overhead cost
All of the costs of producing a product except for direct materials and direct labor.
feedback
Measures provided to operational employees or managers on the performance of subunits of the organization. These measures are used by employees to adjust a process or a behavior to achieve goals. See management by exception.
financial accounting
The branch of accounting that is concerned with recording transactions using generally accepted accounting principles (GAAP) for a business or other economic unit and with a periodic preparation of various statements from such records.
finished goods inventory
The direct materials costs, direct labor costs, and factory overhead costs of finished products that have not been sold.
indirect costs
Costs that cannot be traced directly to a cost object.
line department
A unit that is directly involved in the basic objectives of an organization.
management (or managerial) accounting
The branch of accounting that uses both historical and estimated data in providing information that management uses in conducting daily operations, in planning future operations, and in developing overall business strategies.
management by exception
The philosophy of managing which involves monitoring the operating results of implemented plans and comparing the expected results with the actual results. This feedback allows management to isolate significant variations for further investigation and pos
management process
The five basic management functions of (1) planning, (2) directing, (3) controlling, (4) improving, and (5) decision making.
managerial accounting
The branch of accounting that uses both historical and estimated data in providing information that management uses in conducting daily operations, in planning future operations, and in developing overall business strategies.
manufacturing overhead
Costs, other than direct materials and direct labor costs, that are incurred in the manufacturing process.
materials inventory
The cost of materials that have not yet entered into the manufacturing process.
objectives (goals)
Developed in the planning stage, these reflect the direction and desired outcomes of certain courses of action.
operational planning
The development of short-term plans to achieve goals identified in a business's strategic plan. Sometimes called tactical planning.
period costs
Those costs that are used up in generating revenue during the current period and that are not involved in manufacturing a product, such as selling, general, and administrative expenses.
planning
A phase of the management process whereby objectives are outlined and courses of action determined.
predetermined factory overhead rate
The rate used to apply factory overhead costs to the goods manufactured. The rate is determined by dividing the budgeted overhead cost by the estimated activity usage at the beginning of the fiscal period.
prime costs
The combination of direct materials and direct labor costs.
product costs
The three components of manufacturing cost: direct materials, direct labor, and factory overhead costs.
staff department
A unit that provides services, assistance, and advice to the departments with line or other staff responsibilities.
statement of cost of goods manufactured
The income statement of manufacturing companies.
strategic planning
The development of a long-range course of action to achieve business goals.
strategies
The means by which business goals and objectives will be achieved.
work in process inventory
The direct materials costs, the direct labor costs, and the applied factory overhead costs that have entered into the manufacturing process but are associated with products that have not been finished.