Continuous Improvement
Concept requiring every manager and employee continually to look to improve operations
Control
Process of monitoring planning decisions and evaluating the organization's activities and employees
Controllable Costs
Costs that a manager has the power to control or at least strongly influence
Conversion Costs
Expenditures incurred in converting raw materials to finished goods; includes direct labor costs and overhead costs
Cost Object
Product, process, department, or customer to which costs are assigned
Customer Orientation
Company position that its managers and employees be in tune with changing wants and needs of consumers
Cycle Efficiency (CE)
A measure of production efficiency, which is defined as value-added time divided by total cycle time
Cycle Time (CT)
A measure of the time to produce a product or service, which is the sum of process time, inspection time, move time, and wait time
Direct Costs
Costs incurred for the benefit of one specific cost object
Direct Labor
Efforts of employees who physically convert materials to finished product
Direct Labor Costs
Wages and salaries for direct labor that are separately and readily traced through the production process to finished goods
Direct Material
Raw material that physically becomes part of the product and is clearly identified with specific products or batches of product.
Direct Material Costs
Expenditures for direct material that are separately and readily traced through the production process to finished goods
Ethics
Codes of conduct by which actions are judged as right or wrong, fair or unfair, honest or dishonest.
Factory Overhead
Factory activities supporting the production process that are not direct material or direct labor
Factory Overhead Costs
Expenditures for factory overhead that cannot be separately or readily traced to finished goods
Finished Goods Inventory
Account that controls the finished goods files, which acts as a subsidiary ledger (of the inventory account) in which the costs of finished goods that are ready for sale are recorded.
Fixed Cost
Cost that does not change with changes in the volume of activity
Goods in Process Inventory
Account in which costs are accumulated for products that are in the process of being produced but are not yet complete
Indirect Costs
Costs incurred for the benefit of more than one cost object
Indirect Labor
Efforts of production employees who do not work specifically on converting direct materials into finished products and who are not clearly identified with specific units or batches of product
Indirect Labor Costs
Labor costs that cannot be physically traced to production of a product or service; included as a part of overhead.
Indirect Material
Material used to support the production process but not clearly identified with products or batches of product
Institute of Management Accountants
A professional association of management accountants
Internal Control System
All policies and procedures used to protect assets, ensure reliable accounting, promote efficient operations, and urge adherence to company policies
Just-In-Time Manufacturing
Process of acquiring or producing inventory only when needed
Lean Business Model
Practice of eliminating waste while meeting customer needs and yielding positive company returns
Managerial Accounting
Area of accounting aimed mainly at serving the decid
Manufacturing Statement
Report that summarizes the types and amounts of costs incurred in a company's production process for a period
Non-Value-Added Time
The portion of cycle time that is not directed at producing a product or service; equals the sum of inspection time, move time, and wait time
Opportunity Cost
Potential benefit lost by choosing a specific action from two or more alternatives
Out-of-Pocket Cost
Cost that requires a future outlay of cash
Period Costs
Cost identified more with a time period than with finished products
Planning
Process of setting goals and preparing to achieve them
Prime Costs
Expenditures directly identified with the production of finished goods; includes direct materials and direct labor
Product Costs
Cost that is necessary and integral to finished products
Raw Materials Inventory
Goods a company acquires to use in making products
Sunk Cost
Cost already incurred and cannot be avoided or changed
Total Quality Management (TQM)
Concept calling for all managers and employees at all stages of operations to strive toward higher standards and reduce number of defects
Value-Added Time
The portion of cycle time that is directed at producing a product or service
Value Chain
Sequential activities that add value to an entity's products or services
Variable Cost
Cost that changes in proportion to changes in the activity output volume