managerial
Terms
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- structural cost driver
- strategic plans and decisions that have a long term effect with regard to issues such as scale, experience, technology, and complexity
- executional cost driver
- factors that the firm can manage in the short term to reduce costs such as workforce involvement, design of the production process, and supplier relationships
- differential cost
- differs for each decision option and is therefore option
- discretionary cost method
- used when costs are considered largely uncontrollable, apply discretion at the planning stage; an input oriented approach
- sunk costs
- costs have been incurred or committed in the past and are therefore irrelevant
- controllable cost
- cost is controllable if the manager or employee has discretion in choosing to incur it or can significantly influence its amount within a given. usually short, period of time
- relevant range
- range of cosst driver in which the actual value of the cost driver is expected to fall, and for which the relationship is assumed to be approx. linear
- SWOT analysis
- systematic procedure for identifying a firms critical success factors; its internal strengths and weaknesses and its extreme opportunities and threats
- variable cost
- the change in the total cost associated with each change in the quantity of the cost driver
- fixed cost
- the portion of the total cost that does not change with a change in the quantity of the cost driver within the relevant range
- mixed cost
- used to refer the total cost when total cost includes both variable and fixed cost components
- marginal cost
- the additional cost incurred as the cost driver increases by 1 unit
- period cost
- are all nonproduct expenditures for managing the firm and selling the product
- relevant cost
- has 2 properties: 1. it differs for each decision 2.it will be incurred in the future
- direct labor cost
- includes the labor used to manufacture the product or to provide the service
- indirect labor cost
- includes supervision, quality control, inspection, purchasing, and recieving and other manufacutring support costs
- prime costs
- refer to direct materials and direct labor that are combined into a single amount
- conversion cost
- refers to direct labor and overhead combined into a single amount
- balanced scorecard
- an accounting report that includes the firms critical success factors in 4 areas: 1.financial performance 2.costumer satisfaction 3.internal business processes 4.innovation and learning
- cost pool
- are the meaningful groups into which costs are often collected
- cost driver
- any fctor that causes a changes in the cost often collected
- direct cost
- can be conveniently and economically traced directly to a cost pool or a cost object
- indirect cost
- has NO convenient or economical trace from the cost to the cost pool or from the cost pool to the cost object
- direct materials cost
- includes the cost of the materials in the product and a reasonable allowance for scrap and defective units
- indirect materials cost
- refers to the cost of materials used in manufactuing that arent physically part of the finished product
- actibity based costing (ABC)
- used to improve the accuracy of cost analysis by improving the tracing of costs to products or to individual customer
- activity based management
- uses activity analysis and activity based costing to help managers improve the value of products and services and to increase the organizations competiveness
- differentiation
- competivive strategy in which a firm succeeds by developing and maintainging a unique value for the product is perceived by the customers
- value chain analysis
- analysis tool firms use it to identify the specific steps required to provide a product or service to the customer. (increase value for the customer) ex. dell spend more time on placing emphasis on high value cervices instead of low value
- critical success factor
- measures of those aspects of the firms performance that are essential to its competitive advantage and therefore to its success
- cose manage information
- used to determine prices, change a product or service offerings to improve quality to update faciliates in a timely fashion. EX. toyota studying the implications of a new design
- cost manage information (1)
- information the manager needs to effectively manage the firm or no for profit organization.. Includes both financial info about costs and revenue as well as relevant nonfinancial info about productivity,quality, and other success factors for the firm