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38 Cards in this Set
- Front
- Back
Bid price
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The price that an organization bids on a job that is open for offers. The bid price is often the estimated total job costs plus a margin.
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Conversion costs
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Costs of labor and support activities to convert the materials or product at each process stage.
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Cost driver rate
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activity expense DIVIDED by the total quantity of the activity cost driver.
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Cost pool
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each subset of total support costs that can be associated with a distinct cost driver
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Direct cost
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a cost of a resource or activity that is acquired for or used by a single cost object. An example is the cost of leather to make a leather coat.
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Equivalent units of production
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number of partially completed units
X percentage of competition |
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Finished goods inventory
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The cost of the resources for each completed job that is not yet sold
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Full absorption costing
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A costing method in which all production costs become product costs
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Indirect cost
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The cost of a resource that organizations acquire to be used by more than one cost object.
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Job bid sheet
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A medium for estimating jobs costs.
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Jobs costs sheet
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Medium for recording actual job costs.
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Job costs
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The total direct material, direct labor, and supporting costs for a job.
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Job order costing system
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A process that estimates the costs of manufacturing products for different jobs required for specific customer orders.
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Margin
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The difference between the revenue and the cost of a job.
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Markup rate
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The percent by which job costs are marked up.
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Materials requisition note
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A list of materials required to begin production.
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Multistage process costing system
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A system for determining job costs in which conversion costs are applied to products as they pass through successive process stages.
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Process costing system
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A costing system that computes the cost of each manufacturing process used to make a product.
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Rate of return
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Ratio of net income to investment.
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Raw materials inventory
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The purchase cost of materials that have not been used.
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Sequential allocation method
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Allocates service department costs to production departments and other service departments in a sequential order.
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Service department
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Departments that perform activities that support production but are not responsible for any of the conversion processes.
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Stage 1 allocation
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These involve the estimation of the normal manufacturing support costs incurred in each department.
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Stage 2 allocation
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These require the identification of appropriate cost drivers for each production department, and assign production department costs to jobs and products as they are worked on in the departments.
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Variable costing
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The costs of flexible resources.
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Weighted-average method
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A method used for computing equivalent units of production in process costing.
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Work-in-process inventory
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The costs of the resources for each job not yet completed.
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Activity-based cost systems
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System based on activities linking organizational spending on resources to the products and services produced and delivered to customers.
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Activity-based management
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The set of actions that management can take, based on the information from an activity-based cost system, to increase profitability. The actions includes making operational improvements to high-cost processes, changing product prices and product mix, and restructuring customer relationships.
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Activity-based pricing
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Establishes a base price for a proposed customer order based on the estimated cost producing and delivering the order.
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Activity cost driver
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Measures that identify the linkage between activities and cost objects; they serve as quantitative measures of the output of of activities.
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Activity cost driver rate
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The amount determined by dividing the activity expense by the total quantity of the activity cost driver. This rate is used to assign activity costs to individual products.
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Activity dictionary
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The list of the major activities performed by an organization's resources.
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Cost of unused capacity
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The cost of unused capacity-related resources.
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Practical capacity
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The maximum amount of work that can be performed by resources supplied for production or service.
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Time-driven ABC
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A new ABC variant that is simple and more powerful since it requires estimating only two parameters: the cost of supplying resource capacity and the quantity of capacity consumed by each transition, product, and customer. It enables a much simpler ABC model to capture even highly complex operations through the use of time equations.
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Time equations
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An algebraic representation that predicts the quantity of processing time based on specific order and activity characteristics.
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Whale curve
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A plot of cumulative profitability versus the number of customers, where customers are ranked from the most profitable to the least profitable.
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