improvements.
Life-cycle cost assessment A method that assigns costs and benefits to environmental consequences and improvements.
Life-cycle cost management The management of value-chain activities so
that a long-term competitive advantage is created.
produce, market, distribute, and service a product (the product can be a service).
Inventory The money an organization spends in turning raw materials into throughput.
Inventory analysis A life-cycle assessment step where the quantities and
types of materials, energy, and environmental releases are described.
Investment center A division of a company that is evaluated on the basis of return on investment. J
Just-in-time manufacturing A demand-pull system whose objective is to eliminate waste by producing a product only when it is needed and only in the quantities demanded by customers.
JIT purchasing A purchasing method that requires suppliers to deliver parts and materials just in time to be used in production.
JIT II A form of a JIT purchasing method that requires the supplier’s sales representative to work on site (on a full-time basis) at the customer’s facility while being paid by the supplier.
Job One distinct unit or set of units. Job-order cost sheet A subsidiary account to the work-in-process account on which the total costs of materials, labor, and overhead for a single job
are accumulated.
Job-order costing system A costing system in which costs are collected and assigned to units of production for each individual job.
Joint products Products that are inseparable prior to a split-off point. All manufacturing costs up to the split-off point are joint costs. Joint venture A type of partnership in which investors co-own the enterprise. K
Kaizen costing Efforts to reduce the costs of existing products and processes. 854 ?
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Linear programming A method that searches among possible solutions until it finds the optimal solution.
Line positions Positions that have direct responsibility for the basic objectives of an organization. Long run A period of time in which all costs are variable.
Loose constraints Constraints whose limited resources are not fully used by a product mix. M
Make-or-buy decisions Relevant costing analyses that focus on whether a component should be made internally or purchased externally.
Management accounting information system An information system that produces outputs using inputs and processes needed to satisfy specific management objectives.
Manufacturing cells Machines grouped in families, usually in a semicircle, so that they can be used to perform a variety of operations in sequence. Each cell is set up to produce a particular product or product family.
Maquiladora Manufacturing plants located in Mexico that process imported materials and re-export them to the United States.
Margin The ratio of net operating income to sales.
Margin of safety The units sold or expected to be sold or sales revenue earned or expected to be earned above the break-even volume. Marketing (selling) costs The costs necessary to market and distribute a product or service.
Markup The percentage applied to a base cost; it includes desired profit and any costs not included in the base cost.
Master budget The collection of all area and activity budgets representing a firm’s comprehensive plan of action.
Materials price variance (MPV) The difference between the actual price paid per unit of materials and the N
Net income Operating income less income taxes.
Net present value The difference between the present value of a project’s cash inflows and the present value of its cash outflows.
Nondiscounting models Capital investment models that identify criteria for accepting or rejecting projects without considering the time value of money. Nonfinancial measures Measures expressed in nonmonetary units.
Noninventoriable (period) costs Costs that are expensed in the period in which they are incurred.
Nonmonetary incentives The use of psychological and social rewards to motivate managers.
Nonproduction costs Costs associated
with the functions of selling and administration. Nonunit-level activity drivers Factors that measure the consumption of nonunit-level activities by products and other cost objects.
Nonunit-level drivers Factors, other than the number of units produced, that measure the demands that cost objects place on activities.
Nonvalue-added activities All activities other than those that are absolutely essential to remain in business. Nonvalue-added costs Costs that are caused either by nonvalue-added activities or by the inefficient performance of valued-added activities.
Normal activity capacity The average activity output for a given period. Normal cost of goods sold The cost of goods sold before adjustment for any overhead variance.
Normal costing An approach that assigns the actual costs of direct
materials and direct labor to products but uses a predetermined rate to assign overhead costs. O
Objective function The function to be optimized, usually a profit function; standard price allowed per unit multiplied by the actual quantity of materials purchased.
Materials requisition form A source document that records the type, quantity, and unit price of the direct materials issued to each job.
Materials usage variance (MUV) The difference between the direct materials actually used and the direct
materials allowed for the actual output multiplied by the standard price. Maximum transfer price The transfer price that will make the buying division no worse off if an output is sold