Cost Accounting

Topics: Costs, Cost, Net present value Pages: 34 (10525 words) Published: March 13, 2013
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abnormal spoilage spoilage that should not occur under efficient operating conditions absorption costing all manufacturing costs are assigned to products: direct material, direct labour, variable and fixed manufacturing overhead acceptable quality level (AQL) the defect rate at which total quality costs are minimised account classification method (or account analysis) the process in which managers use their judgement to classify costs as fixed, variable or semivariable costs accounting rate of return (or simple rate of return, rate of return on assets, unadjusted rate of return or return on investment (ROI)) the average annual profit from a project, divided by the initial investment accumulation factor the value of (1 r)n used in present value and future value calculations activity a unit of work performed in the organisation activity-based budgeting (ABB) a process of building up budgets from the major activities of the business activity-based costing (ABC) (system) a methodology that can be used to measure the cost of cost objects and the performance of activities activity-based management (ABM) the process of using information from activity-based costing to analyse activities, cost drivers and performance so that customer value and profitability are improved activity centre a work area in which the activities have a common purpose activity driver a cost driver used to estimate the cost of an activity consumed by the cost object actual costing the process of assigning the actual amounts of direct material, direct labour and overhead to products actual manufacturing overhead the manufacturing overhead costs incurred in production actual overhead rate the actual amount of overhead divided by the actual volume of production adjusted R2 the coefficient of determination after adjusting for the effects of a relatively small number of observations administrative expenses the costs of running a business as a whole, including the costs of senior management and administrative support departments after-tax cash flow the cash flow expected after all tax implications have been taken into account allowable cost the target cost at which the product must be produced if it is to be sold at the target selling price and generate the target profit margin annual budget (or master budget) a comprehensive set of budgets that covers all aspects of a firm’s activities annuity a series of equal cash flows annuity accumulation factor the sum of the accumulation factors used to determine the future value of an annuity annuity discount factor the sum of the discount factors used to determine the PV of an annuity applied manufacturing overhead an estimate of the overhead resources used to manufacture a product appraisal costs the costs of determining whether defects exist asset a measure of costs where the benefits extend into the future average cycle time the ratio of total processing time to total good units produced avoidable costs costs that will not be incurred in the future if a particular decision is made

B2B (or business-to-business) e-commerce activities that take place between a business and its customers, including purchasing and procurement, supplier management, inventory management, sales activities, payment management and customer service and support B2C (or business-to-consumer) e-commerce exchanges between a business and its non-business customers, that may allow customers to purchase and pay for products and services, make sales inquiries, and search for and receive customer support and assistance, all online back office the part of the service production process where the service is produced without the customer being present backflush costing a simplified method of product costing where costing occurs after product is complete, by working backwards to flush costs from the system


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