WGU University C253 Advanced Managerial Accounting A+ Pass Guaranteed + Q&A
Included
Absorption costing A costing method that includes all manufacturing costs—direct materials, direct
labor, and both variable and fixed manufacturing overhead—in unit product costs. << correct answer
>>Activity An event that causes the consumption of overhead resources in an organization. <<
correct answer >>Activity base A measure of whatever causes the incurrence of a variable cost. For
example, the total cost of surgical gloves in a hospital will increase as the number of surgeries increases.
Therefore, the number of surgeries is the activity base that explains the total cost of surgical gloves. <<
correct answer >>Activity cost pool A "bucket" in which costs are accumulated that relate to a single
activity measure in an activity-based costing system. << correct answer >>Activity measure An
allocation base in an activity-based costing system; ideally, a measure of the amount of activity that
drives the costs in an activity cost pool. << correct answer >>Activity variance The difference between
a revenue or cost item in the flexible budget and the same item in the static planning budget. An activity
variance is due solely to the difference between the actual level of activity used in the flexible budget
and the level of activity assumed in the planning budget. << correct answer >>Activity-based costing
(ABC) A costing method based on activities that is designed to provide managers with cost information
for strategic and other decisions that potentially affect capacity and therefore fixed as well as variable
costs. << correct answer >>Activity-based management (ABM) A management approach that focuses
on managing activities as a way of eliminating waste and reducing delays and defects. << correct answer
>>Administrative costs All executive, organizational, and clerical costs associated with the general
management of an organization rather than with manufacturing or selling. << correct answer
>>Allocation base A measure of activity such as direct labor-hours or machine-hours that is used to
assign costs to cost objects. << correct answer >>Avoidable cost A cost that can be eliminated by
choosing one alternative over another in a decision. This term is synonymous with differential cost and
relevant cost. << correct answer >>Batch-level activities Activities that are performed each time a batch
of goods is handled or processed, regardless of how many units are in the batch. The amount of
resource consumed depends on the number of batches run rather than on the number of units in the
batch. << correct answer >>Benchmarking A systematic approach to identifying the activities with
the greatest potential for improvement. << correct answer >>Bill of materials A document that shows
the quantity of each type of direct material required to make a product. << correct answer >>Bottleneck
A machine or some other part of a process that limits the total output of the entire system. <<
correct answer >>Break-even point The level of sales at which profit is zero. << correct answer
>>Budget A detailed plan for the future that is usually expressed in formal quantitative terms. <<
correct answer >>Capital budgeting The process of planning significant investments in projects that
have long-term implications such as the purchase of new equipment or the introduction of a new
product. << correct answer >>Cash budget A detailed plan showing how cash resources will be
acquired and used over a specific time period. << correct answer >>Committed fixed costs
Investments in facilities, equipment, and basic organizational structure that can't be significantly
reduced even for short periods of time without making fundamental changes. << correct answer
>>Common cost A cost that is incurred to support a number of cost objects but that cannot be
, traced to them individually. For example, the wage cost of the pilot of a 747 airliner is a common cost of
all of the passengers on the aircraft. Without the pilot, there would be no flight and no passengers. But
no part of the pilot's wage is caused by any one passenger taking the flight. << correct answer
>>Common fixed cost A fixed cost that supports more than one business segment, but is not traceable
in whole or in part to any one of the business segments. << correct answer >>Constraint A limitation
under which a company must operate, such as limited available machine time or raw materials, that
restricts the company's ability to satisfy demand. << correct answer >>Contribution approach An
income statement format that organizes costs by their behavior. Costs are separated into variable and
fixed categories rather than being separated into product and period costs for external reporting
purposes << correct answer >>Contribution margin The amount remaining from sales revenues
after all variable expenses have been deducted. << correct answer >>Contribution margin ratio (CM
ratio) A ratio computed by dividing contribution margin by sales. << correct answer >>Control The
process of gathering feedback to ensure that a plan is being properly executed or modified as
circumstances change. << correct answer >>Conversion cost Direct labor cost plus manufacturing
overhead cost. << correct answer >>Cost behavior The way in which a cost reacts to changes in the
level of activity. << correct answer >>Cost driver A factor, such as machine-hours, beds occupied,
computer time, or flight-hours, that causes overhead costs. << correct answer >>Cost object
Anything for which cost data are desired. Examples of cost objects are products, customers,
geographic regions, and parts of the organization such as departments or divisions. << correct answer
>>Cost of capital The average rate of return a company must pay to its long-term creditors and
shareholders for the use of their funds. << correct answer >>Cost of goods manufactured The
manufacturing costs associated with units of product that were finished during the period. << correct
answer >>Cost structure The relative proportion of fixed, variable, and mixed costs in an
organization. << correct answer >>Cost-plus pricing A pricing method in which a predetermined
markup is applied to a cost base to determine the target selling price. << correct answer >>Cost-volume-
profit (CVP) graph A graphical representation of the relationships between an organization's
revenues, costs, and profits on the one hand and its sales volume on the other hand. << correct answer
>>Customer-level activities Activities that are carried out to support customers, but that are not
related to any specific product. << correct answer >>Degree of operating leverage A measure, at a
given level of sales, of how a percentage change in salesvolume will affect profits. The degree of
operating leverage is computed by dividing contribution margin by net operating income. << correct
answer >>Differential cost A future cost that differs between any two alternatives. << correct
answer >>Differential revenue Future revenue that differs between any two alternatives. << correct
answer >>Direct cost A cost that can be easily and conveniently traced to a specified cost object. <<
correct answer >>Direct labor Factory labor costs that can be easily traced to individual units of
product. Also called touch labor. << correct answer >>Direct labor budget A detailed plan that
shows the direct labor-hours required to fulfill the production budget. << correct answer >>Direct
materials Materials that become an integral part of a finished product and whose costs can be
conveniently traced to it. << correct answer >>Direct materials budget A detailed plan showing the
amount of raw materials that must be purchased to fulfill the production budget and to provide for
adequate inventories. << correct answer >>Discretionary fixed costs Those fixed costs that arise
from annual decisions by management to spend on certain fixed cost items, such as advertising and
research. << correct answer >>Duration driver A measure of the amount of time required to perform
an activity. << correct answer >>Ending finished goods inventory budget A budget showing the dollar
Included
Absorption costing A costing method that includes all manufacturing costs—direct materials, direct
labor, and both variable and fixed manufacturing overhead—in unit product costs. << correct answer
>>Activity An event that causes the consumption of overhead resources in an organization. <<
correct answer >>Activity base A measure of whatever causes the incurrence of a variable cost. For
example, the total cost of surgical gloves in a hospital will increase as the number of surgeries increases.
Therefore, the number of surgeries is the activity base that explains the total cost of surgical gloves. <<
correct answer >>Activity cost pool A "bucket" in which costs are accumulated that relate to a single
activity measure in an activity-based costing system. << correct answer >>Activity measure An
allocation base in an activity-based costing system; ideally, a measure of the amount of activity that
drives the costs in an activity cost pool. << correct answer >>Activity variance The difference between
a revenue or cost item in the flexible budget and the same item in the static planning budget. An activity
variance is due solely to the difference between the actual level of activity used in the flexible budget
and the level of activity assumed in the planning budget. << correct answer >>Activity-based costing
(ABC) A costing method based on activities that is designed to provide managers with cost information
for strategic and other decisions that potentially affect capacity and therefore fixed as well as variable
costs. << correct answer >>Activity-based management (ABM) A management approach that focuses
on managing activities as a way of eliminating waste and reducing delays and defects. << correct answer
>>Administrative costs All executive, organizational, and clerical costs associated with the general
management of an organization rather than with manufacturing or selling. << correct answer
>>Allocation base A measure of activity such as direct labor-hours or machine-hours that is used to
assign costs to cost objects. << correct answer >>Avoidable cost A cost that can be eliminated by
choosing one alternative over another in a decision. This term is synonymous with differential cost and
relevant cost. << correct answer >>Batch-level activities Activities that are performed each time a batch
of goods is handled or processed, regardless of how many units are in the batch. The amount of
resource consumed depends on the number of batches run rather than on the number of units in the
batch. << correct answer >>Benchmarking A systematic approach to identifying the activities with
the greatest potential for improvement. << correct answer >>Bill of materials A document that shows
the quantity of each type of direct material required to make a product. << correct answer >>Bottleneck
A machine or some other part of a process that limits the total output of the entire system. <<
correct answer >>Break-even point The level of sales at which profit is zero. << correct answer
>>Budget A detailed plan for the future that is usually expressed in formal quantitative terms. <<
correct answer >>Capital budgeting The process of planning significant investments in projects that
have long-term implications such as the purchase of new equipment or the introduction of a new
product. << correct answer >>Cash budget A detailed plan showing how cash resources will be
acquired and used over a specific time period. << correct answer >>Committed fixed costs
Investments in facilities, equipment, and basic organizational structure that can't be significantly
reduced even for short periods of time without making fundamental changes. << correct answer
>>Common cost A cost that is incurred to support a number of cost objects but that cannot be
, traced to them individually. For example, the wage cost of the pilot of a 747 airliner is a common cost of
all of the passengers on the aircraft. Without the pilot, there would be no flight and no passengers. But
no part of the pilot's wage is caused by any one passenger taking the flight. << correct answer
>>Common fixed cost A fixed cost that supports more than one business segment, but is not traceable
in whole or in part to any one of the business segments. << correct answer >>Constraint A limitation
under which a company must operate, such as limited available machine time or raw materials, that
restricts the company's ability to satisfy demand. << correct answer >>Contribution approach An
income statement format that organizes costs by their behavior. Costs are separated into variable and
fixed categories rather than being separated into product and period costs for external reporting
purposes << correct answer >>Contribution margin The amount remaining from sales revenues
after all variable expenses have been deducted. << correct answer >>Contribution margin ratio (CM
ratio) A ratio computed by dividing contribution margin by sales. << correct answer >>Control The
process of gathering feedback to ensure that a plan is being properly executed or modified as
circumstances change. << correct answer >>Conversion cost Direct labor cost plus manufacturing
overhead cost. << correct answer >>Cost behavior The way in which a cost reacts to changes in the
level of activity. << correct answer >>Cost driver A factor, such as machine-hours, beds occupied,
computer time, or flight-hours, that causes overhead costs. << correct answer >>Cost object
Anything for which cost data are desired. Examples of cost objects are products, customers,
geographic regions, and parts of the organization such as departments or divisions. << correct answer
>>Cost of capital The average rate of return a company must pay to its long-term creditors and
shareholders for the use of their funds. << correct answer >>Cost of goods manufactured The
manufacturing costs associated with units of product that were finished during the period. << correct
answer >>Cost structure The relative proportion of fixed, variable, and mixed costs in an
organization. << correct answer >>Cost-plus pricing A pricing method in which a predetermined
markup is applied to a cost base to determine the target selling price. << correct answer >>Cost-volume-
profit (CVP) graph A graphical representation of the relationships between an organization's
revenues, costs, and profits on the one hand and its sales volume on the other hand. << correct answer
>>Customer-level activities Activities that are carried out to support customers, but that are not
related to any specific product. << correct answer >>Degree of operating leverage A measure, at a
given level of sales, of how a percentage change in salesvolume will affect profits. The degree of
operating leverage is computed by dividing contribution margin by net operating income. << correct
answer >>Differential cost A future cost that differs between any two alternatives. << correct
answer >>Differential revenue Future revenue that differs between any two alternatives. << correct
answer >>Direct cost A cost that can be easily and conveniently traced to a specified cost object. <<
correct answer >>Direct labor Factory labor costs that can be easily traced to individual units of
product. Also called touch labor. << correct answer >>Direct labor budget A detailed plan that
shows the direct labor-hours required to fulfill the production budget. << correct answer >>Direct
materials Materials that become an integral part of a finished product and whose costs can be
conveniently traced to it. << correct answer >>Direct materials budget A detailed plan showing the
amount of raw materials that must be purchased to fulfill the production budget and to provide for
adequate inventories. << correct answer >>Discretionary fixed costs Those fixed costs that arise
from annual decisions by management to spend on certain fixed cost items, such as advertising and
research. << correct answer >>Duration driver A measure of the amount of time required to perform
an activity. << correct answer >>Ending finished goods inventory budget A budget showing the dollar
