BUSI 601 FINAL EXAM STUDY GUIDE
Balance Scorecard (BSC)
An accounting report that includes the firm's critical success factors in four areas: (1) financial
performance, (2) customer satisfaction, (3) internal processes, and (4) learning and growth.
Strategy Map
A graphical representation of the organization's value proposition; used to depict the series of causes
and effects embodied in the various perspectives of an organization's balanced scorecard
Activity-based costing (ABC)
A costing approach that assigns resource costs to cost objects based on activities performed for the cost
objects
Volume Based Costing
(also called traditional costing) is a product costing system when an entity allocates factory overhead
costs to a single cost pool (e.g., factory overhead) and then uses volume-based cost drivers to allocate
factory overhead costs to individual products or services. The entity uses volume-based cost drivers that
depend on the number of units manufactured. Cost bases (or drivers) often used include labor hours,
machine hours and labor costs.
Customer Profitability Analysis (CPA)
Identifies customer service activities, cost drivers, and the profitability of each individual- customer or
customer group.
Target Costing
The desired cost for a product as determined on the basis of a given competitive price, so the product
will earn a desired profit.
Break-Even Point
The point at which total revenues equal total costs so that operating profit is zero.
Master Budget
o Types of budgets
o Budgetary slack
Budgeting:
The process of preparing one or more budgets.
Budgetary slack:
, The difference between budgeted performance and expected performance; a "cushion" managers
intentionally build into budgets to help ensure success in meeting the budget.
Cost Estimation Methods
The development of a well-defined relationship between a cost object and its cost drivers for the
purpose of predicting the cost.
Benchmarking
A process by which a firm identifies its critical success factors, studies the best practices of other firms
(or other business units within a firm) for achieving these critical success factors, and then implements
improvements in the firm's processes to match or beat the performance of those competitors.
Theory of Constraints (TOC)
An analysis of operations that improves profitability and cycle time by identifying the bottleneck in the
operation and determining the most profitable product mix given the bottleneck.
Continuous Improvement
A standard that gets progressively tighter over time.
Flow of costs from Raw Materials to Work in Process to Finished Goods to Cost of Goods Sold
The flow of costs then moves to work-in-process inventory, where labor, machining, and overhead costs
are added to the cost of the raw materials. Once the production process is complete, the costs move to
the finished goods inventory classification, where the goods are stored prior to sale.
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Make or Buy Decisions
Make-or-buy decisions involve the assessment of whether an organization should continue
manufacturing a product or service 'in-house', or if it should just buy those from an outside supplier.
Performance Measurement
A process that identifies and fathers information about the work performed and the results achieved by
an individual, activity, process, or organizational unit as compared to preestablished criteria.
SWOT Analysis
A systematic procedure for identifying a firm's critical success factors: its internal strengths and
weaknesses and its external opportunities and threats.
Enterprise Risk Management (ERM)
A framework and process that firms use to manage the risks that could negatively or positively affect the
company's competitiveness and success.
Balance Scorecard (BSC)
An accounting report that includes the firm's critical success factors in four areas: (1) financial
performance, (2) customer satisfaction, (3) internal processes, and (4) learning and growth.
Strategy Map
A graphical representation of the organization's value proposition; used to depict the series of causes
and effects embodied in the various perspectives of an organization's balanced scorecard
Activity-based costing (ABC)
A costing approach that assigns resource costs to cost objects based on activities performed for the cost
objects
Volume Based Costing
(also called traditional costing) is a product costing system when an entity allocates factory overhead
costs to a single cost pool (e.g., factory overhead) and then uses volume-based cost drivers to allocate
factory overhead costs to individual products or services. The entity uses volume-based cost drivers that
depend on the number of units manufactured. Cost bases (or drivers) often used include labor hours,
machine hours and labor costs.
Customer Profitability Analysis (CPA)
Identifies customer service activities, cost drivers, and the profitability of each individual- customer or
customer group.
Target Costing
The desired cost for a product as determined on the basis of a given competitive price, so the product
will earn a desired profit.
Break-Even Point
The point at which total revenues equal total costs so that operating profit is zero.
Master Budget
o Types of budgets
o Budgetary slack
Budgeting:
The process of preparing one or more budgets.
Budgetary slack:
, The difference between budgeted performance and expected performance; a "cushion" managers
intentionally build into budgets to help ensure success in meeting the budget.
Cost Estimation Methods
The development of a well-defined relationship between a cost object and its cost drivers for the
purpose of predicting the cost.
Benchmarking
A process by which a firm identifies its critical success factors, studies the best practices of other firms
(or other business units within a firm) for achieving these critical success factors, and then implements
improvements in the firm's processes to match or beat the performance of those competitors.
Theory of Constraints (TOC)
An analysis of operations that improves profitability and cycle time by identifying the bottleneck in the
operation and determining the most profitable product mix given the bottleneck.
Continuous Improvement
A standard that gets progressively tighter over time.
Flow of costs from Raw Materials to Work in Process to Finished Goods to Cost of Goods Sold
The flow of costs then moves to work-in-process inventory, where labor, machining, and overhead costs
are added to the cost of the raw materials. Once the production process is complete, the costs move to
the finished goods inventory classification, where the goods are stored prior to sale.
We have an expert-written solution to this problem!
Make or Buy Decisions
Make-or-buy decisions involve the assessment of whether an organization should continue
manufacturing a product or service 'in-house', or if it should just buy those from an outside supplier.
Performance Measurement
A process that identifies and fathers information about the work performed and the results achieved by
an individual, activity, process, or organizational unit as compared to preestablished criteria.
SWOT Analysis
A systematic procedure for identifying a firm's critical success factors: its internal strengths and
weaknesses and its external opportunities and threats.
Enterprise Risk Management (ERM)
A framework and process that firms use to manage the risks that could negatively or positively affect the
company's competitiveness and success.
