Cost Management: Measuring, Monitoring, and Motivating Performance, 2nd Edition

Glossary

Note: Numbers in parentheses refer to the page on which the term is found. Bolded page numbers refer to key terms.

Abnormal spoilage. Spoilage that is not part of normal operations. (194, 235)

Absorption costing. All production costs, including direct materials, direct labor, and manufacturing overhead, are assigned to inventory as product costs. (178, 548)

Accounting system. Computerized or manual structure of procedures and records that document organizational performance.

Accrual accounting rate of return. Capital budgeting method that measures the expected increase in average annual operating income as a percent of the initial increase in investment. (476)

Activity. A type of task or function performed in an organization. (259)

Activity-based budgeting (ABB). Uses activity cost pools and their related cost drivers to anticipate the costs for individual activities. (394)

Activity-based costing (ABC). Process of assigning overhead costs to specific activities in a manufacturing or service delivery process. (259)

Activity-based management (ABM). Process of using ABC information to evaluate the costs and benefits of production and internal support activities and to identify and implement opportunities for improvements in profitability, efficiency, and quality within an organization. (269)

Activity-based transfer prices. Cost-based transfer price based on unit-level, batch-level, and possibly some product-level costs for products transferred, plus an annual fixed fee that ...