Absorption Costing

absorption costing计算Absorption costing计算是一种企业用于成本计算和产品定价的方法。

该方法以所有直接和间接成本作为生产成本的一部分，因此参考了整体产品成本。

这种方法可以帮助企业计算成本，确保产品的定价覆盖所有成本，从而帮助企业获得利润。

下面是如何进行Absorption costing计算的步骤：1. 收集所有生产成本：首先，企业必须收集所有与产品生产相关的成本，包括直接人工、直接材料和间接费用成本。

直接人工成本指生产员工的薪资和工资，直接材料成本指用于生产产品的材料成本，间接费用成本指不直接参与生产但与生产有关联的费用，如设备维护和租金等。

2. 分配间接费用成本：接下来，企业需要将间接费用成本分配到每个产品上。

这通常通过建立一个成本池的方式实现，然后将池子中的费用分配到每个产品上，或者通过使用各种成本驱动器（如工作小时或直接人工成本）来分配成本。

3. 计算总成本：完成分配之后，企业需要将所有成本总和，包括直接成本和间接费用成本，得出总成本。

4. 计算单位成本：为了计算单位成本，企业需要将总成本除以产量，得到每单位成本。

5. 确定产品的定价：最后，企业必须借助Absorption costing计算的结果来决定产品的定价。

它必须考虑成本、竞争和市场需求等因素。

Absorption costing计算是一种全面的成本计算方法，它将所有与产品生产相关的成本都包括在内，使企业在定价时能够覆盖所有成本，确保生产利润。

但是，Absorption costing计算也有一些缺点，如将所有成本分配到每个单位产品上可能会导致某些产品被高估，从而影响企业的决策。

综上所述，Absorption costing计算是一种有效的成本计算方法，可以帮助企业确定产品的正确定价，并确保企业实现利润。

但是，企业必须谨慎地分配所有成本，以确保每个单位产品得到适当估价。

absorption costing中oar的算法Absorption costing, also known as full costing, is a costing method that allocates all manufacturing costs to the products, including both variable costs and fixed costs. One crucial component of absorption costing is the calculation of the overhead absorption rate (OAR). In this article, we will delve into the algorithm used to determine the OAR in absorption costing.To begin with, we need to understand the concept of overhead costs. Overhead costs are indirect costs that cannot be directly attributed to a specific product or job. These costs include expenses like rent, utilities, and salaries of administrative staff. Since overhead costs are incurred to support the overall production process, they need to be allocated to the products in a logical and systematic manner.The formula to calculate the overhead absorption rate is as follows:OAR = Budgeted Overhead Cost / Budgeted Activity LevelFirstly, we need to determine the budgeted overhead cost. This involves estimating the total overhead expenses for a specificperiod, typically a year. To get an accurate estimate, the company needs to consider all the indirect costs incurred during that period. This could involve collecting data from various departments, reviewing historical trends, and analyzing any changes in the business environment.Once the budgeted overhead cost is determined, we move on to the second step which is calculating the budgeted activity level. The activity level is a measure of the driver or basis used to allocate overhead costs. Commonly used activity levels include direct labor hours, machine hours, or direct material costs. The choice of activity level depends on the nature of the business and the factors that contribute significantly to overhead costs.For example, if a company's primary overhead expense is associated with machine usage, it would be appropriate to use machine hours as the activity level. On the other hand, if direct labor costs are the main driver of overhead costs, direct labor hours would be a suitable activity level.Once the activity level is identified, the company needs to estimate the total activity level for the budgeted period. This involvesanalyzing historical data or making accurate projections based on future demand and production levels. The company may consider factors like seasonal fluctuations, market trends, and planned changes in production capacity to determine the estimated activity level.Finally, we divide the budgeted overhead cost by the estimated activity level to obtain the overhead absorption rate. This rate represents the amount of overhead cost allocated per unit of the activity level. For instance, if the budgeted overhead cost is 100,000 and the estimated activity level is 10,000 direct labor hours, the overhead absorption rate would be 10 per direct labor hour.The overhead absorption rate serves as a basis for allocating indirect costs to products or jobs. For example, if a product requires 2 hours of direct labor to manufacture, it would be allocated 20 (10 x 2) as overhead cost. This overhead cost is then added to the direct costs (e.g., direct materials and direct labor) to determine the total cost of the product.It's important to note that the OAR calculated using absorption costing is based on budgeted figures. However, the actualoverhead costs and activity levels may differ from the budgeted amounts. This discrepancy can lead to under or over absorption of overhead costs. Under-absorption occurs when the actual overhead costs exceed the allocated overhead, whileover-absorption happens when the allocated overhead exceeds the actual costs incurred. These variances need to be carefully analyzed and adjusted to provide a more accurate reflection of the true costs.In conclusion, absorption costing is a costing method that assigns both variable and fixed manufacturing costs to products. The calculation of the overhead absorption rate in absorption costing involves determining the budgeted overhead cost and the estimated activity level. This rate serves as a basis for allocating indirect costs to products and plays a critical role in determining the total cost of production. However, it's important to monitor and adjust for any variances between the budgeted and actual overhead costs to ensure accurate costing and decision-making.。

ACCA F5知识点：Marginal cost and Absorption cost今天给大家说一下ACCA F5科目中关于marginal cost和absorption cost，其实这个知识点我们在F2的时候就已经学习到了，今天再给大家来整理一下。

Marginal cost means the cost of one unit of a product which could be avoided if that unit were not produced. 这里还有一个contribution的知识点，contribution means the difference between sales value and the variable cost of sales. 对于marginal cost，这里有两个原则，一个是a principle whereby production costs only are charged to cost units and the fixed costs attributable to the relevant period are written off in full against the contribution for the period; 第二个是inventory is valued at variable cost of production.对于marginal cost，有一个计算顺序：Cost cardSales XVariable cost(X)Contribution XFixed cost(X)Profit X关于absorption cost的原则，when use absorption costing technique, we look at the production costs only. i.e. direct material, direct labor, variable production overheads and fixed production overheads. The cost card can be summarized as below:Direct materials per unit XDirect labor per unit XProduction overhead per unit XFull production cost per unit XIt is easy to estimate direct materials per unit and direct labor per unit. However, it is much more difficult to estimate the production overhead per unit because production overheads an indirect cost, which by its nature, we do not know how much it contained in each unit. Therefore, we need a method to estimate the production overheads to each unit. All production overheads must be absorbed into units of production, using a suitable basis.好，关于marginal cost和absorption cost就和大家先说到这。

Chapter 6Lecture NotesChapter theme: Two general approaches are used for valuing inventories and cost of goods sold. One approach, called absorption costing , is generally used for external reporting purposes. The other approach, called variable costing , is preferred by some managers for internal decision making and must be used when an income statement is prepared in the contribution format . This chapter shows how these two methods differ from each other. It also explains how to create segmented contribution format income statements.I. Overview of variable and absorption costingLearning Objective 1: Explain how variable costing differs from absorption costing and compute unit product costsunder each method.Three simplifying assumptions are made in this chapter:i. Normal costing (rather than actual costing) is used (i.e., predetermined overhead rates are used to applyoverhead costs to product.ii. The actual number of units produced is used as theallocation base for assigning actual fixed manufacturingoverhead costs to products.iii. V ariable manufacturing costs per unit and the totalfixed manufacturing overhead cost per period remainconstant.2 3B. Variable costing treats only those costs of production that vary with output as product costs. This approach dovetails with the contribution approach income statement andsupports CVP analysis because of its emphasis onseparating variable and fixed costs.i. The cost of a unit of product consists of directmaterials, direct labor, and variable overhead .Helpful Hint: For simplicity, nearly all examples, exhibits, problems, and exercises in this chapter treat direct labor as a variable cost. However, students should be reminded that labor is essentially a fixed cost in some companies. This is a growing phenomenon as pointed out in earlier chapters.Under variable costing, direct labor would not be included in product costs when it is a fixed cost. This point is reinforced in the discussion on theory of constraints at the end of the chapter.ii. Fixed manufacturing overhead and both variable andfixed selling and administrative expenses are treated asperiod costs and deducted from revenue as incurred.Helpful Hint: Emphasize that the only difference between variable and absorption costing is in how the two methods treat fixed manufacturing overhead costs. Also, emphasize that under both methods, selling and administrative costs are period costs and are not product costs.C. Absorption costing treats all costs of production as product costs, regardless of whether they are variable or fixed. Since no distinction is made between variable and fixed costs,absorption costing is not well suited for CVP computations.i. The cost of a unit of product consists of directmaterials, direct labor, and both variable and fixedoverhead .ii. Variable and fixed selling and administrative expensesare treated as period costs and are deducted fromrevenue as incurred.Quick Check – absorption vs. variable costingII. Harvey Company —an exampleA. Unit cost computationsi. Assume Harvey Company produces a single product with available information as shown.ii. The unit product costs under absorption and variablecosting would be $16 and $10, respectively.1. Under absorption costing, all production costs ,variable and fixed, are included when determiningunit product cost.2. Under variable costing, only the variableproduction costs are included in product costs.Helpful Hint: Before beginning the forthcoming incomecomparisons, remind students of the relationship between ending inventory and net operating income. Higher ending inventory results in higher net operating income since costs of goods available for sale less ending inventory equals cost of goods sold. Therefore, a higher ending inventory results in a lower expense (cost of goods sold) deducted to arrive at net operating income.Learning Objective 2: Prepare income statements using both variable and absorption costing.B. Income comparison of variable and absorption costingi. Harvey Company —additional assumptions.1.20,000 units were sold during the year. 2.The selling price per unit is$30. 3. There isno beginning inventory. ii. Variable costing1. The unit product cost is $10.2. All $150,000 of fixed manufacturing cost is expensed in the current period.3. The net operating income is $90,000. iii. Absorption costing1. The unit product cost is $16.2. The fixed manufacturing overhead cost deferred in inventory is $30,000 (= 5,000 units × $6 per unit).3. The net operating income is $120,000.Helpful Hint: Explain that under absorption costing, therecognition of fixed costs as an expense is really a timing issue. When the items are sold, the fixed costs will bereflected on the income statement as part of cost of goods sold.Learning objective 3: Reconcile variable costing and absorption costing net operating incomes and explain whythe two amounts differ.iv. Comparing the two methods1. Under absorption costing, $120,000 of fixedmanufacturing overhead is included in cost of goodssold and $30,000 is deferred in ending inventory asan asset on the balance sheet.2. Under variable costing, the entire $150,000 of fixedmanufacturing overhead is treated as a periodexpense.a. The variable costing ending inventory is $30,000less than absorption costing , thus explaining thedifference in net operating income between thetwo methods.3. The difference in net operating income between thetwo methods ($30,000) can also be reconciled bymultiplying the number of units in ending inventory(5,000 units ) by the fixed manufacturing overheadper unit ($6) that is deferred in ending inventoryunder absorption costing.C. Extended comparisons of income datai. Harvey Company —additional assumptions/facts1. 30,000 units were sold in year2. 2. The selling price per unit, variable costs per unit,total fixed costs, and number of units producedremain unchanged .3. 5,000 units are in beginning inventory.ii. Unit cost computations1.Since the variable costs per unit, total fixed costs, and the number of units produced remained unchanged, the unit cost computations also remain unchanged. iii. Variable costing 1. The unit product cost is $10. 2. All $150,000 of fixed manufacturing overhead cost is expensed in the current period. 3. The net operating income is $260,000. iv. Absorption costing 1. The unit product cost is $16. 2. The fixed manufacturing overhead cost released from inventory is $30,000 (= 5,000 units × $6 per unit). 3. The net operating income is $230,000.v. Comparing the two methods 1. The difference in net operating income between the two methods ($30,000) can be reconciled by multiplying the number of units in beginning inventory (5,000 units ) by the fixed manufacturing overhead per unit ($6) that is released from beginning inventory under absorption costing.2. Across the two-year time frame, both methods reported the same total net operating income ($350,000). This is because over an extended period of time sales cannot exceed production, nor canproduction much exceed sales. The shorter the timeperiod, the more the net operating income figureswill tend to differ.D. Summary of key insightsi.Whenunits produced equals units sold, the twomethods report the same net operating income .ii. When units produced are greater than units sold , asin year 1 for Harvey, absorption net operating incomeis greater than variable costing net operating income . iii. When units produced are less than units sold , as inyear 2 for Harvey, absorption costing net operatingincome is less than variable costing net operatingincome .III. Advantages of variable costing and the contribution approachA. Enabling CVP analysisi. Variable costing categorizes costs as fixed and variable so it is much easier to use this income statement format for CVP analysis.ii.Absorption costing assigns per unit fixed manufacturing overhead costs to production. This can potentiallyproduce positive net operating income even whenthe number of units sold is less than the breakevenpoint.B. Explaining changes in net operating incomei.Variable costingnet operating income is only affectedby changes in unit sales. It is not affected by thenumber of units produced. As a general rule, when salesgo up net operating income goes up and vice versa.ii.Absorption costing net operating income is influenced by changes in unit sales and units of production. Netoperating income can be increased simply by producingmore units even if those units are not sold.D.Supporting decision makingi.Variable costing correctly identifies the additionalvariable costs incurred to make one more unit. Italso emphasizes the impact of fixed costs on profits.ii.Absorption costing gives the impression that fixed manufacturing overhead is variable with respect tothe number of units produced, but it is not. This canlead to inappropriate pricing decisions and productdiscontinuation decisions.IV. Segmented income statements and the contribution approach Learning Objective 4: Prepare a segmented incomestatement that differentiates traceable fixed costs fromcommon fixed costs and use it to make decisions.A.Key concepts/definitionsi. A segment is a part or activity of an organizationabout which managers would like cost, revenue, orprofit data.ii.Examples of segments include divisions of acompany, sales territories, individual stores, servicecenters, manufacturing plants, marketingdepartments, individual customers, and product lines.iii.There are two keys to building segmented income statements.1.First, a contribution format should be usedbecause it separates fixed from variable costsand it enables the calculation of a contributionmargin.a.The contribution margin is especially useful indecisions involving temporary uses ofcapacity such as special orders.2.Second, traceable fixed costs should be separatedfrom common fixed costs to enable thecalculation of a segment margin. Furtherclarification of these terms is as follows:a. A traceable fixed cost of a segment is a fixed cost that is incurred because of the existence of the segment. If the segment were eliminated, the fixed cost would disappear. Examples of traceable fixed costs include: (1). The salary of the Fritos product manager at PepsiCo is a traceable fixed cost of the Fritos business segment of PepsiCo. (2). The maintenance cost for the building in which Boeing 747s are assembled is a traceable fixed cost of the 747 business segment of Boeing.b. A common fixed cost is a fixed cost that supports the operations of more than one segment, but is not traceable in whole or in part to any one segment . Examples of common fixed costs include: (1). The salary of the CEO of General Motors is a common fixed cost of the various divisions of General Motors. (2). The cost of heating a Safeway or Kroger grocery store is a common fixed cost of the various departments – groceries, produce, bakery, etc. c. It is important to realize that the traceable fixed costs of one segment may be a common fixed cost of another segment . For example: (1). The landing fee paid to land an airplane atan airport is traceable to a particular flight, but it is not traceable to first-class, business-class, and economy-class passengers.Helpful Hint: In practice, a great deal of disagreement exists about what costs are traceable and what costs are common. Some people claim that except for direct materials, virtually all costs are common fixed costs that cannot be traced to products. Others assert that all costs are traceable toproducts; there are no common costs. The truth probably lies somewhere in the middle – many costs can be traced to products but not all costs.d. A segment margin is computed by subtracting the traceable fixed costs of a segment from itscontribution margin.(1). The segment margin is a valuable tool forassessing the long-run profitability of asegment.(2). Allocating common costs to segmentsreduces the value of the segment marginas a guide to long-run segmentprofitability.Helpful Hint: Explain that a segment should notautomatically be eliminated if its segment margin is negative. If a company that produces hair-styling productsdiscontinues its styling gel, sales on its shampoo and conditioner might fall due to the unavailability of the eliminated product.B. Segmented income statements – an examplei.Assume that Webber, Inc. has two divisions –the Computer Division and the Television Division.1. The contribution format income statement for the Television Division is as shown. Notice:a. Cost of goods sold consists of variable manufacturing costs.b. Fixed and variable costs are listed in separate sections .c. Contribution margin is computed by taking sales minus variable costs.d. The divisional segment margin represents the Television Division’s contribution to overall company profits. 2. The Television Division’s results can be rolled into Webber, Inc.’s overall results as shown. Notice: a. The results of the Television and Computer Divisions sum to the results shown for the whole company. b. The common costs for the company as a whole ($25,000) are not allocated to the divisions . 3. The Television Division’s results can also be broken down into smaller segments. This enables us to see how traceable fixed costs of the Television Division can become common costs of smaller segments . a. Assume that the Television Division can be broken down into two major product lines – Regular and Big Screen . b. Assume that the segment margins for these two product lines are as shown. c. Of the $90,000 of fixed costs that were previously traceable to the Television Division, $80,000 (= $45,000 + $35,000) is traceable to the two product lines and $10,000 is a common cost.C. Segmented income statements —decision making and break-even analysisi.To illustrate how the Television Division’s results can be used fordecision making, assume Webber believes that if the Television Division spends $5,000 additionaldollars on advertising it will increase sales of Regular and Big Screen televisions by 5%. Webber can compute the profit impact of this course of action as follows:1. The Regular product line contribution margin would increase by $5,250.2. The Big Screen product line contribution margin would increase by $2,250.3. The Television Division’s segment margin would increase by $2,500. Learning Objective 5: Compute companywide and segment break-even points for a company with traceable fixed costs. ii. To demonstrate how to calculate companywide and segmented break-even points , let’s refer back to the companywide income statement segmented into the Television and Computer Divisions. 1. The companywide break-even point is computed by dividing the sum of the company’s traceable fixed costs and common fixed costs by the company’s overall contribution margin ratio . a. This equation can be used to compute Webber’s companywide break-even point of $361,111.2. A business segment’s break-even point is computedby dividing its traceable fixed costs by itscontribution margin ratio.a. Using this equation, the break-even point for theTelevision Division is $180,000.b. The break-even point for the Computer Divisionis $133,333.3. Notice that the companywide common fixed costsare excluded from the segment break-evencalculations. This occurs because the common fixed costs are not traceable to segments and they are not influenced by segment-level decisions.Segmented income statements—common mistakesA.Omission of costsi.The costs assigned to a segment should include all thecosts attributable to that segment from the company’sentire value chain as discussed in Chapter 12.1.Since only manufacturing costs are included inproduct costs under absorption costing, thosecompanies that choose to use absorption costing forsegment reporting purposes will omit from theirprofitability analysis all “upstream” and“downstream” costs.a.“Upstream” costs include research anddevelopment and product design costs.b.“Downstream” costs include marketing,distribution, and customer service costs.c. Although these “upstream” and “downstream” costs are nonmanufacturing costs, they are just as essential to determining product profitability asare manufacturing costs. Omitting them fromprofitability analysis will result in theundercosting of products.Helpful Hint: An example of a company with a very high amount of upstream and downstream costs is apharmaceutical company such as Merck. A great deal of its costs are comprised of research and development and marketing.B. Inappropriate methods for assigning traceable costs to segmentsi.Failure to trace costs directly1. Costs that can be traced directly to specific segments of a company should not be allocated to othersegments . Rather, such costs should be chargeddirectly to the responsible segment. For example: a. The rent for a branch office of an insurancecompany should be charged directly against thebranch office rather than included in acompanywide overhead pool and then spreadthroughout the company.ii. Inappropriate allocation base1. Some companies allocate costs to segments using arbitrary bases . Costs should be allocated tosegments for internal decision making purposes only when the allocation base actually drives the cost being allocated. For example:a. Sales are frequently used to allocate selling and administrative expenses to segments. This should only be done if sales drive these expenses.C. Arbitrarily dividing common costs among segments i. Common costs should not be arbitrarily allocated to segments based on the rational e that “someone has to cover the common costs” for two reasons:1. First, this practice may make a profitable business segment appear to be unprofitable. If the segment is eliminated the revenue lost may exceed the real traceable costs that are avoided.2. Second, allocating common fixed costs forcesmanagers to be held accountable for costs that they cannot control.Quick Check – common costsV. Income statements—an external reporting perspectiveA. Companywide income statementsi.Practically speaking,absorption costing is requiredfor external reports in the United States. IFRS alsorequire absorption costing for external reports.ii.Probably because of the cost of maintaining twoseparate costing systems, most companies useabsorption costing for their external and internal reports.iii.W ith all of the advantages of the contribution approach, one may wonder why the absorption approach is used atall. Perhaps the biggest reason is because:1.Advocates of absorption costing argue that it bettermatches costs with revenues. They contend thatfixed manufacturing costs are just as essential tomanufacturing products as are the variable costs.2.Advocates of variable costing view fixedmanufacturing costs as capacity costs. They arguethat fixed manufacturing costs would be incurredeven if no units were produced.B. Segmented financial informationi. U.S. GAAP and IFRS require publicly-tradedcompanies to include segmented financial data intheir annual reports. These rulings have implications forinternal segment reporting because:.1. They mandate that companies must prepare external Array segmented reports using the same methods that theyuse for internal segmented reports. This requirement motivates managers to avoid using the contribution approach for internal reporting purposes because if they did they would be required to:a. Share this sensitive data with the public.b. Reconcile these reports with applicable rules forconsolidated reporting purposes.。

ACCA F2考官文章分析-marginal costingIn marginal costing, fixed production costs are treated as period cost(期间费用)written off as they are incurred;In absorption costing, fixed production costs are absorbed into the cost of sales units and are carried forward in inventory to be charged against sales for the next period;Marginal costing 与absorption costing 本质区别的来源：产量在marginal costing下，all incurred fixed overhead直接当作期间费用扣除；（according to 当期产量production units ）而相对地，在absorption costing下，fixed overhead可以作为cost of sales 扣除；（according to 当期销量sales units ）因此，marginal costing 与absorption costing之间的差异体现在以下几个方面：第一，期末利润的不同=（产量-销量）* overhead absorption rate per units第二，期末存货价值的不同= the change in inventory level * overhead absorption rate per units同时，有关于inventory的相关公式：The closing inventory = the opening inventory + production units – sales units公式变形为：The change in inventory level = the closing inventory – opening inventory= production units (产量) –sales units (销量)结合上面所总结的知识，我们得出下面的相关结论：Difference in profits = change in inventory level * overhead absorption rate per unit1. If closing inventory opening inventory, then absorption costing profit will be greater than marginal costing profit;2. If opening inventory closing inventory, then absorption costing profit will be less thanmarginal costing profit;Question practiceA company which uses marginal costing has a profit of $37,500 for a period. Opening inventory was 100 units and closing inventory was 350 units. The fixed production overhead absorption rate is $4 per unit.What is the profit under absorption costing?A $5,700B $5,500C $8,500D $9,300The correct answer is C根据上面所总结的规律，我们可以知道：The change in inventory level = 350-100= 250 unitsDifferent in profits = the change in inventory level * overhead absorption rate= 250 units * $4 per units= $1,000The profit under absorption costing= profit under marginal costing + different in profits= $37,500 + $1,000 = $38,500。

PARTⅠ.TRUE OR FALSE(1×20)1. Actual costing uses the budgeted rate to allocate the indirect manufacturing costs.2. Unfavorable variances has effect of increasing operating income.3. Absorption costing “absorbs” only variable manufacturing costs.4. Under both variable and absorption costing, all variable manufacturing costs areinventoriable costs.5. A final product or service has only one cost driver.6. In a master budget, the production budget is prepared based on the sale budget..7.If a company undercosts one of its products, then it will overcost at least one of its other products.8. Cost drivers are usually expressed in dollars.9. If the selling price per unit is $20 and the contribution margin percentage is 30%, then the variable cost per unit must be $6.10. Cost objects may be jobs, products, or customers.11. The actual costs are the costs that incurred before.12. Cost of Goods Manufactured is just the Manufacturing cost.13. Cost can be measured by dollars, yen, and euros, as well as other currencies.14. Depreciation of assembly equipment is an example of a direct cost.15. A merchandising company has direct materials inventory.16. The contribution-margin format of the income statement is used with absorption costing.17. Variable costing includes all variable costs — both manufacturing and nonmanufacturing — in inventory.18. Activity-based costing helps identify various activities that explain why costs are incurred.19. A final product or service has only one cost driver.20. Knowing the proper relevant range is essential to properly classify costs.PARTⅡ. SINGAL CHOICE(2×20)1. Variable costs:a. are always indirect costsb. increase in total when the actual level of activity increasesc. include most personnel costs and depreciation on machineryd. can always be traced directly to the cost object2. Within the relevant range, if there is a change in the level of the cost driver, thena. total fixed costs and total variable costs will changeb. total fixed costs and total variable costs will remain the samec. total fixed costs will remain the same and total variable costs will changed. total fixed costs will change and total variable costs will remain the same3. Cost-volume-profit analysis is used PRIMARILY by management:a. as a planning toolb. for control purposesc. to prepare external financial statementsd. to attain accurate financial results4. Contribution margin equals:a. revenues minus period costsb. revenues minus product costsc. revenues minus variable costsd. revenues minus fixed costs5. Kaiser’s Kraft Korner s ells a single product. 7,000 units were sold resulting in$70,000 of sales revenue, $28,000 of variable costs, and $12,000 of fixed costs.Contribution margin per unit isa. $4.00b. $4.29c. $6.00d. None of these answers are correct.6. At the breakeven point of 200 units, variable costs total $400 and fixed coststotal $600. The 201st unit sold will contribute ___________ to profits.a. $1b. $2c. $3d. $57. The breakeven point is the activity level where:a. revenues equal fixed costsb. revenues equal variable costsc. contribution margin equals variable costsd. revenues equal the sum of variable and fixed costs8. Companies should ONLY produce and sell units as long as:a. there is customer demand for the productb. the competition allows itc. the revenue from an additional unit exceeds the cost of producing itd. there is a generous supply of low-cost direct materials9. Three major influences on pricing decisions are:a. competition, costs, and customersb. competition, demand, and production efficiencyc. continuous improvement, customer satisfaction, and supplyd. variable costs, fixed costs, and mixed costs10. Activity-based budgeting:a. uses one cost driver such as direct labor-hoursb. uses only output-based cost drivers such as units soldc. focuses on activities necessary to produce and sell products and servicesd. classifies costs by functional area within the value chain11.Kaiser’s Kraft Korner sells a single product. 7,000 units were sold resulting in$70,000 of sales revenue, $28,000 of variable costs, and $12,000 of fixed costs.Breakeven point in units is:a. 2,000 unitsb. 3,000 unitsc. 5,000 unitsd. None of these answers are correct.12. Job costing information is used:a. to develop strategiesb. to make pricing decisionsc. for external financial reportingd. All of these answers are correct.13. Which of the following statements related to assumptions about estimatinglinear cost functions is FALSE?:a. Variations in a single cost driver explain variations in total costs.b. A cost object is anything for which a separate measurement of costs is desired.c. A linear function approximates cost behavior within the relevant range ofthe cost driver.d. A high correlation between two variables ensures that a cause-and-effectrelationship exists.14. Cost-volume-profit analysis assumes all of the following EXCEPT:a. all costs are variable or fixedb. units manufactured equal units soldc. total variable costs remain the same over the relevant ranged. total fixed costs remain the same over the relevant range15. Design of an ABC system requires:a. that the job bid process be redesignedb. that a cause-and-effect relationship exists between resource costs andindividual activitiesc. an adjustment to product mixd. Both b and c are correct.16. Which of the following is an equation of a variable cost function?a. y = bb. y = a + bXc. y = bXd. y = a17. The general term used to identify both the tracing and the allocation ofaccumulated costs to a cost object is:a. cost accumulationb. cost assignmentc. cost tracingd. conversion costing18. Operating budgets include the:a. budgeted balance sheetb. budgeted income statementc. capital expenditures budgetd. budgeted statement of cash flows19. Financial accounting:a. focuses on the future and includes activities such as preparing next year'soperating budgetb. must comply with GAAP (generally accepted accounting principles)c. reports include detailed information on the various operating segments ofthe business such as product lines or departmentsd. is prepared for the use of department heads and other employees20. Management accounting:a. focuses on estimating future revenues, costs, and other measures toforecast activities and their resultsb. provides information about the company as a wholec. reports information that has occurred in the past that is verifiable andreliabled. provides information that is generally available only on a quarterly orannual basisPARTⅢ. SHORT ANSWER(4×5)1.A costing system that identifies the different job oredrs as different cost objects.2. The range of activity over which the relationship between cost and activity is valid.3. Goods fully completed but not yet sold4. The relationship between sales and variable costs5. These costs contain elements of both fixed- and variable-cost behavior6. A sacrifice or consumption of resources for a particular purpose7. Costs that can be traced specifically and exclusively to the manufactured goods in an economically feasible way8.The organization its purpose is not to earn money but to provide the service to the public.9. The level of sales at which the contribution margin equals the fixed cost10. system accounting for mass production of identical or similar productsPARTⅣ. CALCULATION1. Stephanie’s Stuffed Animals reported the following:Revenues $1,000Variable manufacturing costs $ 200Variable nonmanufacturing costs $ 230Fixed manufacturing costs $ 150Fixed nonmanufacturing costs $ 140Required:a. Compute contribution margin.b. Compute gross margin.c. Compute operating income.2. Jarvis Golf Company sells a special putter for $20 each. In March, it sold28,000 putters while manufacturing 30,000. There was no beginning inventory on March 1. Production information for March was:D irect manufacturing labor per unit 15 minutesF ixed selling and administrative costs $ 40,000F ixed manufacturing overhead 132,000D irect materials cost per unit 2D irect manufacturing labor per hour 24V ariable manufacturing overhead per unit 4V ariable selling expenses per unit 2Required:a. Compute the cost per unit under both absorption and variable costing.b. Compute the ending inventories under both absorption and variablecosting.c. Compute operating income under both absorption and variable costing. PARTⅠ.TRUE/FALSE(1.5×20)1.F2.F3.F4.T5.F6.T7.T8.F9.F 10.T11.T 12. F 13.T 14.F 15.F16.F 17. F 18.T 19.F 20.TPARTⅡ. SINGAL CHOICE(1.5×20)1.b2.c3.a4.c5.c6.c7.d8.c9.a 10.c11.a 12.d 13.d 14.c 15.b16.c 17.b 18b 19.b 20.aPARTⅢ. SHORT ANSWER(2×10)Job costingRelevant rangeFinished goods inventoryContribution marginMixed costsCostDirect costsNon Profit OrganizationBreak-even pointProcess-CostingPARTⅣ. CALCULATION(9+11)1.a. Contribution margin $1,000 – $200 – $230 = $570b. Gross margin $1,000 – $200 – $150 = $650c. Operating income $1000 – $200 – $230 – $150 – $140 = $2802. a. Absorption VariableD irect manufacturing labor ($24/4) $ 6.00 $ 6.00D irect materials 2.00 2.00V ariable manufacturing overhead 4.00 4.00F ixed manufacturing overhead ($132,000/30,000) 4.40 ___0Total cost per unit $16.40 $12.00b. Absorption VariableB eginning inventory $0 $0C ost of goods manufactured:30,000 x $16.40 $492,00030,000 x $12.00 _______ $360,000C ost of goods available for sale $492,000 $360,000C ost of goods sold:28,000 x $16.40 $459,20028,000 x $12.00 _______ $336,000E nding inventory $ 32,800 $ 24,000c. Absorption-costing income statement:Sales (28,000 x $20) $560,000Cost of goods sold (28,000 x $16.40) 459,200Gross margin 100,800Less:Variable selling and administrative $56,000Fixed selling and administrative 40,000 96,000 Operating income $ 4,800Variable-costing income statement:Sales (28,000 x $20) $560,000Variable COGS (28,000 x $12) $336,000Variable selling expenses (28,000 x $2) 56,000 392,000Contribution margin 168,000 Fixed costs:Manufacturing $132,000Selling and administrative 40,000 172,000 Operating income $ (4,000)。

absorption costing 例子什么是吸收成本法？吸收成本法是一种会计方法，用于计算和分配企业的制造成本和相关费用。

这种方法会将制造和生产过程中的直接成本和间接成本分配到产品上。

即使在暂时无销售的情况下，也能确定每种产品的成本。

吸收成本法将制造费用分为两类：1. 直接成本：生产中与具体产品直接相关的费用，如材料成本、直接人工成本和直接制造费用。

2. 间接成本：与产品制造有关的费用，并且不能直接分配给某个产品，如工厂租金、折旧、电费和管理人员薪资等。

在吸收成本法中，制造企业可以将所有成本分配到产品上。

每个产品的成本不仅包括直接成本，也包括分配后的间接成本。

举例：假设制造商A在三个月内制造了200支相同的手表。

生产成本如下：直接材料成本：$1000直接人工成本：$600间接制造费用：$3000总成本：$4600在吸收成本法下，生产每一个手表的总成本为：此时，如果A只销售了100支手表，则每个手表的成本就是$21。

如果A销售了200支手表，则每个手表的成本是$23：总成本：$4600÷200=$23吸收成本法的优缺点：1. 明确了产品成本，包括直接成本和间接成本。

这对企业来说非常重要，因为它们可以以更具竞争力的价格销售产品，并在企业内部更好地管理和分配资源。

2. 支持企业做出更好的决策，如与产品相关的定价、生产策略。

然而，吸收成本法也有一些缺点，从而有可能导致企业做出错误的决策。

例如：1. 对于那些采用批量生产的制造企业而言，吸收成本法无法准确确定每一个单独的产品成本。

因此，即使某些产品已经过时，企业也可能继续生产，从而延长了不必要的损失。

2. 由于吸收成本法的成本计算不直观，可能会导致企业难以正确计算产品成本，从而得出错误的决策。

3. 吸收成本法难以衡量生产流程的有效性和效率，同时也难以衡量企业成本阮型的可用性。

吸收成本法和Variable Costing的比较：吸收成本法和变动成本法(variable costing)都是制造企业常用的计算制造成本的方法。

管理会计专业术语词汇AAbsorption costing A product-costingmethod that assigns all manufacturingcosts to a product: direct materials,direct labor, variable overhead, andfixed overhead.Absorption-costing (full-costing) incomeIncome computed using afunctionally-based statement. Cost ofgoods sold includes all variable manufacturingcosts and a portion offixed factory overhead.Accounting rate of return The rate ofreturn obtained by dividing the averageaccounting net income by the originalinvestment (or by average investment).Activity A basic unit of work performedwithin an organization. It alsocan be defined as an aggregation ofactions within an organization usefulto managers for purposes of planning,controlling, and decision making.Activity analysis The process of identifying,describing, and evaluating theactivities an organization performs.Activity attributes Nonfinancial andfinancial information items that describeindividual activities.Activity budgeting The process of estimatingthe demand for eachactivity’s output and assessing thecost of resources required to producethis output.Activity capacity The number oftimes an activity can be performed.Activity dictionary A list of activitiesdescribed by specific attributes suchas name, definition, classification asprimary or secondary, and activitydriver.Activity drivers Factors that measurethe consumption of activities by productsand other cost objects.Activity elimination The process of eliminating nonvalue-added activities. Activity flexible budget The predictionof what activity costs will be asactivity usage changes.Activity inputs The resources consumedby an activity in producing itsoutput (they are the factors that enablethe activity to be performed). Administrative costs All costs associated with the general administrationof the organization that cannot be reasonably assigned to either marketingor production.Advance pricing agreements (APAs) Agreements between the Internal Revenue Service and a taxpayer on the acceptability of a transfer price. The agreement is private and is bindingon both parties for a specified periodof time.Aesthetics A quality attribute that is concerned with the appearance oftangible products (for example, styleand beauty) as well as the appearanceof the facilities, equipment, personnel,and communication materials associated with services.Allocation Assignment of indirectcosts to cost objects.Annuity A series of future cash flows. Applied overhead Overhead assignedto production using predeterminedrates.Appraisal costs Costs incurred to determine whether products and servicesare conforming to requirements.BBalanced Scorecard (See Strategicbased responsibility accountingsystem.)Base period A prior period used toset the benchmark for measuring productivitychanges.Batch-level activities Activities thatare performed each time a batch is produced.Benchmarking An approach that uses best practices as the standard for evaluating activity performance.Best-fitting line The line that fits a setof data points the best in the sensethat the sum of the squared deviationsof the data points from the lineis the smallest.Binding constraints Constraintswhose resources are fully utilized.Break-even point The point where total sales revenue equals total costs;the point of zero profits.Activity output The result or productof an activity.Activity output measure The numberof times an activity is performed. It isthe quantifiable measure of the output. Activity reduction Decreasing the time and resources required by an activity. Activity selection The process of choosing among sets of activities caused by competing strategies.Activity sharing Increasing the efficiency of necessary activities by using economies of scale.Activity volume variance The cost of the actual activity capacity acquiredand the capacity that should be used. Activity-based cost (ABC) system A cost system that first traces costs to activities and then traces costs from activities to products.Activity-based costing (ABC) A cost assignment approach that first uses direct and driver tracing to assigncosts to activities and then uses driversto assign costs to cost objects.Activity-based management (ABM) A systemwide, integrated approach thatfocuses management’s attention onactivities with the objective of improvingcustomer value and the profitachieved by providing this value. Itincludes driver analysis, activityanalysis, and performance evaluation,and draws on activity-based costingas a major source of information.Activity-based management (ABM)accounting system An accounting systemthat emphasizes the use ofactivities for assigning and managingcosts.Activity-based responsibility accountingA control system defined bycentering responsibility on processesand teams where activity performanceis measured in terms of time, quality,and efficiency.Actual costing An approach that assignsactual costs of direct materials,direct labor, and overhead to products.Adjusted cost of goods sold The costof goods sold after all adjustmentsfor overhead variance are made.G l o s s a r y•68183_glossary_849-860.qxd 1/22/04 2:27 PM Page 849 Budget committee A committee responsiblefor setting budgetarypolicies and goals, reviewing and approvingthe budget, and resolving anydifferences that may arise in the budgetaryprocess.Budget director The individual responsiblefor coordinating anddirecting the overall budgetingprocess.Budgetary slack The process ofpadding the budget by overestimatingcosts and underestimating revenues.Budgets Plans of action expressed infinancial terms.CCapital budgeting The process ofmaking capital investment decisions. Capital investment decisions The process of planning, setting goals and priorities, arranging financing, and identifying criteria for making longterm investments.Carrying costs The costs of holding inventory.Cash budget A detailed plan that outlines all sources and uses of cash.Causal factors Activities or variablesthat invoke service costs. Generally, itis desirable to use causal factors asthe basis for allocating service costs. Centralized decision making A systemin which decisions are made at thetop level of an organization and local managers are given the charge to implement them.Certified Internal Auditor (CIA) A person who has passed a comprehensive examination designed to ensuretechnical competence and has two years’ experience.Certified Management Accountant (CMA) A person who has passed a rigorous qualifying examination, hasmet an experience requirement, and participates in continuing education. Certified Public Accountant (CPA) A person who is permitted (by law) toserve as an external auditor and whomust pass a national examination andbe licensed by the state in which heor she practices.Continuous replenishment A system where a manufacturer assumes the inventory management function for theretailer.Contribution margin Sales revenue minus total variable cost or price minusunit variable cost.Contribution margin ratio Contribution margin divided by sales revenue.It is the proportion of each sales dollar available to cover fixed costs andprovide for profit.Control The process of setting standards, receiving feedback on actual performance, and taking correctiveaction whenever actual performance deviates significantly from planned performance.Control activities Activities performedby an organization to prevent or detect poor quality (because poorquality may exist).Control costs Costs incurred from performing control activities.Control limits The maximum allowable deviation from a standard.Controllable costs Costs that managers have the power to influence.Controller The chief accounting officer; supervises all accounting departments.Controlling The managerial activityof monitoring a plan’s implementationand taking corrective action asneeded.Conversion cost The sum of direct labor cost and overhead cost.Core objectives and measures Those objectives and measures common tomost organizations.Cost The cash or cash equivalentvalue sacrificed for goods and servicesthat are expected to bring a currentor future benefit to the organization.Cost assignment The process of associating the costs, once measured, withthe units produced.Cost behavior The way in which acost changes in relation to changes in activity usage.Cost center A division of a companythat is evaluated on the basis of cost. Coefficient of correlation The squareroot of the coefficient of determination, which is used to express notonly the degree of correlation betweentwo variables but also thedirection of the relationship.Coefficient of determination The percentage of total variability in adependent variable (e.g., cost) that is explained by an independent variable(e.g., activity level). It assumes avalue between 0 and 1.Committed fixed expenses Expenses incurred for the acquisition of longterm activity capacity, usually as theresult of strategic planning.Committed resources Resources thatare purchased in advance of usage.These resources may or may not have unused (excess) capacity.Common costs The costs of resourcesused in the output of two or moreservices or products.Common fixed expenses Fixed expenses that cannot be directly tracedto individual segments and that are unaffected by the elimination of anyone segment.Comparable uncontrolled pricemethod The transfer price most preferredby the Internal Revenue Serviceunder Section 482. The comparable uncontrolled price is essentially equalto the market price.Compounding of interest Paying intereston interest.Constraint set The collection of all constraints that pertain to a particular optimization problem.Constraints Mathematical expressionsthat express resource limitations. Consumption ratio The proportion ofan overhead activity consumed by aproduct.Continuous budget A moving twelvemonthbudget with a future monthadded as the current month expires.Continuous improvement The processof searching for ways of increasingthe overall efficiency and productivityof activities by reducing waste, increasingquality, and reducing costs.850 •68183_glossary_849-860.qxd 1/22/04 2:27 PM Page 850 Cost formula A linear function, Y _F _ VX, where Y _ Total mixedcost, F _ Fixed cost, V _ Variablecost per unit of activity, and X _Activity level.Cost measurement The act of determiningthe dollar amounts of directmaterials, direct labor, and overheadused in production.Cost object Any item, such as products,departments, projects, activities,and so on, for which costs are measuredand assigned.Cost of capital The cost of investmentfunds, usually viewed as a weightedaverage of the costs of funds from allsources.Cost of goods manufactured The totalcost of goods completed duringthe current period.Cost of goods sold The cost of directmaterials, direct labor, and overheadattached to the units sold.Cost of goods sold budget The estimatedcosts for the units sold.Cost-plus method A transfer price acceptableto the Internal RevenueService under Section 482. The costplusmethod is simply a cost-basedtransfer price.Cost reconciliation The final sectionof the production report that comparesthe costs to account for withthe costs accounted for to ensure that they are equal.Costs of quality Costs incurred because poor quality may exist orbecause poor quality does exist.Cost-volume-profit graph A graph that depicts the relationships among costs, volume, and profits. It consists of atotal revenue line and a total cost line. Currency appreciation When one country’s currency becomes strongerand can purchase more units of another country’s currency.Currency depreciation When one country’s currency becomes weakerand can purchase fewer units of another country’s currency.Currency risk management A company’s management of its transaction,ment and, consequently, disappear ifthe segment is eliminated.Direct labor Labor that is traceableto the goods or services being produced. Direct labor budget A budget showing the total direct labor hoursneeded and the associated cost for the number of units in the production budget.Direct materials Materials that are traceable to the goods or services being produced.Direct materials budget A budget that outlines the expected usage of materials production and purchases of thedirect materials required.Direct method A method that allocates service costs directly toproducing departments. This method ignores any interactions that may exist among support departments.Direct tracing The process of identifying costs that are specifically orphysically associated with a cost object.Discount factor The factor used toconvert a future cash flow to its present value.Discount rate The rate of return usedto compute the present value of futurecash flows.Discounted cash flows Future cashflows expressed in present-value terms. Discounting The act of finding thepresent value of future cash flows. Discounting models Capital investment models that explicitly considerthe time value of money in identifying criteria for accepting or rejectingproposed projects.Discretionary fixed expenses Expenses incurred for the acquisition of shortterm capacity or services, usually asthe result of yearly planning.Double-loop feedback Informationabout both the effectiveness of strategy implementation and the validity of assumptions underlying the strategy.Driver analysis The effort expendedto identify those factors that are theroot causes of activity costs.economic, and translation exposuredue to exchange rate fluctuations.Currently attainable standards Standards that reflect an efficientoperating state; they are rigorous but achievable.Customer perspective A balanced scorecard viewpoint that defines the customer and market segments inwhich the business will compete.Customer value Realization less sacrifice, where realization is what thecustomer receives and sacrifice iswhat is given up.Cycle time The length of time requiredto produce one unit of aproduct.DDecentralization The granting ofdecision-making freedom to loweroperating levels.Decentralized decision making A systemin which decisions are made andimplemented by lower-level managers.Decision making The process of choosingamong competing alternatives.Decision model A specific set of proceduresthat, when followed,produces a decision.Decision package A description ofservice levels, with associated costs,that a decision unit can or would liketo offer.Defective product A product or servicethat does not conform tospecifications.Degree of operating leverage (DOL)A measure of the sensitivity of profitchanges to changes in sales volume. Itmeasures the percentage change inprofits resulting from a percentagechange in sales.Dependent variable A variable whosevalue depends on the value of anothervariable. For example, Y in thecost formula Y _ F _ VX dependson the value of X.Direct costs Costs that can be easilyand accurately traced to a cost object.Direct fixed expenses Fixed costs thatare directly traceable to a given seg-• 85168183_glossary_849-860.qxd 1/22/04 2:27 PM Page 851 Driver tracing The use of drivers toassign costs to cost objects.Drivers Factors that cause changes inresource usage, activity usage, costs,and revenues.Drum-Buffer-Rope (DBR) System TheTOC inventory management systemthat relies on the drum beat of themajor constrained resources, timebuffers, and ropes to determine inventory levels.Dumping Predatory pricing in the international market.Durability The length of time a product functions.Dysfunctional behavior Individual behavior that conflicts with the goals ofthe organization.EEcoefficiency A view of environmental management maintaining thatorganizations can produce more usefulgoods and services whilesimultaneously reducing negative environmental impacts, resourceconsumption, and costs.Economic order quantity (EOQ) The amount that should be ordered (or produced) to minimize the total ordering(or setup) and carrying costs.Economic risk The possibility that afirm’s present value of future cashflows can be affected by exchange fluctuations.Economic value added (EVA) A performance measure that is calculatedby taking the after-tax operatingprofit minus the total annual cost ofcapital.Electronic business Any business transaction or information exchangethat is executed using informationand communication technology.Electronic commerce (e-commerce)Buying and selling products using information and communicationtechnology.Electronic data interchange (EDI) An inventory management method thatallows suppliers access to a buyer’son-line database.External failure costs Costs incurred because products fail to conform torequirements after being sold to outside parties.External linkages The relationship ofa firm’s activities within its segmentof the value chain with those activitiesof its suppliers and customers.External measures Measures that relateto customer and shareholderobjectives.FFacility-level activities Activities that sustain a facility’s general manufacturing process.Failure activities Activities performedby an organization or its customers in response to poor quality (poor qualitydoes exist).Failure costs The costs incurred by an organization because failure activitiesare performed.Favorable (F) variances Variances produced whenever the actualamounts are less than the budgetedor standard allowances.Feasible set of solutions The collectionof all feasible solutions.Feasible solution A product mix that satisfies all constraints.Features (quality of design) Characteristics of a product that differentiatefunctionally similar products.Feedback Information that can beused to evaluate or correct the stepsbeing taken to implement a plan.FIFO costing method A process costing method that separates units inbeginning inventory from those produced during the current period. Unitcosts include only current periodcosts and production.Financial accounting information system An accounting informationsubsystem that is primarily concernedwith producing outputs for externalusers and uses well-specified economic events as inputs and processes thatmeet certain rules and conventions.Financial budgets The portions of the master budget that include the cash Employee empowerment The authorization of operational personnel toplan, control, and make decisionswithout explicit authorization frommiddle and higher-level management.Ending finished goods inventory budgetA budget that describes plannedending inventory of finished goods inunits and dollars.Environmental costs Costs that areincurred because poor environmentalquality exists or may exist.Environmental detection costs Costs incurred to detect poor environmental performance.Environmental external failure costsCosts incurred after contaminants are introduced into the environment. Environmental internal failure costsCosts incurred after contaminants are produced but before they are introducedinto the environment.Environmental prevention costs Costs incurred to prevent damage to the environment. Equivalent units of output Completeunits that could have been producedgiven the total amount of manufacturingeffort expended during theperiod.Ethical behavior Choosing actionsthat are “right,” “proper,” and“just.” Our behavior can be right orwrong, it can be proper or improper,and the decisions we make can befair or unfair.Exchange gain A gain on the exchangeof one currency for anotherdue to appreciation in the home currency. Exchange loss A loss on the exchangeof one currency for another due todepreciation in the home currency.Exchange rates The rates at whichforeign currency can be exchangedfor the domestic currency.Expected activity capacity Expectedactivity output for the coming year.Expenses Expired costs.External constraints Limiting factorsimposed on the firm from externalsources (such as market demand).852 •68183_glossary_849-860.qxd 1/22/04 2:27 PM Page 852 budget, the budgeted balance sheet,the budgeted statement of cash flows,and the capital budget.Financial measures Measures expressedin dollar terms.Financial perspective A balancedscorecard viewpoint that describes thefinancial consequences of actionstaken in the other three perspectives.Financial productivity measure A productivitymeasure in which inputs andoutputs are expressed in dollars.Fitness of use The suitability of aproduct for carrying out its advertisedfunctions.Fixed activity rate Fixed activity costdivided by the total capacity of theactivity driver.Fixed cost Costs that, in total, areconstant within the relevant range asthe activity output varies.Fixed overhead spending varianceThe difference between actual fixedoverhead and applied fixed overhead.Fixed overhead volume variance Thedifference between budgeted fixedoverhead and applied fixed overhead;it is a measure of capacity utilization.Flexible budget A budget that canspecify costs for a range of activity.Flexible budget variance The sum ofprice variances and efficiency variancesin a performance reportcomparing actual costs to expectedcosts predicted by a flexible budget. Flexible resource Resources that are purchased as used and needed. Thereis no unused or excess capacity forthese resources.Foreign trade zones Areas that are physically on U.S. soil but consideredto be outside U.S. commerce. Goods imported into a foreign trade zone areduty free until they leave the zone. Forward contract An agreement that requires the buyer to exchange aspecified amount of a currency at a specified rate (the forward rate) on a specified future date.Full environmental costing The assignment of all environmental costs,both private and societal, to products. Heterogeneity When there is a greater chance of variation in the performanceof services than in theproduction of products.Hidden quality costs Opportunitycosts resulting from poor quality.High-low method A method for fittinga line to a set of data pointsusing the high and low points in thedata set. For a cost formula, the highand low points represent the high andlow activity levels. It is used to breakout the fixed and variable componentsof a mixed cost.Homogeneous cost pool A collectionof overhead costs associated with activities that have the same processand the same level and can use thesame activity driver to assign costs to products.IIdeal standards Standards that reflect perfect operating conditions.Impact analysis A life-cycle assessmentstep where the environmentalimpacts of different product (orprocess) designs are compared and evaluated.Improvement analysis A life-cycle assessment step where efforts are madeto reduce the environmental impacts revealed by the inventory and impactsteps.Incentives The positive or negative measures taken by an organization toinduce a manager to exert effort toward achieving the organization’sgoals.Incremental (or baseline) budgetingThe practice of taking the prior year’sbudget and adjusting it upward ordownward to determine next year’sbudget.Independent projects Projects that, if accepted or rejected, will not affectthe cash flows of another project. Independent variable A variablewhose value does not depend on thevalue of another variable. For example,in the cost formula Y _ F _VX, the variable X is an independent variable.Full private costing The assignmentof only private costs to individual products.Functional-based costing (FBC) An approach for assigning costs ofshared resources to products andother cost objects using only productionor unit-level drivers.Functional-based management(FBM) A managerial approach thatattempts to control costs by focusingon the efficiency of organizational subunits.Functional-based management (FBM) accounting system An accounting informationsystem that emphasizes theuse of functional organizational unitsto assign and manage costs.Functional-based responsibility accountingsystem A control systemdefined by centering responsibility onorganizational units and individualswith traditional budgets and standardcosting used to evaluate and monitorperformance.Future value The value that will accumulateby the end of an investment’slife if the investment earns a specifiedcompounded return.GGainsharing Providing cash incentivesfor a company’s entire workforce thatare keyed to quality and productivitygains.Goal congruence The alignment of amanager’s personal goals with thoseof the organization.Goodness of fit The degree of associationbetween Y and X (cost andactivity). It is measured by how muchof the total variability in Y is explainedby X.HHalf-year convention The assumptionthat a newly acquired asset is in servicefor one-half year of its firsttaxable year regardless of the date theservice actually began.Hedging A way of insuring againstgains and losses on foreign currencyexchange.• 85368183_glossary_849-860.qxd 1/22/04 2:27 PM Page 853 Indirect costs Costs that cannot betraced to a cost object.Industrial value chain The linked setof value-creating activities from basicraw materials to end-use customers.Innovation process A process that anticipatesthe emerging and potentialneeds of customers and creates new products and services to satisfy those needs.Input trade-off efficiency The leastcost, technically efficient mix of inputs. Inseparability The fact that producersof services and buyers of servicesmust usually be in direct contact foran exchange to take place.Intangibility When buyers of services cannot see, feel, hear, or taste a service before it is bought.Intercept parameter The fixed cost, representing the point where the cost formula intercepts the vertical axis. In the cost formula Y _ F _ VX, F isthe intercept parameter.Internal business process perspective A balanced scorecard viewpoint that describes the internal processesneeded to provide value for customers and owners.Internal constraints Limiting factors found within the firm (such as machine time availability).Internal failure costs Costs incurred because products and services fail to conform to requirements where lackof conformity is discovered prior to external sale.Internal linkages Relationships among activities within a firm’s value chain. Internal measures Measures that relate to the processes and capabilitiesthat create value for customers and shareholders.Internal rate of return The rate of return that equates the present value of a project’s cash inflows with the present value of its cash outflows (i.e., it setsthe NPV equal to zero). Also, the rateof return being earned on funds that remain internally invested in a project.。