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MMAC
MMAC TERMINOLOGY
| Term | Definition |
|---|---|
| Management Accounting | To provide information for use within an organisation |
| Management Information | Should be accurate, relevant and complete. |
| Cost Accounting | Concerned with establishing costs |
| Cost Object | Anything for which costs can be ascertained |
| Cost Unit | Unit of product or service in relation to which costs are ascertained |
| Responsibility Centre | Individual part of a business whose manager has personal responsibility for its performance |
| Cost Centre | Production or service location, function or activity or item of equipment whose costs are identified and recorded |
| Profit Centre | Part of the business for which both the costs incurred and the revenues earned are identified |
| Product Cost | A cost that relates to the product or service being produced or provided |
| Period Cost | A cost that relates to a time period |
| Cost Card | Used to show the breakdown of the costs of producing output based on the classification of each cost |
| Cost by Element | Materials, labour, expenses |
| Cost by Function | Production, Administration, Distribution |
| Cost by Nature | Direct, Indirect |
| Cost by Behavior | Variable, Fixed, Semi-variable, Stepped |
| High-Low Method | Used to calculate variable and fixed element of semi-variable costs. |
| Inventory | Generally the largest single item of cost for a business. |
| FIFO | First In, First Out |
| LIFO | Last In, First Out |
| AVCO | Averaged Weighted cost |
| Economic Order Quantity | Most economic quantity of inventory minimizing cost of having inventory |
| Re-order Level | Level at which inventory falls before placing an order |
| Maximum inventory level | Highest quantity of inventory which should be held |
| Minimum Inventory Level | Lowest quantity of inventory which should be held |
| Overtime payment | Total amount paid for hours worked above normal working hours |
| Overtime premium | Extra paid over normal rate for overtime hours |
| Piecework | Rates per unit of output |
| Royalty/Patent Costs | Payable for use of a particular component |
| Capital Expenditure | Non-current asset required for use in business |
| Revenue Expenditure | Acquisition of assets for conversion into goods or cash |
| Absorption Costing | Absorbing production overheads into the cost of a product |
| Allocation | Overheads relating entirely to one production or service Centre |
| Apportionment | Overheads relating to more than one production or service centre |
| Reapportionment | Secondary apportionment |
| Overhead Absorption | Charging of overhead costs to cost units produced |
| Activity Based Costing | Allocates to cost pools before absorbing to units |
| Fixed Budget | Budget produced for a single activity level |
| Adverse Variance | Actual costs exceed budgeted costs |
| Favourable Variance | Actual cost is less than budgeted costs |
| Flexed Budget | Changes as volume of activity changes |
| Job Costing | Where production is made up of individual jobs |
| Batch Costing | Where production is made up of batches of identical units |
| Service Costing | Establishes a cost unit |
| Process Costing | Costing method used where goods or services result for a sequence of continuous processes |
| Normal Loss | Expected loss within a production run |
| Abnormal Loss | Loss in excess of expected loss within a production run |
| Abnormal Gain | Where losses are less than expected within a production run |
| Marginal Costing | Values each unit of inventory at the variable production cost required to make each unit |
| Contribution | Measures difference between the sales price and variable cost per unit |
| Relevant Costs | Costs and revenues that changes as a direct result of a decision that is taken |
| Avoidable Cost | A cost which only occurs as a result of taking the decision, |
| Breakeven Point | Volume of sales at which neither a profit not a loss is made |
| Margin of safety | Amount by which the budgeted sales can fall before making a loss |
| Margin of safety units | Budgeted sales units - breakeven sales units |
| Margin of safety % | budgeted sales units less breakeven sales units divided by budgets sales units multiplied by 100 |
| Target Profit | Total fixed costs plus required profit divided by contribution per unit |
| Profit/Volume Ratio | Contribution per unit divided by selling price per unit |
| Limiting Factor Analysis | A resource in short supply which limits production |
| Payback Period | Length of time a project takes to recoup initial money invested in it |
| Net Present Value/Cost | Net benefit/loss in present value terms from an investment opportunity |
| Internal Rate of Return | Calculates the rate of return that one project is expected to achieve if it breaks even |
Created by:
donnaowen
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