Question

Listed below are eight technical accounting terms introduced or emphasized in this chapter: Activity-based management Value-added activit) Target costing Just-in-tiime manufacturing system Each ofthe following statements may (or may not) describe one of these technical terms. In the space provided below each statement, indicate the accounting term described, or answer "None" if the statement does not correctly describe any of the terms Life-cycle costing Non-value-added activity Total quality management Cycle time a The process ofusing activity-based costs to helpreduce or eliminate non-value-added activities. b Can be eliminated without affecting the desirability of the product from the perspective of the customer c The length of time for a product to pass completely through a specificmanufacturing process d If eliminated, the desirability of the product to consumers is decreased. Consideration of all potential resources that will be consumed by a product from development through disposal. e f A method in which a product's selling price is determined by adding a fixed profit margin to its production cost. g An approach that expliatly monitors quality costs and rewards quality enhancıng behavior

Answer 1

a) Activity-based management

b) Non-value-added activity

c) Cycle time

d) Value-added activity

e) Life cycle costing

f) none**

g) Total quality management

Note:-

** the method is known as cost plus or mark up method

1. Activity-based management (ABM) is a method of evaluating activities by use of activity-based costing to control the cost of production and canceling out the unwanted cost.
2. value-added-activity is the activity which is of value in the perspective of the customers.
3. Targeting costing is the method of controlling the cost to a budgeted amount and not allowing it to go past the mark
4. Just in time manufacturing system is the method of decreasing the production time and the response time
5. Life cycle costing it is the systematic way of estimating how much is spent on a product from the beginning till the end.
6. Non-value-adding activity is the activity which is of no value in the perspective of the customers. and they do not mind if these costs are made by the company or not.
7. Total quality management is a management approach in which it tries to permanently improve the quality o the employees as well as the products.
8. Cycle time is the total time taken from the beginning till the end