Flashcards
Chapter 13 Key Terms
Flashcards do conjunto (26)
- 1Administrative Departmentan organizational unit that performs management activities benefiting the entire organization; includes top management personnel and organization headquarters
- 2Advance Pricing Agreement (APA)a binding contract between a company and one or more national tax authorities that provides details of how a transfer price is to be set and establishes that no regulatory adjustments or penalties will be made if the agreed-upon methodology is used
- 3Algebraic Methoda process of support department cost allocation that considers all interrelationships of the departments and reflects these relationships in simultaneous equations
- 4Benefits-Provided Rankinga listing of support departments in an order that begins with the one providing the most support to all other corporate areas and ends with the support department providing support primarily to revenue-producing areas
- 5Centralizationa management style that exists when top management makes most decisions and controls most activities of the organizational units from the company's central headquarters
- 6Cost Centera responsibility center in which the manager has the authority to incur costs and is evaluated on the basis of how well costs are controlled
- 7Decentralizationa management style that exists when top management grants subordinate managers a significant degree of autonomy and independence in operating and making decisions for their organizational units
- 8Direct Methoda support department cost allocation approach that assigns support department costs directly to revenue-producing areas with only one set of intermediate cost pools or allocations
- 9Dual Pricing Arrangementa transfer pricing method that allows a selling division to record the transfer of goods or services at one price (e.g., a market or negotiated market price) and a buying division to record the transfer at another price (e.g., a cost-based amount)
- 10Goal Congruencea circumstance in which the personal and organizational goals of decision makers throughout a firm are consistent and mutually supportive
- 11Investment Centera responsibility center in which the manager is responsible for generating revenues; planning and controlling expenses; and acquiring, disposing of, and operating assets to earn the highest rate of return feasible on those assets given the center's mission
- 12Negotiated Transfer Pricean intracompany charge for goods or services set through a process of negotiation between the selling and purchasing unit managers
- 13Profit Centera responsibility center for which the manager is accountable for generating revenues and planning and controlling all expenses
- 14Pseudo-profit Centera center created when one responsibility center uses a transfer price to artificially “sell” goods or services to another responsibility center
- 15Responsibility Accounting Systeman accounting system for successively higher-level managers about the performance of segments or sub-units under the control of each specific manager
- 16Responsibility Centera cost object or area under the control of a manager
- 17Responsibility Reporta report that reflects the revenues and/or costs under the control of a particular unit manager
- 18Revenue Centera responsibility center for which the manager is accountable only for the generation of revenues and has no control over setting selling prices, or budgeting or incurring costs
- 19Sales Price Variance (SPV)a revenue variance that indicates the financial difference between the actual and budgeted sales prices for the actual number of units sold
- 20Sales Volume Variance (SVV)a revenue variance that indicates the difference caused by actually selling more or fewer units than budgeted multiplied by the budgeted sales price
- 21Service Departmentan organizational unit that provides one or more specific functional tasks for other internal units
- 22Shared ServiceThe provision of a “back office” or support function for various organizational units from a central location
- 23Step Methoda process of support department cost allocation that assigns support department costs to cost objects after considering the interrelationships of the support departments and revenue-producing departments
- 24Suboptimizationa situation in which an individual manager pursues goals and objectives that are in his/her own and his/her segment's particular interests rather than in the company's best interests
- 25Support Departmentthe generic term for either a service or an administrative department
- 26Transfer Pricean internal charge established for the exchange of goods or services between organizational units of the same company
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- Chapter 13 Key Terms Flashcards
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- Monica Holloway
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