Cost Accounting – 12th Edition

Ch 14 Terms

 

 

Composite unit – Hypothetical unit with weights based on the mix of individual units.

 

Customer cost hierarchy – Hierarchy that categorizes costs related to customers into different cost pools on the basis of different types of cost drivers, or cost allocation bases, or different degrees of difficulty in determining cause-and effect or benefits received relationships.

 

Customer profitability analysis– The reporting and analysis of revenues earned from customers and the costs incurred to earn those revenues.

 

Direct materials mix variance –  The difference between (1) the budgeted cost for the actual mix of the actual total quantity of direct materials used and (2) the budgeted costs of the budgeted mix of the actual total quantity of direct materials used.

 

Direct materials yield variance – The difference between (1) the budgeted cost of direct materials based on the actual total quantity of direct materials used and (2) the flexible-budgeted cost of direct materials based on the budgeted total quantity of direct materials allowed for actual output produced.

 

Homogeneous cost pool – Cost pool in which all the costs have the same or a similar cause-and effect or benefits received relationship with the cost-allocation base.

 

Market share variance-  The difference in budgeted contribution margin for actual market size in units caused solely by actual market share being different from budgeted market share.

 

Market size variance – The difference in budgeted contribution margin at the budgeted market share caused by actual market size in units being different form budgeted market size in units.

 

Price discounting- Reduction of selling prices below list selling prices to encourage increases in customer purchases.

 

Sales-mix variance – The difference between (1) the budgeted contribution margin for the actual sales mix, and (2) the budgeted contribution margin for the budgeted sales mix.

 

Sales-quantity variance – The difference between (1) the budgeted contribution margin based on actual units sold of all products at he budgeted-mix and (2) the contribution margin in the static budget (which is based on the budgeted units of all products to be sold at the budgeted mix).