common fixed costsFixed costs that are incurred to support more than one business unit
cost centerAn area of responsibility under the control of a manager who is responsible for costs incurred within the unit; the unit generally has little revenue function
decentralized decision makingA business style where top leaders concentrates on strategy, and leaves day-to-day operation and decision-making tasks to lower-level personnel
direct labor efficiency varianceA variance comparing standard hours of direct labor to the actual hours worked; measured at the standard rate per hour [(standard hours - actual hours) X standard rate]
direct labor rate varianceA variance that reveals the difference between the standard rate and actual rate for the actual labor hours worked [(standard rate - actual rate) X actual hours]
fixed overhead volume varianceA fixed overhead variance that compares the budgeted fixed overhead to the fixed overhead that is applied to production based on standard fixed overhead per unit of output
ideal standardsA standard that could only be achieved under perfect operating conditions; such standards are rarely expected to be achieved
investment centerA evaluative unit where managers are accountable for cost and profit outcomes, including consideration of the amount of capital that is deployed to achieve those outcomes
management by exceptionA management focus of attention on areas where corrective measures appear necessary
materials price varianceA variance that reveals the difference between standard price for materials purchased and amounts actually paid for those materials [(standard price - actual price) X actual quantity]
materials quantity varianceA variance comparing standard quantity to actual quantity of materials; variation is measured at the standard price per unit [(standard quantity - actual quantity) X standard price]
profit centerBusiness unit that has control over both costs and revenues and is therefore evaluated on the profit outcomes
return on investmentROI: A model consisting of a margin component (Operating Income/Sales) and turnover component (Sales/Average Assets); reduces to Operating Income/Average Assets
standard costA measure of what costs should be incurred to achieve the observed output
traceable fixed costsFixed costs that would not exist if the unit under evaluation ceased to exist
variable overhead efficiency varianceA variance that reflects the level of efficiency associated with the application of variable overhead to production
variable overhead spending varianceA variance that reflects the difference between actual variable overhead and standard variable overhead associated with the actual units of the application base
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