Test Bank for Cost Management: A Strategic
Emphasis: 2026 Release
Activity-based costing (ABC) - answer-Costing method that first assigns costs to activities and
then assigns them to products based on the products' consumption of activities
Benchmarking - answer-Continuous process of measuring a company's own products, services,
or activities against competitors' performance
Budget - answer-Financial plan of the resources needed to carry out activities and meet
financial goals
Cost Accounting - answer-Field of accounting that measures, records, and reports information
about costs
Cost-Benefit Analysis - answer-Process of comparing benefits (often measured in savings or
increased profits) with costs associated with proposed change within an organization
Cost Driver - answer-Factor that causes costs to go up in price
Cost of Quality - answer-System that identifies the costs of producing low-quality items,
including rework, returns, and lost sales
Customer Relationship Management (CRM) - answer-System that allows firms to target
profitable customers by assessing customer revenues and costs
1
, Differential Costs - answer-With two or more alternatives, costs that differ among or between
alternatives
Differential Revenues - answer-Revenues that change in response to a particular course of
action
Distribution Chain - answer-Set of firms and individuals that buys and distributes goods and
services from the firm
Enterprise Resource Planning (ERP) - answer-Information technology that links the various
systems of the enterprise into a single comprehensive information system
Financial Accounting - answer-Field of accounting that reports financial position and income
according to accounting rules
Generally Accepted Accounting Principles (GAAP) - answer-Rules, standards, and conventions
that guide the preparation of financial accounting statements for shareholders
International Financial Reporting Standards (IFRS) - answer-Rules, standards, and conventions
that guide the preparation of the financial accounting statements in many other countries
Just-in-Time (JIT) Method - answer-In production or purchasing, each unit is purchased or
produced just in time for its use
Lean Accounting - answer-A cost accounting system that provides measures at the work cell or
process level designed around the value chains of major products and services to support lean
manufacturing
2
Emphasis: 2026 Release
Activity-based costing (ABC) - answer-Costing method that first assigns costs to activities and
then assigns them to products based on the products' consumption of activities
Benchmarking - answer-Continuous process of measuring a company's own products, services,
or activities against competitors' performance
Budget - answer-Financial plan of the resources needed to carry out activities and meet
financial goals
Cost Accounting - answer-Field of accounting that measures, records, and reports information
about costs
Cost-Benefit Analysis - answer-Process of comparing benefits (often measured in savings or
increased profits) with costs associated with proposed change within an organization
Cost Driver - answer-Factor that causes costs to go up in price
Cost of Quality - answer-System that identifies the costs of producing low-quality items,
including rework, returns, and lost sales
Customer Relationship Management (CRM) - answer-System that allows firms to target
profitable customers by assessing customer revenues and costs
1
, Differential Costs - answer-With two or more alternatives, costs that differ among or between
alternatives
Differential Revenues - answer-Revenues that change in response to a particular course of
action
Distribution Chain - answer-Set of firms and individuals that buys and distributes goods and
services from the firm
Enterprise Resource Planning (ERP) - answer-Information technology that links the various
systems of the enterprise into a single comprehensive information system
Financial Accounting - answer-Field of accounting that reports financial position and income
according to accounting rules
Generally Accepted Accounting Principles (GAAP) - answer-Rules, standards, and conventions
that guide the preparation of financial accounting statements for shareholders
International Financial Reporting Standards (IFRS) - answer-Rules, standards, and conventions
that guide the preparation of the financial accounting statements in many other countries
Just-in-Time (JIT) Method - answer-In production or purchasing, each unit is purchased or
produced just in time for its use
Lean Accounting - answer-A cost accounting system that provides measures at the work cell or
process level designed around the value chains of major products and services to support lean
manufacturing
2
