the costs to account for with the costs accounted for to ensure that they are equal.

Costs of quality Costs incurred because poor quality may exist or because poor quality does exist. Cost-volume-profit graph A graph that depicts the relationships among costs, volume, and profits. It consists of a total revenue line and a total cost line. Currency appreciation When one country’s currency becomes stronger and can purchase more units of another country’s currency.

Currency depreciation When one country’s currency becomes weaker and can purchase fewer units of another country’s currency.

Currency risk management A company’s management of its transaction, ment and, consequently, disappear if the segment is eliminated. Direct labor Labor that is traceable to the goods or services being produced. Direct labor budget A budget showing the total direct labor hours

needed and the associated cost for the number of units in the production budget.

Direct materials Materials that are traceable to the goods or services being produced.

Direct materials budget A budget that outlines the expected usage of materials production and purchases of the direct materials required.

Direct method A method that allocates service costs directly to

producing departments. This method ignores any interactions that may exist among support departments.

Direct tracing The process of identifying costs that are specifically or

physically associated with a cost object.

Discount factor The factor used to convert a future cash flow to its present value.

Discount rate The rate of return used to compute the present value of future cash flows.

Discounted cash flows Future cash flows expressed in present-value terms. Discounting The act of finding the present value of future cash flows. Discounting models Capital investment models that explicitly consider the time value of money in identifying criteria for accepting or rejecting proposed projects.

Discretionary fixed expenses Expenses incurred for the acquisition of shortterm capacity or services, usually as the result of yearly planning. Double-loop feedback Information about both the effectiveness of strategy implementation and the validity of assumptions underlying the strategy.

Driver analysis The effort expended to identify those factors that are the root causes of activity costs. economic, and translation exposure due to exchange rate fluctuations.

Currently attainable standards Standards that reflect an efficient

operating state; they are rigorous but achievable.

Customer perspective A balanced scorecard viewpoint that defines the customer and market segments in which the business will compete. Customer value Realization less sacrifice, where realization is what the customer receives and sacrifice is what is given up.

Cycle time The length of time required to produce one unit of a product. D

Decentralization The granting of decision-making freedom to lower operating levels.

Decentralized decision making A system in which decisions are made and implemented by lower-level managers. Decision making The process of choosing among competing alternatives.

Decision model A specific set of procedures that, when followed, produces a decision.

Decision package A description of service levels, with associated costs, that a decision unit can or would like to offer.

Defective product A product or service that does not conform to specifications.

Degree of operating leverage (DOL) A measure of the sensitivity of profit changes to changes in sales volume. It measures the percentage change in profits resulting from a percentage change in sales.

Dependent variable A variable whose value depends on the value of another variable. For example, Y in the cost formula Y _ F _ VX depends on the value of X.

Direct costs Costs that can be easily and accurately traced to a cost object. Direct fixed expenses Fixed costs that are directly traceable to a given seg- ? 851

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Driver tracing The use of drivers to assign costs to cost objects.

Drivers Factors that cause changes in resource usage, activity usage, costs, and revenues.

Drum-Buffer-Rope (DBR) System The TOC inventory management system that relies on the drum beat of the major constrained resources, time

buffers, and ropes to determine inventory levels.

Dumping Predatory pricing in the international market.

Durability The length of time a product functions.

Dysfunctional behavior Individual behavior that conflicts with the goals of the organization. E

Ecoefficiency A view of environmental management maintaining that organizations can produce more useful goods and services while

simultaneously reducing negative environmental impacts, resource consumption, and costs.

Economic order quantity (EOQ) The amount that should be ordered (or produced) to minimize the total ordering (or setup) and carrying costs. Economic risk The possibility that a firm’s present value of future cash flows can be affected by exchange fluctuations.

Economic value added (EVA) A performance measure that is calculated by taking the after-tax operating profit minus the total annual cost of capital.

Electronic business Any business transaction or information exchange that is executed using information and communication technology. Electronic commerce (e-commerce) Buying and selling products using information and communication technology.

Electronic data interchange (EDI) An inventory management method that allows suppliers access to a buyer’s on-line database.

External failure costs Costs incurred because products fail to conform to