requirements after being sold to outside parties.

External linkages The relationship of a firm’s activities within its segment of the value chain with those activities of its suppliers and customers.

External measures Measures that relate to customer and shareholder objectives. F

Facility-level activities Activities that sustain a facility’s general manufacturing process.

Failure activities Activities performed by an organization or its customers in response to poor quality (poor quality does exist).

Failure costs The costs incurred by an organization because failure activities are performed.

Favorable (F) variances Variances produced whenever the actual amounts are less than the budgeted or standard allowances.

Feasible set of solutions The collection of all feasible solutions.

Feasible solution A product mix that satisfies all constraints.

Features (quality of design) Characteristics of a product that differentiate functionally similar products. Feedback Information that can be used to evaluate or correct the steps being taken to implement a plan. FIFO costing method A process costing method that separates units in

beginning inventory from those produced during the current period. Unit costs include only current period costs and production.

Financial accounting information system An accounting information

subsystem that is primarily concerned with producing outputs for external

users and uses well-specified economic events as inputs and processes that meet certain rules and conventions. Financial budgets The portions of the master budget that include the cash Employee empowerment The authorization of operational personnel to plan, control, and make decisions without explicit authorization from middle and higher-level management. Ending finished goods inventory budget A budget that describes planned ending inventory of finished goods in units and dollars.

Environmental costs Costs that are incurred because poor environmental quality exists or may exist.

Environmental detection costs Costs incurred to detect poor environmental performance.

Environmental external failure costs Costs incurred after contaminants are introduced into the environment. Environmental internal failure costs Costs incurred after contaminants are produced but before they are introduced into the environment.

Environmental prevention costs Costs incurred to prevent damage to the environment. Equivalent units of output Complete units that could have been produced given the total amount of manufacturing effort expended during the period.

Ethical behavior Choosing actions that are “right,” “proper,” and “just.” Our behavior can be right or wrong, it can be proper or improper, and the decisions we make can be fair or unfair.

Exchange gain A gain on the exchange of one currency for another

due to appreciation in the home currency. Exchange loss A loss on the exchange

of one currency for another due to depreciation in the home currency. Exchange rates The rates at which foreign currency can be exchanged for the domestic currency.

Expected activity capacity Expected activity output for the coming year. Expenses Expired costs.

External constraints Limiting factors imposed on the firm from external sources (such as market demand). 852 ?

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budget, the budgeted balance sheet, the budgeted statement of cash flows, and the capital budget.

Financial measures Measures expressed in dollar terms.

Financial perspective A balanced scorecard viewpoint that describes the financial consequences of actions taken in the other three perspectives.

Financial productivity measure A productivity measure in which inputs and outputs are expressed in dollars. Fitness of use The suitability of a product for carrying out its advertised functions.

Fixed activity rate Fixed activity cost divided by the total capacity of the activity driver.

Fixed cost Costs that, in total, are constant within the relevant range as the activity output varies.

Fixed overhead spending variance The difference between actual fixed overhead and applied fixed overhead. Fixed overhead volume variance The difference between budgeted fixed overhead and applied fixed overhead; it is a measure of capacity utilization. Flexible budget A budget that can specify costs for a range of activity. Flexible budget variance The sum of

price variances and efficiency variances in a performance report

comparing actual costs to expected costs predicted by a flexible budget. Flexible resource Resources that are purchased as used and needed. There is no unused or excess capacity for these resources.

Foreign trade zones Areas that are physically on U.S. soil but considered to be outside U.S. commerce. Goods imported into a foreign trade zone are duty free until they leave the zone. Forward contract An agreement that requires the buyer to exchange a specified amount of a currency at a specified rate (the forward rate) on a specified future date.

Full environmental costing The assignment of all environmental costs,

both private and societal, to products. Heterogeneity When there is a greater chance of variation in the performance of services than in the production of products.

Hidden quality costs Opportunity costs resulting from poor quality. High-low method A method for fitting a line to a set of data points using the high and low points in the data set. For a cost formula, the high and low points represent the high and low activity levels. It is used to break out the fixed and variable components of a mixed cost.

Homogeneous cost pool A collection of overhead costs associated with activities that have the same process and the same level and can use the same activity driver to assign costs to products. I

Ideal standards Standards that reflect perfect operating conditions.