Impact analysis A life-cycle assessment step where the environmental impacts of different product (or process) designs are compared and evaluated.

Improvement analysis A life-cycle assessment step where efforts are made to reduce the environmental impacts revealed by the inventory and impact steps.

Incentives The positive or negative measures taken by an organization to induce a manager to exert effort toward achieving the organization’s goals.

Incremental (or baseline) budgeting The practice of taking the prior year’s budget and adjusting it upward or downward to determine next year’s budget.

Independent projects Projects that, if accepted or rejected, will not affect the cash flows of another project. Independent variable A variable whose value does not depend on the value of another variable. For example, in the cost formula Y _ F _ VX, the variable X is an independent variable.

Full private costing The assignment of only private costs to individual products.

Functional-based costing (FBC) An approach for assigning costs of shared resources to products and other cost objects using only production or unit-level drivers.

Functional-based management (FBM) A managerial approach that attempts to control costs by focusing on the efficiency of organizational subunits.

Functional-based management (FBM) accounting system An accounting information

system that emphasizes the

use of functional organizational units to assign and manage costs.

Functional-based responsibility accounting system A control system

defined by centering responsibility on organizational units and individuals with traditional budgets and standard costing used to evaluate and monitor performance.

Future value The value that will accumulate by the end of an investment’s life if the investment earns a specified compounded return. G

Gainsharing Providing cash incentives for a company’s entire workforce that are keyed to quality and productivity gains.

Goal congruence The alignment of a manager’s personal goals with those of the organization.

Goodness of fit The degree of association between Y and X (cost and

activity). It is measured by how much of the total variability in Y is explained by X. H

Half-year convention The assumption that a newly acquired asset is in service for one-half year of its first

taxable year regardless of the date the service actually began.

Hedging A way of insuring against gains and losses on foreign currency exchange. ? 853

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Indirect costs Costs that cannot be traced to a cost object.

Industrial value chain The linked set of value-creating activities from basic raw materials to end-use customers.

Innovation process A process that anticipates

the emerging and potential needs of customers and creates new products and services to satisfy those needs.

Input trade-off efficiency The leastcost, technically efficient mix of inputs. Inseparability The fact that producers of services and buyers of services must usually be in direct contact for an exchange to take place.

Intangibility When buyers of services cannot see, feel, hear, or taste a service before it is bought.

Intercept parameter The fixed cost, representing the point where the cost formula intercepts the vertical axis. In the cost formula Y _ F _ VX, F is the intercept parameter.

Internal business process perspective A balanced scorecard viewpoint that describes the internal processes needed to provide value for customers and owners.

Internal constraints Limiting factors found within the firm (such as machine time availability).

Internal failure costs Costs incurred because products and services fail to conform to requirements where lack of conformity is discovered prior to external sale.

Internal linkages Relationships among activities within a firm’s value chain. Internal measures Measures that relate to the processes and capabilities that create value for customers and shareholders.

Internal rate of return The rate of return that equates the present value of a project’s cash inflows with the present value of its cash outflows (i.e., it sets the NPV equal to zero). Also, the rate of return being earned on funds that remain internally invested in a project.

Internal value chain The set of activities required to design, develop,

Kaizen standard An interim standard that reflects the planned improvement for a coming period.

Kanban system An information system that controls production on a demand-pull basis through the use of cards or markers.

Keep-or-drop decisions Relevant costing analyses that focus on keeping or dropping a segment of a business. L

Labor efficiency variance (LEV) The difference between the actual direct labor hours used and the standard direct labor hours allowed multiplied by the standard hourly wage rate.

Labor rate variance (LRV) The difference between the actual hourly rate paid and the standard hourly rate multiplied by the actual hours worked.

Lag measures Outcome measures or measures of results from past efforts. Lead measures (performance drivers) Factors that drive future performance. Lead time For purchasing, the time to receive an order after it is placed. For manufacturing, the time to produce a product from start to finish.

Learning and growth (infrastructure) perspective A balanced scorecard viewpoint that defines the capabilities that an organization needs to create long-term growth and improvement. Life cycle costs All costs that are associated with the product for its entire life cycle.

Life-cycle assessment An approach

that identifies the environmental consequences of a product through its

entire life cycle and then searches for opportunities to obtain environmental