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statistical process control (SPC)

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Definition of statistical process control (SPC)

Statistical Process Control (SPC) Image 1

statistical process control (SPC)

the use of control techniques that are based on the theory that a process has natural variations in it over time, but uncommon variations
are typically the points at which the process produces "errors", which can be defective goods or poor service



Related Terms:

Budgetary control

The process of ensuring that actual financial results are in line with targets – see variance
analysis.


business process reengineering (BPR)

the process of combining information technology to create new and more effective
business processes to lower costs, eliminate unnecessary
work, upgrade customer service, and increase
speed to market


Configuration control

Verifying that a delivered product matches authorizing
engineering documentation. This also refers to engineering changes made subsequent
to the initial product release.


Control

50% of the outstanding votes plus one vote.


Control account

An account maintained in the general ledger that holds the balance without the detail. The detail is maintained in a subsidiary ledger.



control chart

a graphical presentation of the results of a
specified activity; it indicates the upper and lower control
limits and those results that are out of control


control premium

the additional value inherent in the control interest as contrasted to a minority interest, which reflects its power of control


Statistical Process Control (SPC) Image 2

controllable cost

a cost over which a manager has the ability to authorize incurrence or directly influence magnitude


Controllable profit

The profit made by a division after deducting only those expenses that can be controlled by the
divisional manager and ignoring those expenses that are outside the divisional manager’s control.


controllable variance

the budget variance of the two variance approach to analyzing overhead variances


Controlled disbursement

A service that provides for a single presentation of checks each day (typically in
the early part of the day).


Controlled foreign corporation (CFC)

A foreign corporation whose voting stock is more than 50% owned
by U.S. stockholders, each of whom owns at least 10% of the voting power.


Controller

The corporate manager responsible for the firm's accounting activities.


controller

the chief accountant (in a corporation) who is responsible
for maintaining and reporting on both the cost
and financial sets of accounts but does not handle or negotiate
changes in actual resources


controller

Officer responsible for budgeting, accounting, and auditing.


controlling

the process of exerting managerial influence on
operations so that they conform to previously prepared plans


Corporate processing float

The time that elapses between receipt of payment from a customer and the
depositing of the customer's check in the firm's bank account; the time required to process customer
payments.


cost-benefit analysis the analytical process of comparing the

relative costs and benefits that result from a specific course
of action (such as providing information or investing in a
project)



Cost control

The process of either reducing costs while maintaining the same level of productivity or maintaining costs while increasing productivity.


cost control system

a logical structure of formal and/or informal
activities designed to analyze and evaluate how well
expenditures are managed during a period


Cutoff control

A procedure for ensuring that transaction processing is completed
before the commencement of cycle counting.


Diffusion process

A conception of the way a stock's price changes that assumes that the price takes on all
intermediate values. dirty price. Related: full price


DLOC (discount for lack of control)

an amount or percentage deducted from a pro rata share of the value of 100% of an equity interest in a business, to reflect the absence of some or all of the powers of control.


Dupont system of financial control

Highlights the fact that return on assets (ROA) can be expressed in terms
of the profit margin and asset turnover.


Exchange controls

Governmental restrictions on the purchase of foreign currencies by domestic citizens or
on the purchase of the local domestic currency by foreigners.


Extrapolative statistical models

Models that apply a formula to historical data and project results for a
future period. Such models include the simple linear trend model, the simple exponential model, and the
simple autoregressive model.


FIFO method (of process costing)

the method of cost assignment that computes an average cost per equivalent
unit of production for the current period; keeps beginning
inventory units and costs separate from current period production
and costs


Financial control

The management of a firm's costs and expenses in order to control them in relation to
budgeted amounts.



Foreign exchange controls

Various forms of controls imposed by a government on the purchase/sale of
foreign currencies by residents or on the purchase/sale of local currency by nonresidents.


Immigration Reform and Control Act of 1986

A federal Act requiring all employers having at least four employees to verify the identity and employment
eligibility of all regular, temporary, casual, and student employees.


In-house processing float

Refers to the time it takes the receiver of a check to process the payment and
deposit it in a bank for collection.


internal accounting controls

Refers to forms used and procedures
established by a business—beyond what would be required for the
record-keeping function of accounting—that are designed to prevent
errors and fraud. Two examples of internal controls are (1) requiring a
second signature by someone higher in the organization to approve a
transaction in excess of a certain dollar amount and (2) giving customers
printed receipts as proof of sale. Other examples of internal
control procedures are restricting entry and exit routes of employees,
requiring all employees to take their vacations and assigning another
person to do their jobs while they are away, surveillance cameras, surprise
counts of cash and inventory, and rotation of duties. Internal controls
should be cost-effective; the cost of a control should be less than
the potential loss that is prevented. The guiding principle for designing
internal accounting controls is to deter and detect errors and dishonesty.
The best internal controls in the world cannot prevent most fraud
by high-level managers who take advantage of their positions of trust
and authority.


internal control

any measure used by management to protect
assets, promote the accuracy of records, ensure adherence
to company policies, or promote operational efficiency;
the totality of all internal controls represents the
internal control system


Ito process

statistical assumptions about the behavior of security prices. For
details, see the book by Hull listed in the “Bibliography”.


joint process

a manufacturing process that simultaneously
produces more than one product line
joint product one of the primary outputs of a joint process;
each joint product individually has substantial revenuegenerating
ability


management control

This is difficult to define in a few words—indeed, an
entire chapter is devoted to the topic (Chapter 17). The essence of management
control is “keeping a close watch on everything.” Anything can
go wrong and get out of control. Management control can be thought of
as the follow-through on decisions to ensure that the actual outcomes
happen according to purposes and goals of the management decisions
that set things in motion. Managers depend on feedback control reports
that contain very detailed information. The level of detail and range of
information in these control reports is very different from the summarylevel
information reported in external income statements.


management control system (MCS)

an information system that helps managers gather information about actual organizational occurrences, make comparisons against plans,
effect changes when they are necessary, and communicate
among appropriate parties; it should serve to guide organizations
in designing and implementing strategies so that
organizational goals and objectives are achieved


modified FIFO method (of process costing)

the method of cost assignment that uses FIFO to compute a cost per
equivalent unit but, in transferring units from a department,
the costs of the beginning inventory units and the
units started and completed are combined and averaged


multiprocess handling

the ability of a worker to monitor
and operate several (or all) machines in a manufacturing
cell or perform all steps of a specific task


noncontrollable variance

the fixed overhead volume variance;
it is computed as part of the two-variance approach to overhead analysis


Price discovery process

The process of determining the prices of the assets in the marketplace through the
interactions of buyers and sellers.


Process

A series of linked activities that result in a specific objective. For example, the
payroll process requires the calculation of hours worked, multiplication by hourly
rates, and the subtraction of taxes before the final objective is reached, which is the
printing of the paycheck.


process benchmarking

benchmarking that focuses on practices and how the best-in-class companies achieved their results


process complexity

an assessment about the number of processes through which a product flows


Process costing

A method of costing for continuous manufacture in which costs for an accounting compared are compared with production for the same period to determine a cost per unit produced.


Process costing

A costing methodology that arrives at an individual product cost through the calculation of average costs for large quantities of identical products.


process costing system

a method of accumulating and assigning costs to units of production in companies producing large quantities of homogeneous products;
it accumulates costs by cost component in each production department and assigns costs to units using equivalent units of production


Process flow production

A production configuration in which products are continually
manufactured with minimal pauses or queuing.


process map

a flowchart or diagram indicating every step
that goes into making a product or providing a service


process productivity

the total units produced during a period
using value-added processing time


process quality yield

the proportion of good units that resulted from the activities expended


processing time

the actual time consumed performing the
functions necessary to manufacture a product


product- (or process-) level cost

a cost that is caused by the development, production, or acquisition of specific products or services


Purchased In-Process Research and Development

Unfinished research and development that is acquired from another firm.


quality control

the implementation of all practices and policies
designed to eliminate poor quality and variability in the
production or service process; it places the primary responsibility
for quality at the source of the product or service


Reprocessed material

Material that has been reworked and returned to stock.


Risk controlled arbitrage

A self-funding, self-hedged series of transactions that generally utilize mortgage
securities as the primary assets.


Shelf life control

Deliberate usage of the oldest items first, in order to avoid exceeding
a component or product’s shelf life.


strict FIFO method (of process costing)

the method of cost assignment that uses FIFO to compute a cost per equivalent unit and, in transferring units from a department, keeps the
cost of the beginning units separate from the cost of the
units started and completed during the current period


Visual control

The visual inspection of inventory levels, enabled by the use of
designated locations and standard containers.


Wage/Price Controls

An incomes policy in which wages and prices are constrained by law not to rise by more than a specified percentage.


weighted average method (of process costing)

the method of cost assignment that computes an average cost per
equivalent unit of production for all units completed during
the current period; it combines beginning inventory units
and costs with current production and costs, respectively,
to compute the average


Work-in-process

Any items being converted into finished goods or released from
the warehouse in anticipation of beginning the conversion process.


Work-in-process inventory

Inventory that has been partially converted through the
production process, but for which additional work must be completed before it can
be recorded as finished goods inventory.



 

 

 

 

 

 

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