Flashcards in B2: Strategic Planning Deck (46):
What is a master budget?
an overall budget, consisting of many smaller budgets, that is based on a specific level of production
What is a flexible budget?`
a series of budgets based on different activity levels within a relevant range.
What can be used to seperate fixed and variable components?
What is a regression analysis?
statistical model that estimates the dependent variables based on changes in the independent variable
What is learning curve analysis?
used to predict increases in efficiency/production as experience is gained
What is expected value analysis?
long-term average of repeated trials and is found by multiplying the probability of each outcome by its payoff and then summing the results.
What is the coefficient of determination?
The coefficient of determination (R2) is the proportion of the total variation in the dependent variable (y) explained by the independent variable (x).
What is the balanced scorecard method?
using both financial and nonfinancial measurements
Sales volume variance can be divided into which two additional variances?
sales quantity variance, sales mix variance
SBU stands for?
strategic business units
Critical success factors generally included in the balanced scorecard are:
innovation, customer satisfaction, internal business processes and finance. (FICI)
What is an investment center responsible for?
revenues, expenses, and invested capital
What is a profit center responsible for?
revenue and expenses
What is the internal business process perspective of a balanced scorecard concerned with?
low costs supported with low prices
The customer perspective of a balanced scorecard is concerned with
The financial perspective of a balanced scorecard is concerned with
the captures of increased market share
The learning and growth (advanced learning and innovation) perspective of a balanced scorecard is concerned with
linking strategy with reward and recognition
What is the learning and growth perspective on the balanced scorecard concerned with?
productivity, employee effectiveness, and retention
What are "critical success factors"
financial and non-financial features of an organization that contribute to its success in achieving strategy
What are "authoritative standards"?
standards imposed by management w/out employee input
What is "controllable margin"?
contribution margin net of controllable costs
What are "controllable costs"?
fixed costs that managers can impact in <1 year
What are the types of responsibility segments?
CRPI - cost, revenue, profit (accountable for revenues and costs), and investment
What are the critical success factors of the balanced scorecard?
FICA - financial, internal business processes, customer satisfaction, advancement (learning and growth)
When is the cash budget created?
after all other are
What is gross profit?
sales - cogs
What is included in the financial budget process?
1. cash/capital purchases budgets 2. balance sheet and statement of cash flows
What is included in the operating budget process?
1. all budgets except cash/capital purchases 2. pro forma income statement
What is a strategic plan?
process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy
What are the four perspectives of a balanced scorecard?
1.) Customer satisfaction
4.) Internal business Processes
What is regression analysis?
used to estimate relationships among variables.
What is sensitivity analysis?
Sensitivity analysis uses a trial and error method in which the sensitivity of the solution to changes in variables is calculated
What is target pricing?
taking the price you want the unit to cost and then determining production costs based off that
What is multiple regression?
a statistical technique that predicts values of one variable on the basis of two or more other variables.
What is the Delphi method of forecasting?
multiple teams in geographically remote locations. Information is shared and gathered in a central point and compiled and then redistributed for comment
What is Regression analysis?
dependent variable and one or more independent variables. More specifically, regression analysis helps one understand how the typical value of the dependent variable changes when any one of the independent variables is varied
What are time-series models?
examine historical data to predict future
What's the difference between financial and operating budgets?
The financial budget process includes:
-Cash and capital purchases budgets.
-Balance sheet and statement of cash flows.
The operating budget process includes:
-All budgets except cash and capital purchases.
-The pro forma income statement.
Difference between a Strategic Plan and a Performance Report?
a strategic plan is broad-based and long-term in nature; a performance report is more specific and shorter term
What does "net of" mean
What is a Controllabe Margin?
contribution margin - controllable fixed costs (can be changed in under one year like advertising)
What is trade credit?
agreement between businesses to buy goods or services on account (ex: pay within 30 days)
What is Standard Costing?
production costs are compiled and compared with actual costs
What is Cost of Capital?
rate of return that covers costs associated with the funds employed
How do you calculate the Weighted Average Cost of Capital?
% amount financed * % cost of capital
for example $35 at 8% cost and $15 at 6% cost -- will be (.07 * .08) + (.3 * .06) = 7.4% cost of capital