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Flashcards in BEC Homework 2.2 Deck (42):
1

Master budget

Master budget is overall budget consisting of many smaller budgets that is based on one level of production. The master budgets include the entire company

2

Flexible budget

IT can be prepared for any production level within a relevant range. It is a series of budgets based on different activity levels within the relevant range. It is appropriate for any activity that has variable costs. They give management the opportunity to compare actual results to the budget for the activity level achieved

3

Volume overhead efficiency variance

Budge table variable based on standard hours =Standard Direct labour hours allowedxStandard overhead variable rate
Budgeted Variable OH=Actual labour hoursx standard OH variable rate
(OR)
SH-AHxSR

4

production volume variance

(Actual units produced - Budgeted units produced) x Budgeted overhead rate
AUP-BUPxBOHPU

5

Material price variance

AP-SPxAQ

6

Variable spending OH Variance

Budget variable -actual

7

Strategic business unit SBU

Responsibility from highest order Investment SBU-profit-revenue-cost

8

Balance score card

Reports management info regarding organizational performance as defined by critical success factors. These critical success factors are often classified as human resources business processes, customer satisfaction, and financial performance to demonstrate no single dimension of organizational performance can be relied upon to evaluate success.Criticalsucess factors...Financial,Internal business process, customer and human resource considrations. It integrates financial with non-financial measures. Innovation is the perpective Defined by balance score card

9

ROI

Evaluates business performance in terms of the dimensions of revenue expense and investment the measurement all are financial

10

KAIZEN

Kaizen is synonomous with continuous improvement but not multidimensional

11

Market value added

Contemplates to the degree to which management actions improve stockholders value

12

Investment Center

Investment center is most likely an independent business

13

Successful responsibility accounting system

A reasonable separation of costs into their fixed and variable components since fixed costs are not controllable and must be eliminated from the responsibility report

14

Financial and non financial measures

Financial and non-financial features of an organization that contribute to its success in achieving strategy are referred to as critical success factors and are normally classified as: 1. Financial solvency and return, 2. Customer satisfaction, 3. lntemal business processes, and 4. Human resource innovation.

15

what all will be included in performance measures

A user focus
specific time horizons
exceptional items that are controllable

16

Authoritattive standerds

Standereds imposed by management without employee input

17

Participative standards

Standerds imposed by management with collaboration to employee input

18

Ideal Standerds

Are based optimum condition

19

Attainable standards

per unit budget with normal conditions

20

The information in COGM Budget would directly relate to

Material used, Direct Labour, OH applied and finished goods

21

firm develops an annual cash budget in order to

Avoid the oppertuity cost of noninvested excess cash and minimize the cost of interim financing. It is don't after all budgets have been prepared. Cash budget is not for the need of internal financing. Cash budget must be completed before the forecasted balance sheet. Statement of cash flows is the last proforma statement prepared . because all the other things or budgets affects cash.

22

The financial budget process include

cash and capitol purchase budgets and balance sheet and statement of cash flows.

23

difference between Flexible budget and static budget

A flexible budget provides cost allowances for different level of activity. cost budget provides budget for one level of activity. Both budgets can be prepared by any level of management. Both budgets are used for planning . Both include variable nad fixed costs/

24

For a company that produces more than ne product

sales volume variance can be divided into sales quantity and sales mix

25

Learning and growth

Employee satisfaction and retention

26

Two way material price variance

Actual quantity x Actual price -Actual quantity x Standard price = difference
Standard quantity allowed x standard price - actual quantity used x standard price

27

Controllable margin

controllable margin is computed as contribution margin less controllable fixed costs

28

The customer perspective of a balance score card which examines a comapnys sucesss in a targeted market

customer.
The financial perspective is concerened with the capture of the increased market share
internal busiess prospects of a balanced score card is concerned with maintaining low costs.
the learning and growth is tied to reward and recognition

29

Flexible budget variance

Actual- Flexible budget actual

30

Volume variance

Flexible budget actual- Volume variance

31

Spending variance

Actual hours X actual rate- actual hours X standerd rate

32

Fixed O/H Volume variance

Fixed OH Rate x actual production- Fixed overhead rate x Standard production

33

Material efficiency variance can be caused by

actions of the purchasing department
design of the product
skill level of the labor force

34

production volume variance is due to

difference in the planned level of the base used for overhead allocation and the actual level achieved. production volume variance is the variance in an absorption costing system that measures the departure from the denominator level of activity that was used to set the fixed overhead rate.

35

efficiency variance

production volume variance is the variance in an absorption costing that measure the denominator level of activity that was used to set the fixed OH rate

36

Variable overhead spending variance

is most controllable by plant manager and somewhat by production control

37

Discretionary costs

are costs arising from periodic budgeting decisions by management to spend in certain areas not directly related to manufacturing

38

Incurred marginal costs

are the sum of variable and avoidable fixed costs necessary to have one unit increase in activity

39

Opportunity costs

is the maximum benefit foregone by using a scarce resource for a given purpose. it is the benefit provided by the next best use of that resource

40

Residual income

is income excess of a fixed return of a invested capitol

41

Least associated with target pricing

price stability, price justification fixed cost recovery

42

costs relevant to made or buy decision include variable material variable labor

avoidable fixed costs