Domain III, Topic C, Financial Management Flashcards
(40 cards)
______ development gives manager a basis for control estimate of future needs
1) Must be a flexible and adjustable according to changes
2) Usually reviewed monthly
Budget
An _________ budget includes:
a) Forecast of revenues, expenses, and profit fro a specific period of time
b) First step - forecast sales or revenue (income) portion
c) Then budget expenditures (labor, food, operating expenses) related to the projected level of revenue
Operating
A ____ budget includes
a) Projects revenues and expenses, showing inflow and output of cash
b) Purpose is to determine if funds will be available when needed
Cash
A _______ budget includes
- Plant facilities, equipment, cost of improvements and repairs (service, maintenance contracts), expansions, replacements
a) Includes expenditures whose returns are expected to last beyond one year
Capital
___________ budget (Incremental, baseline)
- Uses existing budget as a base and projects changes for the ensuing year in relation to the current budget
a) Usually begins with this year’s expenses plus an inflation factor
b) control oriented
c) Prepared at one level of sales or revenue
Traditional
____ - _____ budget (ZBB)
- NOT this year’s expenses plus an inflation factor
a) begin at 0. Must justify each expense
b) example: PPBS - Planning, Programming Budgeting System
1) Past dollar allocations are NOT the basis of projections
c) Planning oriented
Zero - Based
_____ budget
- Prepared at one level of sales or revenue (no expected major change in patient or customer count during the year)
Fixed
________ budget
- Adjusted to various levels of operation with varying levels of sales or revenues throughout the year (changes in patient or customer count)
a) closing a floor for renovation
b) gives dollar range for low to high levels of predicted activity
Flexible
__________ budget
- Details what it costs to perform an activity (how much to supervise the cafeteria)
Performance
________ (fixed) costs
- Not affected by sales volume (number of people served), not directly evident in day to day activities, required for business to exist even if it produces nothing, cannot be readily changed
a) Rent, taxes, interest on debt, insurance, depreciation
b) Stay fixed within a range of sales volume
Indirect
______, ________, ________ costs
- Varies directly with changes in sales (revenue); directly involved in service to customer
a) china, silver, food, uniforms, laundry, repairs, benefits
Direct, variable, flexible
____ - ________ costs
- Both a fixed and variable component;
a) A portion of the cost will remain fixed regardless of changes in sales volume
b) Labor, maintenance, utilities
c) These are divided into fixed and variable components before doing break even analysis
Semi - variable costs
____ costs - already incurred and cannot be recouped by a new decision or alternative; cost involved in studying merits of a new computer
Sunk
____________ costs
-Amount of increase or decrease in cost when you compare alternative choices; difference in costs between two delivery systems
Differential
________ __________: Efficient allocation of people, materials, and equipment to meet the needs of the operating system (can lead to cost savings).
Resource Allocation
The _______ ____ ______ (CPM) of resource allocation helps plan and control an operation. It identifies the most critical activities to allocate limited resources
Critical Path Method
____ costs are the most readily controlled item, subject to the greatest fluctuation
1) menu planning - most important
2) type of service - selective menu reduces waste and cost
3) Purchasing methods - group buying reduces costs
4) Receiving control - weigh in and check items against invoice
5) Storage and production control
6) Standardize portions to control costs; keep records of employee meals
Food
To determine ______ _______ (EP) cost per pound, divide the purchase cost by the edible weight.
Raw purchase cost(AP) $12.24 / Cooked edible weight 9.9 = EP cost / lb $1.24
Edible portion
_____ costs
- Less controllable than food costs
Labor
_________ costs
- 12 - 18% of budget
- Utilities (electricity), laundry, cleaning
Operating
____ Basis accounting method
- Recognizes a transaction at the tie the cash is taken in or released
Cash
_______ basis accounting method
- Recognizes revenues when earned and expenses when incurred (regardless of when the actual cash is received or dispersed)
Accrual
A _______ ______
- Records and reports transactions categorized by account numbers
a) Summary of all expenses and revenues for the month by category (meat, fruit, dairy)
General Ledger
A ______ and ____ statement (Income Statement) - shows operating results over a period of time
a) Presents the income (revenue), expenses and profit (or loss or break even) over the course of the budget period
b) Also known as the revenue and expense statement
Profit and loss Statement
