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Accounting > Exam 4 > Flashcards

Exam 4 Flashcards

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1
Q

Advantages of responsibility centers

A

Frees up top management to focus on strategic planning. Improves motivation and retention

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2
Q

Disadvantages of responsibility centers

A

Potential duplication of cost and effort. Lower level managers might not see the big picture (goal congruence)

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3
Q

Cost center

A

Responsible for cost only

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4
Q

Revenue center

A

Responsible primarily for revenue. Sales region and marketing department

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5
Q

Profit center

A

Responsible for revenues and costs

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6
Q

Investment center

A

Responsible for revenues, costs, and effieciently managing long term assets

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7
Q

Investment departments

A

President and CEO and operations VP

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8
Q

Cost departments

A

Finance CEO, legal councial, HR, Bottling plant manager, warehouse manager, and distribution manager

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9
Q

Profit departments

A

Snacks divison, beverage divison, and confections division

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10
Q

Segment

A

A part or activity of an organization about which managers would like cost, revenue, or profit data

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11
Q

Segment margin

A

Sales-variable expensese=contribution margin-traceable fixed cost

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12
Q

Return on investment

A

Operating income/total assets

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13
Q

Roi extended

A

Sales margin (profitablility)* capital turnover (productivity)

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14
Q

Sales margin

A

Noi/sales

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15
Q

Capital turnover

A

Sales/total assets

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16
Q

Risidual income

A

Operating income- (total assets*minimum required rate of return)

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17
Q

Increase ROI

A

Increase sales,reduces operating expenses,reduced operating assets

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18
Q

Transfer price

A

The sales revenue for the selling divison and the cost for the buying division

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19
Q

Market price

A

Price that could be obtained in an open market. The fairest price

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20
Q

Negotiated price

A

Division managers negotiate; usually between variable cost and market price

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21
Q

Cost

A

Variable cost is the lowest

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22
Q

Perspectives on balance scorecard

A

Financial, customer, internal business processes, and learning and growth

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23
Q

Learning and growth questions

A

Are we maintaining our abilith to change and improve

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24
Q

Internal business processes questions

A

Have we improved key business processes so that we can deliever more value to our customers

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25
Customers questions
Do customers recognize thst we are delivering more value?
26
Financial questions
Has out financial performance improved
27
KPI for learning and growth
Hours of training, certifications, retention
28
Internal business processes KPI
Quality checks, time to make product, MCE, error rates
29
Customer KPI
Satisfaction, repeat sales, referrals, number of complaints
30
Financial KPI
ROI, RI, Sales, CM
31
Price variance
AQ*(AP-SP)
32
Quantity Variance
SP*(AQ-SQ)
33
Rate variance
AH*(AR-SR)
34
Efficiency Variance
SR*(AH-SH)
35
Advantages of standard cost
Cost benchmarks, useful budgeting, motivation, simplifying bookkeeping
36
Disadvantages of standard cost
Outdated or inaccurate standards, lack of timliness, focus on operational performance measures and visual management, lean thinking, increase in automation, behavioral consequenses
37
Fixed overhead budget variance
Budgeted-actual
38
Fixed overhead volume variance
Budgeted-(standard direct labor hours*units produced)*standard fixed overhead
39
Screening decisions
A budgeting decision that asks does the project meet or exceed a hurdle rate
40
Preference decisions
A budgeting decision that are for those projects that meet or exceed a hurdle rate, which one is best
41
Payback method
Number of years needed to recover the investment
42
Payback method formula
Investment/net cash flows
43
ARR
Used acrrual accounting for NOI
44
ARR formula
NOI/investment
45
NPV
Accept project if NPV>=0
46
NPV formula
PV cash inflow-PV cash outflows
47
IRR
Discount rate that results in a NPV of 0
48
Depreciation
Cost-residual value/# of useful years
49
Accrual NOI
Cash flows-depreciation
50
Consider time value of mone
NPV and IRR
51
Dont consider time value of money
Payback period and ARR
52
Assumptions for NPV
Cash flows occur at end of period, all cash flows are immediatey reinvested at discount rate
53
Profitability index
NPV/investment
54
Accept proposal with IRR
Accept if IRR is equal to or greater than the MRRR
55
Accept NPV
If it is zero or positive
56
Computes unique rate of return
IRR
57
Sustainability
The ability of a company to create products that meet the needs of today without impacting the ability of future generations to meet their needs
58
Three Ps of Triple bottom line
Profit, people, and planet
59
Sustainablilty vision
A sustainable global econ where organizations manage their econ, environmental, social and governance performance and impacts reponsiblolty and report transparently
60
Sustainablu mission
To make sustainability reporting standard practice
61
Business cases for sustainability
Reduce cost, improve image, reduce risks, create new revenue, attract labor talent, attract capital
62
Monetary information
Directs materials cost, waste and emmison cost, preventation cost, RD cost, intangible cost materials, cost of non product outputs
63
Physical information
Quanity of air emmisons, tons sould waste generated, gallons of waste water generated, pounds of packing recyled, toral amount of water consumed
64
Uses of EMA
Compliance, strategy, developement, systems and info flow, costing, investment appraisal, performance management, exernal reporting
65
Challenges of EMA
Communication issues, hidden cost, archaic info systems, historical orientation of accounting, undeveloped field
66
Types of reports
Sustainibility, integrated annual report, corporate social responsiblity, balanced scorecard
67
If NPV is positive the IRR is
Greater than discount rate
68
If NPV is zero then IRR
Is equal to discount rate
69
If NPV is negative then IRR
Is less then discount rate

Accounting (30 decks)

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