In class test

Question 1

Differences between MA and FA

Answer 1

legal requirements, focus on diff parts, GAAP, Time, report frequency

Question 2

legal requirements

Answer 2

FA have to be audited and submit accounts

Question 3

Focus

Answer 3

MA can focus on diff segments, FA focuses on everything

Question 4

Time dimension

Answer 4

FA looks at past, MA forward looking, predictiona

Question 5

Report frequency

Answer 5

FA annual basis, MA quarterly or monthly

Question 6

GAAP

Answer 6

FA IFRS ISA, MA doesnt

Question 7

Functions of MA

Answer 7

inventory valuation for int and ext profit measurement. Provide info to help managers make better decisions. Provide info for planning, control and performance measurement.

Question 8

traceability

Answer 8

direct and indirect

Question 9

function

Answer 9

manufacturing, marketing, sales and admin

Question 10

behaviour

Answer 10

fixed, variable, semi fixed

Question 11

relevance

Answer 11

relevant, irrelevant, sunk, opportunity

Question 12

high low method

Answer 12

difference in £/ difference in activity = VC per unit

Question 13

CVP analysis

Answer 13

examines relationship between changes in activity and changes in total sales rev, cost and net profit

Question 14

breakeven

Answer 14

total fixed costs/ contribution per unit

Question 15

contribution per unit

Answer 15

selling price - variable costs

Question 16

target profit

Answer 16

fixed costs + target profit / contribution per unit

Question 17

contribution margin/ PV ratio

Answer 17

PV ratio = contribution per unit / sales price per unit

Question 18

margin of safety

Answer 18

% = expected sales - BE sales/ expected sales

Question 19

BREAKEVEN HAS

Answer 19

4 STEPS

Question 20

BE step 1

Answer 20

calculate contribution per unit

Question 21

BE step 2

Answer 21

weight contribution, multiply % by sales mix to give weighted contribution per unit

Question 22

BE step 3

Answer 22

use weighted contribution per unit in breakeven formula to give total number of uits

Question 23

BE step 4

Answer 23

split out units into products using sales mix

Question 24

uses of ABC

Answer 24

product pricing, product emphasis, cost control

Question 25

criticisms of ABC

Answer 25

ABC unit costs vary, reported costs may significantly differ

Question 26

ABC system came about because

Answer 26

traditional systems arent always appropriate and errors from relying on misleading costs

Question 27

ABC systems can

Answer 27

identify the major activities taking place, assign costs, determine cost drivers and assign the cost to products

Question 28

2 types of costing systems

Answer 28

marginal/ variable (uses direct costs) | absorption (uses both direct and indirect

Question 29

traditional costing advantages

Answer 29

easy to implement and useful for industries with large quantities

Question 30

traditional costing disadvantages

Answer 30

assumes indirect costs are directly related to a volume of measure, and companies can make wrong decisions if inaccurate

Question 31

advantages of ABC

Answer 31

detailed info, more accurate and can be used for all overheads, not just production

Question 32

disadvantages of ABC

Answer 32

timely and costly to implement, may be difficult to allocate overheads

Question 33

why do we use budgeted figures?

Answer 33

use this over a longer period of time as normal costs fluctuate monthly

Question 34

expected value

Answer 34

Multiply all probabilities by outcome to get weighted amount and add all of them together to get EV.

Question 35

Range

Answer 35

difference between largest and smallest value

Question 36

probability of independent events

Answer 36

work out probabilities and multiply together

Question 37

Coefficient of variation

Answer 37

SD/EV relative measure of dispersion

Question 38

risk seeker

Answer 38

seek riskier options even if it causes a loss

Question 39

risk averter

Answer 39

choose options with positive outcomes

Question 40

decision trees

Answer 40

used to clarify alternative course of actions

Question 41

maximin

Answer 41

the worst possible outcome will occur, so select the largest payoff under this assumption

Question 42

maximax

Answer 42

the best possible outcome will occur, so select the largest payoff under this assumption

Question 43

regret

Answer 43

minimise the value that is lost as a result of not having chosen the best option, if the best possible outcome does not occur

Question 44

standard deviation

Answer 44

expected value - (expected profit) * x probability

Question 45

ABC steps 1

Answer 45

identify the total overhead costs

Question 46

ABC step 2

Answer 46

allocate costs into cost pool and give each an activity driver

Question 47

ABC step 3

Answer 47

calculate overhead rate for each activity | total cost/ no. of times activity occurs

Question 48

ABC step 4

Answer 48

allocate overheads to products