More Revision Cards - Topics I am struggling with

Question 1

What are the four stages of lifecycle costing?

Answer 1

Introduction
Growth
Maturity
Decline

Question 2

What are the three factors that need to be managed to maximise a products return?

Answer 2

Design costs out of product
Minimise time to market
Maximise life of cycle

Question 3

What percentage of costs are incurred at the design stage of the life cycle?

Answer 3

80% and 90%

Question 4

What can life cycle costs be classified as?

Answer 4

Development Costs
Design Costs
Manufacturing Costs
Marketing Costs
Distribution Costs

Question 5

What is target costing driven by?

Answer 5

External market factors

Question 6

What should the requirement of target costing be driven by?

Answer 6

Strategic profit planning rather than a standard mark up

Question 7

What are BI tools used to produce?

Answer 7

Management information that is already produced in-house

Question 8

What does BI tools enable you to do?

Answer 8

Produce a more up-to date basis, in a more use friendly format

Question 9

What are the pros of BI tools?

Answer 9

User friendly
Savings include efficiency gains
May replace a disparate array of tools already being used
Allow company to forecast more accurately
Greater understanding of what is most profitable
Emerging trends spotted earlier

Question 10

What is an annuity?

Answer 10

A constant annual cash flow for a number of years

Question 11

How do you calculate the PV of an annuity factor?

Answer 11

annual cash flow x annuity factor

Question 12

How do you calculate the annuity factor?

Answer 12

(1 - (1+r)^-n)/r

r = cost of capital
n = number of periods

e.g AF for a 6 year annuity at 10%

(1-(1.1)^-6)/0.1 = 4.355

Question 13

What is a perpetuity?

Answer 13

Annual cash flow that occurs forever

Question 14

How do you calculate the PV of a perpetuity?

Answer 14

PV = cash flow/ r
r = required rate of return

OR

PV = cash flow x 1/r
1/r = perpetuity factor

Question 15

What is an example of a quantitative cost?

Answer 15

Purchase price of machinery
Installation and training costs

Question 16

What is an example of a quantitative benefit?

Answer 16

Lower direct labour costs
Lower scrap costs
Lower stock costs

Question 17

What is an example of a qualitative cost?

Answer 17

Increased Noise
Lower morale if staff are made redundant

Question 18

What is an example of qualitative benefit?

Answer 18

Reduction in production time
Improved product quality

Question 19

What are IT controls?

Answer 19

Personal controls
Access controls
Computer equipment controls

Question 20

What are application or program controls?

Answer 20

Performed automatically by system
Completeness checks
Validity checks
ID and authentication checks

Question 21

What is the base layer of the BI stack?

Answer 21

Data sources where data is extracted, translated and loaded by ETL software into data warehouse

Question 22

What is above the base layer of the BI stack?

Answer 22

Application layer

Question 23

What is on the application layer of the BI stack?

Answer 23

Presentation or delivery layer to make it easier for management to understand data

Question 24

What do we assume while doing a capital investment appraisal?

Answer 24

All cash flows are know with certainty
Sufficient funds available
Zero Inflation
Zero Taxation

Question 25

What are the appraisal methods?

Answer 25

NPV, considers time value of money IRR, considers time value of money Discounted payback periods ARR

Question 26

If the IRR if greater than the cost of capital should we accept project?

Answer 26

Yes

Question 27

If the IRR if less than the cost of capital should we accept project?

Answer 27

No, reject project

Question 28

If a manager is responsible for a particular aspect of operating costs what is the responsibility centre called?

Answer 28

Cost Centre

Question 29

If a manager is responsible for revenue what is the responsibility centre called?

Answer 29

Revenue Centre

Question 30

If a manager is responsible for both revenue and costs what is the responsibility centre called?

Answer 30

Profit centre

Question 31

If a manager is responsible for investment decisions as well as for revenue and costs what is the responsibility centre called?

Answer 31

Investment centre

Question 32

What is benchmarking?

Answer 32

Continuous process of measuring a firms products, services and activities against other organisations

Question 33

What is the idea behind benchmarking?

Answer 33

Ascertain how processes and activities can be improved

Question 34

What are the five types of benchmarking?

Answer 34

Internal Competitive Functional Strategic Customer

Question 35

What is internal benchmarking?

Answer 35

Other units and departments in the same organisation used

Question 36

What is competitive benchmarking?

Answer 36

Most successful competitors used

Question 37

What is functional benchmarking?

Answer 37

Comparisons made with similar functions

Question 38

What is the strategic benchmarking?

Answer 38

Form of competitive benchmarking aimed at reaching decisions for strategic action and organisation change

Question 39

What is customer benchmarking?

Answer 39

Compares performance with performance expected by customers

Question 40

What is economic value added?

Answer 40

Measure of performance similar to residual income Profit figure used is economic profit and capital employed figure used is the economic capital

Question 41

What is the basic concept of economic value added?

Answer 41

Performance of company as a whole should be measured in terms of value added to business during profits

Question 42

What are the types of business risk?

Answer 42

Strategic Product Contractual Inadequacy Fraud and Malfeasance Commodity Price Product reputation Operational

Question 43

What is strategic risk?

Answer 43

Risk that business strategies will fail e.g. product launches

Question 44

What is product risk?

Answer 44

Risk of failure of new product launches/loss of interest in existing products

Question 45

What is commodity price risk?

Answer 45

Risk of change in products reputation or image

Question 46

What is operational risk?

Answer 46

Risk that business operations may be inefficient or business processes may fail

Question 47

What is a contractual inadequancy risk?

Answer 47

Risk that terms of a contract do not fully cover a business against all potential outcomes

Question 48

What is fraud and malfeasance risk?

Answer 48

Malfeasance means doing something wrong or committing an offence. Organisations may be exposed to fraud, or of actions employees that result in an offence or crime