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financial planning process:

1) analyzing the investment and financing alternatives available to a firm, 2) forecasting the future consequences for each of the alternatives, 3) deciding which alternatives to undertake, 4) measuring subsequent performance against established goals. Measuring the subsequent performance is the final step in that process.


what are the steps to process improvement?

1) design, 2) modeling (which involves simulation of the process), 3) execution (including training of personnel and testing of the process), 4) monitoring, and 5) optimization.


what is a pareto chart?

a bar chart or histogram that ranks the causes of variations in a process from most to least frequent, which is intended to indicate their effects on quality


what is a control chart?

measures deviations from process standards, a fishbone diagram identifies causes of defects and their effects


steps in project management:

project initiation, project planning, project execution, project monitoring and control, and project closure


a cost management system is:

a planning and control system that measures the cost of significant activities, identifies non value-added cost, and identifies activities.


relevant range?

level of activity where fixed costs remain fixed


diff between theoretical capacity and practical capacity?

Theoretical capacity assumes output is produced 100% of the time. Practical capacity adjusts theoretical capacity for non-production time such as holidays and maintenance shutdowns.


Utilizing the expected annual capacity approach to overhead application, can result in overapplied overhead when:

Actual overhead costs were less than expected and/or production was higher than expected.Overhead is applied based on a calculated rate per unit. This calculated rates uses estimate overhead costs divided by an estimated activity level. If either the estimated overhead is higher than the actual overhead or the estimated activity level is lower than the actual activity level, overhead can be overapplied.


labor rate variance?

actual rate paid minus standard hourly rate times the total hours worked


labor efficiency variance?

number of hours worked less hours supposed to have been worked times the standard rate


material price variance?

diff of total price paid and total price should have paid for the same amount


fixed overhead spending variance

It is the difference between the actual overhead spending and the budgeted overhead spending.


when doing weighted avg cost of capital calculations, what needs to have taxes removed?

the cost of capital for DEBT must be computed net of the tax benefit provided by the deductibility of the interest expense


how to find effective rate of interest on a compensating balance question?

cost of borrowing / funds available for useIf you have 500,000 at 8% interest that equals 40,000 in interest expense. but if you can only use 400,000, then the calculation is 40k/400k for an effective rate of 10%, not 8%


difference between performance standards and attribute standards

attribute standards describe the characteristics of organizations and people who perform internal audit services.performance standards describe internal auditing and identify the quality criteria applicable to the performance of the internal audit services


what percentage can a whistleblower get for a dodd-frank award?

10% and 30% of sanctions imposed


what is the slope of a demand curve?

it is negative. the lower the price, the greater quantity demanded


a positive GDP gap exists when:

potential GDP exceeds real GDP. This means that the economy is operating at less than full capacity- which implies unemployment and under-utilized plant and equipment


2 largest export countries?

germany and china- each about 9%


US share of worldwide GDP is:

approximately 25%


which type of employment is not considered in calculating full employment?

cyclical- the other 3 types can exist and still have "full employment"


a supply schedule shows the relationship between the quantity of a commodity that will be supplied during a period of time and:

the selling price of the commodity. A supply curve is basically saying that as price increases, more sellers would enter the market and more of the good would be supplied


freely fluctuating exchange rates:

automatically correct a lack of equilibrium in the balance of payments


what would the Federal Reserve NOT do to stimulate the economy?

Reduce tax rates. The Fed Reserve does not change tax rates. This would stimulate the economy, but tax rates are set by Congress, not the Fed. The Fed could reduce the reserve requirement, reduce the discount rate which would increase loan activity, and they could increase the money supply.


who controls fiscal and monetary policy?

The Fed controls monetary policy(money supply), and Congress controls fiscal policy(gov spending and taxes)


calculate marginal propensity to consume:

change in spending over change in disposable income


calculate avg propensity to consume:

% of disposable income spent on consumable goods


the preventive measure for deflation?

increase the money supply. this stimulates demand and increases the general price level


how does deflation distort reported income?

depreciation is NOT reflective of current fixed-asset replacement costs?