Planning, Control, & Analysis (M47) Flashcards Preview

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Flashcards in Planning, Control, & Analysis (M47) Deck (73):
1

At the breakeven point, the contribution margin equals total...

Fixed Costs

2

The most likely strategy to reduce the breakeven point, would be to...

Decrease the Fixed Costs (Numerator) & Increase the Contribution Margin (Denominator)

3

This is a budgeting approach that focuses on the cost of activities required to produce and sell products. It is an extension of activity-based costing

Activity based budgeting

4

These are costs that will not continue to be incurred if the department or product is terminated

Avoidable costs

5

This requires the products, services, and I activities be continually measured against the best levels of performance either inside or outside the organization

benchmarking

6

This is a quantification of the plan for operations

Budget

7

This is a budget that is adjusted for changes in volume

A flexible budget

8

These are reports that are comparing budgeted an actual performance

Performance reports

9

This is the practice of underestimating revenues and overestimating expenses to make budget targets more easily achievable

Budgetary slack

10

These costs arise from a company's basic commitment to open its doors and engage in business

Committed costs

11

This equals revenue less all variable costs

Contribution margin

12

This can be affected by manager during the current period.

Controllable costs

13

These costs cannot be affected by the individual in question

Uncontrollable costs

14

This refers to the approaches and activities used by management to make planning and control decisions for the firm

Cost management

15

This is a planning tool used to analyze the effects of changes in volume, sales mix, selling price, variable expense, fixed expense, and profit

Cost volume profit analysis

16

This is the difference in cost between two alternatives

Differential or incremental cost

17

These are fixed costs who's level is set by current management decisions

Discretionary costs

18

This supports the financial planning process by making it easier to construct projected financial scenarios. These models incorporate the interrelationships among operating activities, financial activities, and other factors that affect the business, and range from simple models to those that incorporate hundreds of equations

Financial planning models

19

The cash budget, the capital budget, the budgeted balance sheet, and the budgeted statement of cash flow's are all examples of this

Financial budgets

20

These costs are not very with the level of activity within the relevant range for a given period of time

Fixed costs

21

This involves developing budgets that require only justification for increases in the funding over the prior period

Incremental budgeting

22

This involves estimating the revenues and costs attributable to each product from initial research and development to its final customer and support

Lifecycle budgeting

23

This focuses attention on material deviations from plans while allowing areas operating as expected to continue to operate without interference

Management by exception

24

This is a comprehensive expression of managements operating in financial plans for a future period that is summarized as budgeted financial statements. It consists of the operating and financial budgets

Master budget

25

These costs have a fix component and a variable component. They are separated by using the scattergraph, high-low, or linear regression methods

Mixed or semi-variable costs

26

This model estimates the relationship between independent variable and two or more independent variables. It may be used to develop sales forecasts

Multiple regression

27

This is the budgeted income statement and related schedules

Operating budget

28

This is the maximum income or savings benefit for gone by rejecting an alternative

Opportunity cost

29

This is the cash disbursement associated with a specific project

Outlay or out-of-pocket costs

30

This involves selecting goals and choosing methods to attain those goals

Planning

31

This is the implementation of the plans and a valuation of their effectiveness in attaining goals

Control

32

These are future costs that will change as a result of a specific decision

Relevant costs

33

This is the operating range of activity in which cost behavior patterns are valid. Thus it is the production range for which fixed costs remain constant

Relevant range

34

This measures subunit performance based on the cost and or revenues assigned it to responsibility centers

Responsibility accounting

35

These are predetermined target costs

Standard costs

36

These are committed costs which are not avoidable and are therefore irrelevant to the decision process

Sunk,past, or unavoidable costs

37

This is a defined short-term financial plan that includes assigned responsibilities at all levels

Tactical profit plan

38

This identifies the estimated cost of a new product that must be achieved for that product to be priced competitively and still produce an acceptable profit. Often the product is redesigned and the production process simplified several times before the target cost can be met

Target costing

39

This is the determination of the price at which goods and services will be sold to profit or investment centers via internal company transfers

Transfer pricing

40

These costs very proportionally in total with the activity level throughout the relevant range

Variable costs

41

These are differences between standard and actual results

Variances

42

This involves developing budgets from the ground up by requiring each program or department to justify its level of funding

Zero based budgeting

43

What is the formula for the Contribution Margin?

Selling Price - Variable Costs

44

What is the formula for the Contribution Margin Ratio?

[Selling Price - Variable Costs]
/
Selling Price

45

How do you calculate the Break Even Point in units when the problem does NOT mention profit?

Total Fixed Costs /
[CM/Unit}

46

How do you calculate the Break Even Point in dollars when the problem does NOT mention profit?

Total Fixed Costs /
CMR

47

How do you calculate the Break Even Point in units when the problem DOES mention profit?

Total Fixed Costs + Before Tax Profit /
CM/Unit

48

How do you calculate the Break Even Point in dollars when the problem DOES mention profit?

Total Fixed Costs + Before Tax Profit /
CMR

49

How do you calculate after tax profit?

Before Tax Profit * (1 - Tax Rate)

50

How do you calculate the before tax profit?

After Tax Profit / (1 - Tax Rate)

51

How do you calculate the Margin of Safety (in units or dollars)?

Current Sales Level (in units/$) - BEP (in units/$)

52

How do you calculate the CM/Unit?

Net Income / Margin of Safety in Units

53

How do you calculate CMR?

Net Income / Margin of Safety in Dollars

54

What is the Flexible Budget Formula?

Budgeted OH = Total Fixed Costs +
(# Hrs) * (Variable OH Rate/Hr)

55

Contribution Margin - Fixed Costs = ____

Profit

56

Sales - Margin of Safety =

Revenues

57

Which budgeting process projects costs on the basis of improvements to be implemented?

Kaizen Budgeting

58

What budgeting process focuses on the ability of the manager to control the cost?

Responsibility Budgeting

59

What budgeting process uses cost driers to determine budgeted costs?

Activity Based Budgeting

60

What budgeting process focuses on budgeting operating costs?

Operational Budgeting

61

T/F

The budgeted income statement is included in a firm's financial budgeted

FALSE

This is part of the operating budget

62

T/F

The capital budget is included in a firm's financial budgeted

TRUE

63

T/F

The production schedule statement is included in a firm's financial budgeted

FALSE

This is part of the operating budget

64

T/F

The Cost of Goods Sold Budget is included in a firm's financial budget

FALSE

This is part of the operating budget

65

T/F

Markov techniques is a quantitative approach used to develop sales forecasts based on analysis of consumer behavior

TRUE

66

T/F

Regression Analysis is a quantitative approach used to develop sales forecasts based on analysis of consumer behavior

FALSE

Regression Analysis forecasts sales base don the relationship between sales and one or more predictors

67

T/F

Econometric Models are a quantitative approach used to develop sales forecasts based on analysis of consumer behavior

Econometric Models forecast sales based on the relationship between sales and economic data

68

T/F

Exponential Smoothing is a quantitative approach used to develop sales forecasts based on analysis of consumer behavior

Exponential Smoothing is used to forecast sales based on historical data

69

T/F

The Delphi Technique is a quantitative approach to developing a sales forecast

FALSE

The Delphi Technique is simply a structured approach to developing a subjective estimate from a group of people

70

T/F

Customer Surveys are a quantitative approach to developing a sales forecast

FALSE

This is a qualitative approach

71

T/F

Moving Average is a quantitative approach to developing a sales forecast

TRUE

72

T/F

Executive Opinions are a quantitative approach to developing a sales forecast

FALSE

This is a qualitative approach

73

________ are the reduction in average total cost of production when a firm expands plant production.

Economies of scale