Planning, Control, and Analysis

Question 1

Business analysis that provides management with profitability estimates at all levels of production in the relevant rannge; based on the firm’s profit function (Profit=Sales-VC-FC)

Answer 1

Cost-Volume-Profit (Breakeven) Analysis

Question 2

The amount of contribution margin (Sales-VC) required to cover the fixed costs

Answer 2

Breakeven point

Question 3

A form of inventory costing that applies variable costs to products sold but considers fixed manufacturing costs as aperiod rather than product cost, expensing all fixed MOH in the period incurred
**not GAAP

Answer 3

Variable (Direct) Costing

Question 4

Inventory costing that treats fixed MOH as product costs and expenses them in the period in which the products are sold (so if not production>sales, some of the MOH will not be expensed that period)

Answer 4

Absorption Costing

Question 5

The process of analyzing hte investment and financing alternatives available, forecasting the furture consequences of hte alternatives, decidng which to undertake, and measuring subsequent performance against established goals

Answer 5

Financial Planning

Question 6

Outputs of the fianncial planning process

Answer 6

Pro forma financial statements
Operating and financial budgets
Scenario analysis

Question 7

Summarizes the results of all of hte firm’s individual budgets into a set of projected financial statements and schedules

Answer 7

Master budget

Question 8

The budgeted income statement and supporting schedules

Answer 8

Operating budget

Question 9

The capital budget, cash budger, and budgeted balance sheet and statemtn fo cash flows

Answer 9

Financial budget

Question 10

Budgets that are continualy updated as time passes

Answer 10

Rolling budgets

Question 11

A budget in which upper-level managment establishes the budget paramters and passes it down through the organization to each operating unit
-quick and clear but doens’t involve lower-level employees

Answer 11

Top-Down mandated approach

Question 12

Budget approach in which the budget is driven by involving lower-level management and employees
–more readily accepted budget by all employees, but management may try to pad their budget

Answer 12

Bottom-up (participative) approach

Question 13

Displays the financial effects of purchases and retirements of long-lived assets–these budgets tend to span several years

Answer 13

Capital budget

Question 14

A form of budgeting that projects costs on teh basis of improvements yet to be implmeented rather than upon current conditions

Answer 14

Kaizen budgeting

Question 15

A form of budgeting that complements ABC by focusing on the costs of activities necessary for production and sales–budgets are formulated around each activity
–gives managfement better insight into what causes costs sothey are in a better position to control them

Answer 15

Activity-based budgeting (ABB)

Question 16

A structured approach to qualitative forecasting that develops consensus among a group about the future through a series of structured questionnairesa nd an iterative process

Answer 16

Delphi technique

Question 17

A quantitative forecasting approach based exclusively o historical observation of sales or other variables

Answer 17

Naive model

Question 18

A quantitative forecasting technique that simply uses the average of sales for hte most recent periods to predict hte next period’s sales

Answer 18

Moving average

Question 19

A quantitative forecasting technique that is similar to moving average but weights more recent sales data more heavily than otder data
–based on the belief that more recent data is more relevant

Answer 19

Exponential smoothing

Question 20

A quantitative forecasting technique that examines prior sales data and estimtaes seasonal and cyclical efects to observe historical trends

Answer 20

Decomposition of time series

Question 21

A quantitative forecasting technique that estimates sales based on an observed relationship between sales (dependent variable) and one or more predictors of sales (independent variable)

Answer 21

Regression analysis

Question 22

A quantitative forecasting techinque that involves the use of regression analysis to model the firm’s sales ased on economic data (i.e. disposable income, interest rates, etc.)

Answer 22

Econometric models

Question 23

A quantitative forecasting technique that attempts to frecast consumer purchasing by considering factors such as brand loyalty and brand switching behavior–wich is used to predict changes in teh firm’s market share

Answer 23

Markov technique

Question 24

The violatin of hte regression analysis assumption that the variance of hte error (residual) term is constant–reduces the reliability of the estimate

Answer 24

Heteroscedasticity

Question 25

Using regression analysis to fit a trend line ot a time series of data

Answer 25

Trend analysis

Question 26

Measures how well the predicted values of hte dependent variable match the actual amounts

Answer 26

goodness of fit (measured by the coefficient of determination--Adjusted R Squared)

Question 27

A measure of significance of the relationship in trend analysis for each indpendent variable

Answer 27

T-statistic

Question 28

A measure of the probablity that the relationship of a variable in a trend anlysis occurred by chance (i.e. if less than 5%, means there is a

Answer 28

P-value

Question 29

Used when management wishes to forecast sales using two or more associated variables

Answer 29

Multiple regression

Question 30

The standard deviation of the regression--can be used to establish confidence intervals aroudn the estimate of sales

Answer 30

Standard Error

Question 31

Provides an overall measure of hte significance of th eregression equation --% chance htat hte overall relationship occurred bychance

Answer 31

Significanace F

Question 32

In multiple regression when 2 indpendent variables are highly correlated, causing an error in the equation --signs include lowt-Stats, and negative relationships when they should be positive

Answer 32

Multicollinearity

Question 33

In multiple regression, when the errors (regressions) are serially correlated, distorting the results --a sign would be if a major indpenednet variable is not included in the model

Answer 33

Autocorrelation

Question 34

A budget adjusted for changes in volume

Answer 34

Flexible budget

Question 35

A manager's area of responsibility if he/she is only responsible for costs; typically non-revenue generating departments

Answer 35

Cost center

Question 36

Area of responsibilty if a a manager is responsible for both revenues and costs

Answer 36

Profit center

Question 37

Manager is responsible for revenues, costs, and asset investment

Answer 37

Investment ccenter

Question 38

Allocating those revenues and/or assets which a manager can control to that manger's responsibility center and holding htat manger accountable for operating results

Answer 38

Responsibility Accounting

Question 39

Sales- Variable manufacturing costs

Answer 39

Manufacturing contribution margin

Question 40

Manufacturing contribution margin (Sales-VC)-Variable S&A

Answer 40

Contribution Margin

Question 41

CM-Fixed costs controllable by segment managers

Answer 41

Controllable contribution

Question 42

Controllable Contribution-Fixed costs controllable by others

Answer 42

Segment contribution

Question 43

Predetermined target costs which should be attainable under efficient conditions; used to aid in the budget process, pinpoint trouble areas, and evaluate performance

Answer 43

Standard Costs

Question 44

Standards that reflect hte absolute minimum costs which could be achieved under perfect operating conditions

Answer 44

Ideal standards

Question 45

Standards that should be achieved under efficient operating conditions

Answer 45

Currently attainable standards

Question 46

The standard quantity of input that should have been used for hte good units produced

Answer 46

Standard Quantity

Question 47

AQ (AP-SP) | Unfavorable if AP>SP

Answer 47

Price Variance

Question 48

SP(AQ-SQ) | Unfavorable if AQ>SQ

Answer 48

Quantity (usage) Variance

Question 49

The most common base used to apply overhead to production

Answer 49

direct labor hours (DLH)

Question 50

REquires that fixed overhead costs be allocated based on normal capacity and variances related to fixed overhead volume should be allocated only to COGS (i.e. treated as a period cost)

Answer 50

SFAS 151

Question 51

A document that authorizes the project and sets forth the project managers authority and responsibility

Answer 51

Project charter

Question 52

A document that sets forth the scope of the work jn a narrative description of the work to be performed and the deliverables

Answer 52

Statement of Work (SOW)

Question 53

A detailed listing of the man hour, equipment, and material requirements

Answer 53

Project specs

Question 54

Sets forth the start date, the end date, and other major milestones involved in completing the project

Answer 54

Milestone schedule

Question 55

Breaks the project into manageable, independent, and measurable elements that can be budgeted and for which responsibility can be assigned

Answer 55

Work breakdown structure (WBS)

Question 56

A project planning approach in which project planning is divided into defined phases and an assessment is done at the end or each phase

Answer 56

Life-cycle approach to project planning

Question 57

A type of bar chart that illustrated the scheduled start and finish of elements of a project over time

Answer 57

Gantt chart

Question 58

A type of chart that illustrates the milestones for a project over time

Answer 58

Milestone chart

Question 59

A type of chart that illustrates the series of activities that are related--appropriate where a project has a series of repetitive actions

Answer 59

Line of balance

Question 60

Illustrates the logical representation of activities that defines the sequence of the work of a project--lots of advantages

Answer 60

Network diagram

Question 61

A network diagram that formally focuses on the interdependence of activities and the time required to complete an activity to schedule and control the project

Answer 61

Program evaluation and review technique (PERT)

Question 62

The shortest amount of time necessary to accomplish the project

Answer 62

Critical patt

Question 63

In PERT analysis, the difference between the expected time and te latest time the activity can be completed without delaying the project

Answer 63

Slack time

Question 64

Similar to PERT, but only use one time estimate that represents the normal time to complete an activity-used for projects where there is less variability in time estimates

Answer 64

Critical Path Method (CPM)

Question 65

Similar to PERT but has the advantage of allowing looping and branching based on the results of a particular activity--useful for projects that can be completed multiple ways

Answer 65

Graphical Evaluation and Review Technique (GERT)

Question 66

A term used describe the practice of adding resources to shorten selected activity time on the critical path of a project ---in effect trading money for time

Answer 66

Project crashing

Question 67

A short run pricing approach that considers all relevant variable costs plus any additional fixed costs needed to sustain the new production level

Answer 67

Contribution margin approach

Question 68

A pricing decision model in which prides are set at variable costs plus a percentage markup

Answer 68

Cost-plus pricig

Question 69

Setting prices at the amount customers are wiling to pay based on their perceived value of the product, and then setting target costs based on that and target income

Answer 69

Target pricing

Question 70

Examines al components of the value chain to find opportunities for improvements and cost reduction

Answer 70

Value engineering

Question 71

When transfers are recorded by the selling subunit at one price while the purchasing subunit records the transfer at a different price

Answer 71

Dual transfer pricing