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BEC > B1-Corporate Governance-Operations Management > Flashcards

B1-Corporate Governance-Operations Management Flashcards

1
Q

Financial Performances Measures

A
  1. Profit-income generated after expenses
  2. Return on Investment (ROA, ROE)-income generated on a specific investment
  3. Variance Analysis-actual performance vs expected performance
  4. Balanced Scorecard-framework used for implementing strategy that converts a company’s strategic objectives into a set of performance measures.
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2
Q

NonFinancial Performance measures

External Benchmarks-Productivity measures

A

productivity defined as the measure of the ratio of the outputs achieved to the inputs of production.

  1. Total Factor Productivity Ratios (TFP)- Output / Total Costs
  2. Partial Productivity Ratios (PPRs)- Output / Specific Quantity
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3
Q

NonFinancial Performance measures

Internal Benchmarks-Productivity measures

(Techniques to find and analyze problems)

A
  1. Control Charts-important tool used in statistical quality control (SQC). Used to plot a comparison of actual results by batch or other suitable constant interval to an acceptable range. Show if there is a trend toward improved quality conformance or deteriorating quality conformance.
  2. Pareto Diagrams (histogram)-used to determine the quality-control issues that are most frequent and often demand the greatest attention.
  3. Cause-and-Effect (Fishbone) Diagram-once the most frequently recurring and costly defects/problems are identified by the Pareto diagram, a cause and effect diagram may be used to further analyze the defect. Managers use the diagram to identify the sources of problems in the production process by resource and take corrective action.
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4
Q

Transaction Marketing (lowest price)

A

Customers are attracted for the sake of a single sale

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5
Q

Interaction-Based Relationship Marketing

A

Customers are attracted for the purpose of a sale that serves as the basis for an ongoing relationship. Repeat business/loyalty discounts

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6
Q

Database Marketing

A

information is gathered on customers and the information from the database is used to segment customers into target markets for a more effective selling effort.

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7
Q

E-Marketing

A

use of internet to accomplish marketing functions

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8
Q

Cost Objects

A

resources or activities that serve as the basis for management decisions.

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9
Q

Operations Mgmnt

Product Costs

A

Product costs are all costs related to manufacturing of the product

  1. Inventory and COG Manufactured an sold
  2. Components-DM, DL, and MOH applied
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10
Q

Operations Mgmnt

Period Costs

A

Expensed in the period in which they are incurred and are not inventoriable.

  1. Selling, general, and admin expenses as well as interest
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11
Q

Operations Mgmnt

Objective of Cost accounting(PIE)

A
  1. Product costing-(inv and cog manufactured and sold)
  2. Income Determination (profitability)
  3. Efficiency measurements (comparisons to standards)
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12
Q

Operations Mgmnt

Traditional Costing: what is it? and steps

A

All indirect costs are allocated to a single cost pool called “overhead” and allocated as a single pool.

Application of overhead accomplished in two steps:

  1. Calculated overhead rate = Budgeted overhead costs / estimated cost driver(ie DL $, DLH, MH)
  2. Applied overhead=actual cost driver x overhead rate (step 1)
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13
Q

Operations Mgmnt

Cost behavior

Variable Costs

Bahavior, amount, Long run-characteristics

A

Behavior-cost changes proportionally with the cost driver

Amount-variable costs change in total but they remain constant per unit.

Long Run Characteristics-short run and long run effects of variable costs are the same within relevant ranges

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14
Q

Operations Mgmnt

Fixed Cost

Behavior, Amount, Long Run Characteristics

A

Behavior-in short term and within relevant range, a fixed cost does not change when the cost driver changes.

Amount-Fixed costs remain constant in total but they vary per unit. Volume increases and fixed costs remain the same but fixed cost per unit will decrease.

Long Run Characteristics-given enough time (and a long enough relevant range), any cost can be considered variable.

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15
Q

Operations Mgmnt

Cost accumulation systems

Cost of Goods Manufactured Statement

A

WIP Beginning

Add:Direct Materials Used

+ Direct Labor

+ MOH Applied

= Total Manufacturing Costs incurred

Total Manufacturing Costs Available

Less: WIP ending

=Cost of Goods Manufactured (completed this period)

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16
Q

Operations Mgmnt

Cost Accumulation Systems

COGS

A

Finished Goods Inv Beginning

Add: COG manufactured (or net purchases if retailer)

=COGAFS

Less:Finished Goods inv, ending

=COGS

17
Q

Operations Mgmnt

Job Order Costing

A

method of product costing that identified the job as the cost objective and is used when there are relatively few units produced adn when each unit is unique or easily identifiable.

18
Q

Operations Mgmnt

Job Order Costing

Job-Cost Records

A

maintained for each product, service, or batch of products, and they serve as the primary records used to accumulate all costs for the job. Accumulate data from the following internal docs

  1. Materials Requisitions
  2. Labor Time Tickets
  3. Overview of Job Order Costing
19
Q

Operations Mgmnt

Process Costing (cost accumulation system)

A

method of costing that averages costs and applies them to a large number of homogenous items.

  1. summarize flow of physical units (production report)
  2. Calc equivalent unit output
  3. Accumulate the total costs to be accounted for (production report)
  4. Calculate the unit costs based on total costs and equivalent units
  5. Apply the average costs to the units completed and the units remaining in ending WIP inventory.
20
Q

Components of Inventory Cost (BASE) Mnemonic

Raw Materials

WIP

Finished Goods

A

Inventory: Raw Materials

B Beginning inv of raw materials

A Add: purchases of raw materials

=Raw Materials avail for use

S Subtract:Raw materials used

E Ending inventory of raw materials

Inventory: WIP

B Beg Inv of WIP

A Add: Raw materials used plus direct labor and overhead used

=WIP inventory available to be finished

S Subtract:Inventory transferred to finished goods

E Ending Inventory of WIP

Inventory: Finished Goods

B Beg Inv of finished goods

A Add: Inventory transferred from WIP

=Finished goods inventory available for sale

S Subtract: COGS

E Ending Inv of Finished Goods

21
Q

Operations Mgmnt

Processing Costing

Cost Flow Assumptions

FIFO 3 Steps

A
  1. Beginning WIP x % to be completed
  2. Units completed-Beginning WIP
  3. Ending WIP x % completed
  • Example*
  • WIP, beg= 100 units, 25% completed*
  • units completed and transferred out= 600 units*
  • WIP, end= 200 units, 40% complete*
  1. WIP, beg= 100 x 75%= 75
  2. 600 - 100 = 500
  3. 200 x 40% = 80
  4. total = 655
22
Q

Operations Mgmnt

Processing Costing

Cost Flow Assumptions

Weighted Average 2 steps

A
  1. Units Completed
  2. Ending WIP x % completed

= equivalent units

Example

WIP, beg= 100 units, 25% completed

units completed and transferred out= 600 units

WIP, end= 200 units, 40% complete

  1. 600
  2. 200 x 40%= 80
  3. total = 680
23
Q

Operations Mgmnt

Processing Costing

Cost per equivalent unit

Weighted Avg and FIFO

A

Weighted Avg

Beginning Costs + current costs / equivalent units

FIFO

Current costs only / equivalent units

24
Q

Spoilage

Normal Vs Abnormal

A

Normal-included in the standard cost of the manufactured product

Abnormal-not included in standard cost of the manufactured product (period cost)

25
Q

Activity-Based Costing

A

Refines traditional costing methods and assumes that the resource-consuming activities (task, units of work, etc) with specific purposes cause costs. ABC assumes the best way to assign indirect costs to products is based on the product’s demand for resource consuming activities. . Attemps to improve cost allocation by emphasizing long-term product analysis.

26
Q

Cost Drivers

ABC

Vs

Traditional

A

ABC=multiple cost drivers

Traditional=based just on “volume”

27
Q

Characteristics of ABC

A

More focused and detailed approach than using a dpmnt or plant as the level for gathering costs.

Focuses on mutiple causes (activities) and effects (costs) and then assigns costs to them.

  1. Can be part of a job order system(unique) or a process cost system (mass)
  2. can be used for mfg or service businesses
  3. take L-T viewpoint and treats production costs as variable
  4. cost driver is often a nonfinancial variable
  5. used for internal but not external purposes

BEC (18 decks)

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