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CPA- BEC > B2- Strategic Planning > Flashcards

B2- Strategic Planning Flashcards

1
Q

Absorption Approach to Costing

A

(GAAP)

Revenue

- COGS (DM+DL+VOH+FOH)

= Gross Margin

- Op Exp (FSG&A+VSG&A)- period costs

= NI

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2
Q

Contribution Approach to Costing

A

(Not GAAP)

Revenue

- VC (DM + DL + VOH + VSG&A)

= CM

- FC (FOH + FSG&A)

= NI

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3
Q

Contribution Approach

vs.

Absorption Approach

A

* Difference = treatment of FOH

  • Absorption= Product Cost, included in COGS
  • Contribution= Period Cost, included in FC

Effect on Income

  1. FOH / # units produced
  2. Change Inv * Step 1
  • Inv N/C: Absorption NI = Variable NI
  • Inv Inc: Absorption NI > Variable NI
  • Inv Dec: Absorption NI < Variable NI
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4
Q

Margin of Safety

A

Sales Dollars:

Total Sales - BE Sales = Margin of Safety ($)

Percent:

Margin of Safety ($) = Margin of Safety %

Total Sales

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5
Q

Relevant Costs

vs.

Irrelevant Costs

A

Relevant Rev & Costs- Change

  • Incremental Costs
  • Opportunity Costs
  • Controllable Costs

Irrelevant Costs

  • Sunk Costs
  • Uncontrollable Costs
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6
Q

Special Order Decisions

A

Accept if Rev > Relevant Costs

  • Excess Capacity: Accept if SP > VC
  • Full Capacity: Accept if SP > VC + OC
  • OC = CM in $ (forgo)
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7
Q

Regression Analysis

A

y = A + Bx

  • y= dep variable/total costs
  • x= indep variable/volume
  • A= y-int/FC
  • B= Slope/VC per unit
  • Coefficiant of Correlation (r)
  • Coefficient of Determination (R2)
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8
Q

High-Low Method

A

VC per unit = _change in y _

                    change in x
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9
Q

Ideal Standards

vs.

Currently Attainable Standards

A

IDEAL

  • continuous quality improvement (CQI)
  • demotivation

CURRENTLY AVAILABLE

  • reasonable
  • requires judgement
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10
Q

Authoritative Standards

vs.

Participative Standards

A

AUTHORITATIVE

  • set by management
  • quick
  • not followed

PARTICIPATIVE

  • set by both
  • slow
  • followed
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11
Q

Master Budget

vs.

Flexible Budget

A

MASTER

  • annual business plan
  • one level of output
  • comprehensive plan
  • assumption: supporting schedules
  • limit- meaningless if volume variance

FLEXIBLE

  • designed to change w/ activity level
  • more meaningful
  • adjust w/in relevant range
  • but need accurate FC & VC
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12
Q

Budget Process

A
  1. Sales Budget
  2. Production Budget
  3. DM/DL/OH Budgets
  4. COGS
  5. Cash Budget
  6. Pro Forms FS

1-4 are Operating Budgets

5&6 are Financial Budgets

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13
Q

Operating Budget:

Production Budget

A

Budgeted Sales

+ End Inv

- Beg Inv

= Budgeted Production

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14
Q

Operating Budget:

Direct Materials

A

Purchase

  • DM units needed
    • End Inv
  • - Beg Inv
  • = # DM purchase
  • * Price
  • = Cost of DM Purchase

Usage

  • Beg Inv
    • Purchase
  • - End Inv
  • = DM Usage
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15
Q

Operating Budget:

Direct Labor

A

Budgeted Production (units)

* Hours per unit

= Hours needed

* wage rate

= Total wages

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16
Q

Financial Budget:

Cash Budget

A

Beg Cash

+ Collections

- Disbursements

= End Cash

- Desired end cash

= Loan required

17
Q

Variance Analysis:

DM & DL

A

PURE, DADS, SAD

  • P= DA: DM Price Var = Change P * AQ
  • U= DS: DM Usage Var = Change Q * SP
  • R= DA: DL Rate Var = Change R * AH
  • E= DS: DL Eff Var = Change H * SR
18
Q

Variance Analysis

Sales

A

Price = Change P * AQ

Volume = Change Q * S CM

19
Q

Types of Responsibility Segments/SBUs

A

“CRPI”

C- Cost (lowest level)

R- Revenue

P- Profit

I- Investment (most like indep business)

20
Q

Financial Scorecards

A

Point AT US

Accurate and Timely

Understandable

Specific accountability (by segment)

21
Q

Controllable Margin Formula

A

= CM - CFC (controllable FC)

22
Q

Balanced Scorecard

A

FICA

F- Financial (Profit, Pointed AT US)

I- Internal Bus Practices (Efficient & Effective Production)

C- Customer Satisfaction (Value Inc, Market Share Inc)

A- Adv of Innovation & HR (retention of key employees)

23
Q

Probability (risk) analysis is…

A

an extension of sensitivity analysis

24
Q

Variance Analysis:

MOH

A

I favor my RIGHT hand

One way variance

two way variance

three way variance

25
Q

Variance Analysis:

MOH One-way variance

A

Check Figure, T-account

1 vs. 4

  • 1 = Actual = AFOH + AVOH
  • 2 = Budgeted Actual = BFOH + (ADLH * SVOH rate)
  • 3 = Budgeted Standard = BFOH + (SHA * SVOH rate)
  • 4 = Applied = STOH rate * (SHA * AH)
26
Q

Variance Analysis:

MOH three-way variance

A

ABA BSA- leave me alone, I have to study

Spending- 1 vs 2

Efficiency- 2 vs 3

Volume- 3 vs 4

  • 1 = Actual = AFOH + AVOH
  • 2 = Budgeted Actual = BFOH + (ADLH * SVOH rate)
  • 3 = Budgeted Standard = BFOH + (SHA * SVOH rate)
  • 4 = Applied = STOH rate * (SHA * AH)
27
Q

Variance Analysis:

MOH two-way variance

A

Two BV or not to BV

Budget- 1 vs 3

Volume- 3 vs 4

  • 1 = Actual = AFOH + AVOH
  • 2 = Budgeted Actual = BFOH + (ADLH * SVOH rate)
  • 3 = Budgeted Standard = BFOH + (SHA * SVOH rate)
  • 4 = Applied = STOH rate * (SHA * AH)

CPA- BEC (6 decks)

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