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B3 Flashcards

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1
Q

Process Costing: FIFO

A
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2
Q

Process Costing: Weighted Avg

A
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3
Q

Customer Retention Rate

A

(Beginning Customers - Customers Added) / Customers at YE

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4
Q

Churn Rate

A

100% - Customer Retention Rate - % of Customers Lost

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5
Q

Employee Turnover Rate

A

of Employees that Leave / Avg # of Employees during the Year

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6
Q

Critical Success Factors for a Balanced Scorecard

A
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7
Q

Costs of Quality

A
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8
Q

Costs of Quality - Examples

A
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9
Q

Coefficient of Correlation

A

r - ranges from -1.00 to +1.00

Shows the strength and direction of the linear relationship between two variables.

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10
Q

Coefficient of Determination

A

R^2 - ranges from 0 to 1

The higher the R^2, the greater the proportion of the total variation in the dependent variable (y) explained by the indep. variable (x)

The better the fit of the regression line

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11
Q

High-Low Method

A

Difference of Highest - Lowest Units/Volume per Month
Divided by
Difference of Highest - Lowest Cost from those Months (likely same)

   This is the calculated Variable Costs to use in this equation: Total Costs = Fixed Costs + (Calc. Variable Costs x # of Units)
     so... Fixed Costs = Total Costs (you can use either High or Low month cost) - Calc. Variable Costs
 
  The better the R^2 the more reliable the High-Low method will work.
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12
Q

Breakeven Analysis

A

Sales Price - VC = Contribution Margin per Unit
Contribution Margin per Unit / Sales Price = Contribution Margin Ratio

Fixed Costs / CM per Unit = BE in Units

BE in Units x Sales Price = BE in $
or
Fixed Costs / Contribution Margin Ratio - BE in $

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13
Q

Learning Curve

A

Production Time per Unit drops by a % as the production doubles.

Ex. Team took 50 hours to produce one unit. Assuming a 70% learning curve, what is the est. time per unit to produce 2.

1 = 50 hrs
2 = 50 x .7 = 35 hrs per unit
4 = 35 x .7 = 24.5 hrs per unit

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14
Q

Contribution Margin

A

Unit Contribution Margin = Sales Price - Variable Costs

Contribution Margin Ration = (S-VC)/S

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15
Q

Absorbtion Approach vs. Contribution Approach

A

Contribution Approach is NOT GAAP - Used for internal analysis purposes only.
Absorbtion Approach is GAAP.

SG&A expense are Period Costs under both.

Contribution Approach - Variable SG&A is included are part of Total Variable Costs to calculate Contribution Margin.

Absorbtion Approach - Variable SG&A are not included.

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16
Q

Sales Volume for Target Profit

A

Calculated just like Breakeven Analysis.
Add Desired Profit to Fixed Costs and calculate BE point.

Fixed Costs + Desired Profit / Contribution Margin Ratio = Sales Target in $

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17
Q

Absorbtion Approach vs. Contribution Approach

A

SG&A are period costs (expensed as incurred) in both.

Contribution (Variable) Approach - SG&A are included in Total Variable Costs for Contribution Margin calculation.
Absorbtion Approach - Both Fixed and Variable SG&A are not included.

Contribution Approach - Fixed Costs are treated as Period Costs
Absorbtion Approach - Fixed Costs are capitalized into Inventory and expensed via COGS
When more units are produced than sold (FGs are sitting in inventory) Absorbtion Approach will lead to higher Net Income.

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18
Q

Target Costing

A

Target Cost = Margin Price - Required Profit

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19
Q

Order to prepare the four types of budgets.

A

Sales - Production - DM Purchases - Cash Disbursements

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20
Q

Fixed Cost / Month - 2,500
Unit Selling Price - 100
Variable Cost as a % of Sales - 60%

What amount of annual sales must the company achieve to break even?

A

$75,000

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21
Q

Partial Productivity Ratio

A

Total Quantity of Production Units / Quantity of Specific Materials Used (Only Iron for ex.)

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22
Q

Total Factor Productivity Ratio

A

Total Quantity of Units Produced / Cost of all Raw Materials (Units x Cost)

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23
Q

Economic Value Added (EVA)

A

NOPAT minus:
Investment x Cost of Capital (Required Return)

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24
Q
A
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25
Q
A
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26
Q

What order are the budgets prepared?

A
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27
Q

Total Variance

Volume Variance

Flex Budget Variance

A

Master Budget Operating Income - Actual Operating Income

Budget Sales (Units x Price) - Actual Units@Budget Price

Flex Budget (Actual Units@Budget Price) - Actual (Units&Price)

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28
Q

Flex Budget

A

Actual Units X Budget Price

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29
Q

Gross Profit Margin

A

Sales(net) - COGS / Sales(net)

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30
Q

Return on Sales

A

EBIT / Sales(net)

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31
Q

Return on Assets

A

NI / Avg Total Assets

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32
Q

DuPont Return on Assets

A

Profit Margin X Asset Turnover

NI / Sales(net) X Sales(net) / Avg Total Assets

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33
Q

Operating Cashflow Ratio

A

Cashflow from Operations / Current Liabilities

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34
Q

Current Ratio

A

Current Assets / Current Liabilities

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35
Q

Quick Ratio

A

Cash + ST Securities + Receivables(net) / Current Liabilities

No Inventory

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36
Q

AR Turnover

A

Sales(net) / Avg AR(net)

37
Q

Days Sales in AR

A

Ending AR(net) / (Sales(net) / 365)

38
Q

Inventory Turnover

A

COGS / Avg Inventory

39
Q

Days in Inventory

A

Ending Inv / (COGS/365)

40
Q

AP Turnover

A

COGS / Avg AP

41
Q

Days of Payables Outstanding

A

Ending AP / (COGS/365)

42
Q

Cash Conversion Cycle

A

Days in AR + Days in Inventory - Days of Payables Outstanding

43
Q

Total Debt Ratio

A

Total Liabilities / Total Assets

44
Q

Equity Multiplier

A

Total Assets / Total Equity

45
Q

Times Interest Earned

A

EBIT / Interest Expense

How many times you could pay your interest expense with your Operating Income

46
Q

Which of the following does not change the current ratio or total current assets?

A

A cash advance to a divisional office - the reduction in cash is offset by the receivable.

47
Q
A
48
Q
A
49
Q

Materials Price Variance

A

(Actual Price - Standard(Budget) Price) x Actual Quantity

50
Q

Direct Labor Usage (Efficiency) Variance

A

(Budget - Actual Hours) x Budget Rate

51
Q

Variable OH Efficiency Variance

A

Budgeted Var OH Rate x Budget Driver - Budgeted Rate x Actual Driver

52
Q

Production Volume Variance

A
53
Q

Selling Price Variance

A

(Actual Selling Price - Budgeted SP) x Actual Units Sold

53
Q
A
54
Q

Perpetuity (Zero Growth Stock) Equation

A

PV = Fixed Dividend / Required Return Rate

Baker pays a $5 annual dividend, I want to make a 20% return. How much should I pay for the stock?

= $5 / .2 = PV $25

55
Q

Constant (Gordon) Growth Dividend Discount Model

A

Basically, the price of a share at a point in time should be:

D x (1+g) / R - g

The expected dividend payment one time period after P, divided by the Required Return (often calculated by CAPM) minus the assumed Growth Rate.

56
Q
A
57
Q
A
58
Q
A
59
Q
A
60
Q
A
61
Q

Horizontal Merger

A

Merger of two companies in the same industry

62
Q

Vertical Merger

A

Merger of a company with one of its suppliers

63
Q

Circular Merger

A

Merger of two companies in unrelated industries

64
Q

Diagonal Merger

A

Merger of two companies that provide ancillary support

65
Q

Merger

A

A mergers with B to create a new company C

66
Q

Acquisition

A

A acquires B, leaving only A. B no longer exists

67
Q

Tender Offer

A
68
Q

Sell-Off

A
69
Q

Spin-Off

A
70
Q

Equity Carve Out

A
71
Q
A
72
Q
A
73
Q
A
74
Q
A
75
Q
A

It has multiple lines of business, if they are only interested in the Cat and Dog food segment, then a Purchase of Assets is most appropriate.

76
Q
A
77
Q

Operating Cycle

A

Days in Inventory + Days in AR

Ending Inv / (COGS/365) + Ending AR(net) / (Net Sales/365)

78
Q
A
79
Q
A
80
Q
A
81
Q
A
82
Q
A
83
Q
A
84
Q
A
85
Q

Job Costing vs Process Costing

A

Job Costing - Custom/Unique Products

Process Costing - Mass Produced, Homogeneous Products

86
Q

Types of Data Analytics

Descriptive
Diagnostic
Predictive
Prescriptive

A

Backwards Looking
Descriptive - describing what has occured; Simmary Statistics
Diagnostic - Diagnosing or explaining why it occured; Profiling customer behaviors

   Forward Looking Predictive - Predicting what will occur; Regression Analysis Prescriptive - Prescribing what could or should occur; AI or Scenario Modeling
87
Q

A static budget contains…. ?

A

Budgeted costs for budgeted outputs.

88
Q
A

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