B4 Flashcards
What is Probability (risk) analysis?
used to examine possible outcomes given different alternatives (extension of Sensitivity analysis)
What costs are included in product/inventoriable costs in absorption costing?
DM,DL, all overhead (No period costs included)
What is the formula for sales units needed to obtain a specific profit?
CM per unit
If a company changes from a traditional manufacturing phiosophy to JIT philosophy, what is the effect on Inventory turnover and inventory percentage?
IO -> increase
Percentage-> decrease (asset decreases)
Define opportunity Cost
The potential benefit lost by selecting a particular course of action
What costs are relevant?(6 or 7)
- Direct costs
- Prime costs
- discretionary costs
- Incremental
- opportunity cost
- Controllable(could go both ways)
- Avoidable costs
What costs are relevant to make-or-buy decision making?
- Variable labor
- Variable materials
- Avoidable fixed costs
What is the last budget to be produced during the budgeting process?
Cash budget
What is the first step in developing a budget?
Forecasting of sales volume
What makes up a static budget?
Budgeted costs for a budgeted output
What is the best basis for setting standards?
Based on attainable performance
What is not considered an operating or a financial budget?
The Capital Budget
What is the purpose of a cash budget?
To avoid the opportunity costs of noninvestment excess cash and minimize the cost of interim financing
What sales variances use contribution margin to compute results?(3)
Market Share Variance
Sales volume Variance
Market Size Variance
How do you calc the efficiency variance?
(Act Qty used-std qty used) x Std Price
