B4 ass

Question 1

Tell me what Linear regression is

Answer 1

its the relationship between two or more variables. It is used to predict the value of the DEPENDENT Variable corresponding to the independent variable(s)

Question 2

What is simple regression? What is multiple regression

Answer 2

simple involves only one independent variable where multiple has more than one

Question 3

What is the Coefficient of determination (r^2)

Answer 3

proportion of the total variation of Y explained by the independent variable (x)…higher R^2 means better fit on regression line

Question 4

Cash Conversion Cycle Formula

Answer 4

Days in Inventory + Days sales in A/R - Days of Payables Outstanding

Question 5

What is the high-low method

Answer 5

used to estimate the fixed and variable portions of total costs…calculated by dividing the difference of high & Low total costs by difference in high & Low volumes to get the VARIABLE COST PER UNIT.

Take th VC per unit multiply by either the high or low Volume

subract the total variable cost from total cost to get the fixed cost

Question 6

Operating Cash Flow Formula

Answer 6

Cash Flow from operations / End CL

Question 7

Please sir, explain the diff between absorption costing net income and variable costing net income

Answer 7

Difference depends on the change in inventory level during the period.

No change in inv: Abs Income = Var Income
Increase in Inv: Abs > Var
Decrease in Inv: Abs < Var

Question 8

Gross Margin Equation

Answer 8

(Net Sales - COGS) / Net Sales

Question 9

Required Sales Volume for Target Profit Formula

Answer 9

(Fixed Cost - Pretax Profit) / CM per Unit

Question 10

Margin of Safety ($) Formula

Answer 10

Total Sales ($) - Breakeven Sales ($

Question 11

Working Capital Turnover Formula

Answer 11

Net Sales / Avg. Working Capital

Question 12

Selling prices based on assumed volume formula

Answer 12

(Fixed Costs + Variable Costs + Pretax Profit) / Number of Units Sold

Question 13

Operating Margin Equation

Answer 13

Operating Income / Net Sales

Question 14

What is the Absoroption Formula

Answer 14

Rev
LESS: COGS
=Gross Margin
LESS: Operating Expenses
=Net Income

Question 15

What is the Contribution MArgin ratio Formula (CM)

Answer 15

Contribution Margin / Revenue

OR

(R - VC) / R

Question 16

Days Sales in AR Formula

Answer 16

Ending AR (Net) / (Net Sales / 365)

Question 17

Days Payable Outstanding

Answer 17

Ending AP / (COGS /365)

Question 18

Days in inventory

Answer 18

Ending INV / (COGS / 365)

Question 19

Formula for contribution approach

Answer 19

Rev 
LESS: Variable Costs
= Contribution Margin
LESS: Fixed Costs
= Net Income

Question 20

Breakeven point in dollars

Answer 20

Total Fixed Costs / Contribution MArgin Ratio

Or

Unit price x breakeven units

Question 21

Quick Ratio

Answer 21

Cash and equivalents + Short term marketable securities + Net Receivables / CL

Question 22

Difference between the contribution and absorption approach

Answer 22

Absorption has fixed OH as a product cost while contribtuion approach has fixed OH as a Period Cost

Question 23

Operating cycle Formula

Answer 23

Days in INVENTORY + Days sales in AR

Question 24

Times interest earned formula

Answer 24

EBIT / Interest Expense

Question 25

Breakeven point in UNITS

Answer 25

Total Fixed Costs / Contribution MArgin per Unit

Question 26

Oppurtunity Cost at full capacity is WHAT??????

Answer 26

at full capacity it is the net benfit given up from the best alternate use of the capacity

Question 27

How should firms approach special orders

Answer 27

if there is excess capacity then it should be accepted if Selling Price > Variable Cost per Unit

If its at full capcity, the oppurtunity cost should be included in the analysis

Question 28

How should a firm go about KEEP OR DROP

Answer 28

segments should be kept if the lost contribution margin exceeds avoided fixed costs. amd it should be dropped if the lost contribution margin is LESS than the FC’s avoided

Question 29

Under Absorption Costing what are the product costs and what are the period costs

Answer 29

PRODUCT COSTS: DM, DL, VMOH, FMOH

PERIOD COSTS: V and F SG&A expenses

Question 30

Under Variable Costing what are the product costs and what are the period costs

Answer 30

PRODUCT COSTS: Dm, DL, VMOH

PERIOD COSTS: FMOH, V & F SG&A expenses

Question 31

How do you compute the difference between variable costing NI and absorption costing NI

Answer 31

Step 1: Find Fixed Cost per unit (FMOH / Units Prod. )

Step 2: Find Changes in income ( Change in inventory * Fixed cost per unit)

Step 3: Determine the impact of the change in volume…
ABS NI = Variable: No Change
ABS NI > Variable: Increase in Inv
ABS NI < Variable: Decrease in Inv

Question 32

Margin of Safet Percentage Formula

Answer 32

Margin of Safety in Dollars / Total sales

Question 33

target cost formula

Answer 33

market price - required profit