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CIMA EPA Role Simulation > Ba2 > Flashcards

Ba2 Flashcards

1
Q

Direct Costs

A

Clearly Identified with the cost object

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2
Q

Prime Cost

A

Total of all direct costs

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3
Q

Indirect costs

A

cannot be directly linked to cost unit but clearly incurred in production

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4
Q

fixed cost

A

cost unaffected by movement in activity

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5
Q

stepped fixed cost

A

if production grows, fixed cost increases

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6
Q

variable cost

A

varies with measure of activity

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7
Q

semi variable cost

A

fixed costs with additional add ons

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8
Q

high low method

A

find the difference between the highest and lowest activity levels and their respective costs
find variable cost per unit
multiply this by highest activity level to get total variable cost and subtract from total to get fixed

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9
Q

regression analysis y=a+bx

A

y= total cost
a= fixed cost
b= variable cost per unit
x= activity level

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10
Q

coefficient of determination

A

r^2 = gives the proportion of changes in y that can be explained by changes in x

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11
Q

relevant costs

A

costs affected by managerial decision

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12
Q

irrelevant cost

A

costs that will not change in the future when you make one decision vs another

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13
Q

overheads

A

these are the same as indirect costs

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14
Q

total cost per unit

A

direct costs(prime) + overheads

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15
Q

production overheads

A

indirect costs incurred by the production function

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16
Q

service cost centres

A

cost centres that are part of production but not directly involved

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17
Q

absorption costing

A

allocation and apportionment, reapportionment and absorption of overheads

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18
Q

apportioned costs

A

(total overhead cost/total value of apportionment base) x value of apportionment based off the cost centre being calculated

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19
Q

reapportionment

A

ratio based of how much should be apportioned to each production centre

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20
Q

absorption of overheads

A

measure the level of production achieved
work out the OAR
multiply this by hours/units used to get overhead absorbed by cost unit

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21
Q

OAR

A

production cost centre overhead/ quantity of absorption base

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22
Q

reciprocal servicing

A

when we need to apportion the costs of multiple service centres

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23
Q

under/over absorption

A

the amount of overhead could be more/less than budgeted
the quantity of the absorption base could have been more/less than budgeted

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24
Q

overheads absorbed

A

budgeted OAR x actual hours/units

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25
Q

under/over absorption calc

A

amount absorbed- actual cost incurred

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26
Q

marginal costing

A

the additional cost incurred in producing one additional unit of the product including total variable costs but NOT fixed overheads

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27
Q

contribution

A

sales value - variable costs

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28
Q

total contribution

A

contribution per unit x sales value

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29
Q

profit

A

total contribution - fixed costs

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30
Q

profit for absorption costing

A

opening and closing inventory are valued at full production cost
and adjustment for under/over absorption of overheads is necessary

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31
Q

profit of marginal costing

A

opening and closing inventory are valued at marginal production cost
if there are variable non production costs these would be deducted before contribution but not included in cost of sales
fixed costs actually incurred are deducted from contribution earned

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32
Q

Costing affects on inventory

A

inventory levels increase- absorption gives higher profit
inventory levels decrease- marginal gives higher profit

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33
Q

profit mark up

A

selling price = total cost +%
profit = % of total cost

34
Q

profit margin

A

selling price = total cost x (required margin/ 1- required margin)
profit = total cost/ 1- required margin

35
Q

purpose of budgeting

A

planning
control
co ordination
communication
motivation
performance evaluation
authorisation

36
Q

what is a budget

A

a quantitive expression of a plan for a defined period of time

37
Q

levels of budgeting

A

strategic- long term
budgetary- short to medium term
operational- short term/ day to day

38
Q

master budget

A

contains all the departmental activity budgets
comprised of a budgeted SOPL, SOFP and cash flow statement

39
Q

budget preparation steps

A

sales budget considers how many units can be sold
production budget considers how many units to produce
material labour and overhead budgets are established based on production budget
non production budgets are considered
the master budget is created

40
Q

cash budget

A

shows the cash effect of all decisions taken in the planning process
can be a forewarning of potential problems
prepared for each period showing deficits or surpluses

41
Q

periodic budgeting

A

costs and revenues for one period at a time

42
Q

rolling budget

A

budgets continuously updated by adding a further accounting oeriod

43
Q

incremental budgeting

A

based on the previous budget or actual, adjusting for known changes in inflation

44
Q

zero based budgeting

A

required all costs to be specifically justified by the benefits expected

45
Q

bottom up budget

A

all budget holders have the opportunity to participate in setting their own budgets

46
Q

top down budget

A

set without permitting the ultimate budget holder to have the opportunity to participate

47
Q

fixed budget

A

used for planning purposes
set at the start of the period and plans expected income and expenditure

48
Q

flexible budget

A

used for control purposes
prepared at the end of the budget period to determine whether or not the operations remain under control

49
Q

total cost variance equations for flexible budgets

A

original budget - fixed cost = variable cost
budget cost allowance = budgeted fixed cost + (number of units produced x variable cost per unit)
budget variance = flexed budget - actual cost
total cost variance = (fixed budget - flexed budget) - (flexed budget - actuals)

50
Q

direct material total variance

A

what a material did cost be what it should have for x units

51
Q

direct material price variance

A

what the weight should have cost vs what it did

52
Q

direct material usage variance

A

the amount of kg used vs what was planned for x units

53
Q

direct labour cost variance

A

what labour did cost vs should have for x units

54
Q

direct labour rate variance

A

what labour should have cost vs what it did for x hours

55
Q

direct labour efficiency variance

A

how long it should have taken vs did to produced x units

56
Q

variable overhead total variance

A

what overheads should have cost vs did for x units

57
Q

variable overhead expenditure variance

A

how much variable overheads cost be should have in hours

58
Q

variable overhead efficiency variance

A

labour efficiency variance multiplied by the standard variable overhead rate per hour

59
Q

sales price variance

A

x units should sell for x$ but did sell for y$

60
Q

sales volume contribution variance

A

(actual sales(units) - budgeted sales) x standard contribution variance

61
Q

gross revenue

A

total sales achieved by the company

62
Q

sales revenue

A

gross revenue - returns

63
Q

gross profit

A

sales revenue - cost of sales/ cost of goods sold

64
Q

gross margin

A

gross profit/sales revenue x100

65
Q

operating profit

A

gross profit - all other expenses

66
Q

operating margin

A

operating profit/ sales revenue x 100

67
Q

ROCE

A

operating profit/ capital employed

68
Q

non financial performance measures

A

measurement of customer satisfaction
resource utilisation
measurement of quality

69
Q

batch costing

A

a group of similar units which maintains its identity throughout one or more stages of production and is treated as a cost unit

70
Q

value for money concept

A

economy- relationship between money spent and the inputs
efficiency- whether the maximum output is being achieved from the resources used
effectiveness- what extent the outputs generated achieve the objectives of the organisation

71
Q

relevant costs

A

materials
labour
overheads
NCA

72
Q

break even point in units

A

fixed costs/ contribution per unit

73
Q

margin of safety in units

A

projected sales - breakeven sales

74
Q

margin of safety %

A

projected sales - breakeven sales/ projected sales

75
Q

C/S ratio

A

contribution/sales

76
Q

breakeven point in $ of sales revenue

A

fixed costs/ c/s ratio

77
Q

sales units required to achieve a profit of x

A

fixed costs + x/ contribution per unit

78
Q

sales revenue required to achieve a profit of x

A

fixed costs + x/ c/s ratio

79
Q

limiting factor

A

any factor which is in scarce supply and which limits the organisations activites

80
Q

contribution per unit of limiting factor

A

contribution per unit/ amount of limiting factor required per unit

81
Q

LF steps

A

establish LF
calculate contribution per unit for each product
calculate contribution per unit of LF for each product
rank the products according to their contribution per unit of LF
allocate the LF to the highest ranking product
distribute rest going down in ranking order

82
Q

make or buy decisions

A

external= purchase cost is marginal
in house= variable production costs + specific or avoidable fixed costs (+ opportunity cost if there is no spare capacity)

CIMA EPA Role Simulation (1 decks)

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