BAR Deck #1

Question 1

EOQ (Economic Order Quantity) Formula?

Answer 1

Square root of 2(Sales in units x cost per purchase order) / carrying cost per unit

Question 2

Constant Growth Dividend Discount Model formula?

Answer 2

D(t+1) = Do(1+G)^(t+1)

D(t+1) = Dividend one year after period
t = Time
Do = Current Dividend
G = Growth

Question 3

Current Price from Dividend Discount Model formula?

Answer 3

Pt = D(t+1) / (R-G)

D(t+1) = Dividend one year after period
G = Growth
R = Required return (discount rate) You can use the CAPM to calculate this

Question 4

PEG Ratio formula?

Answer 4

PEG = (P/E) / (Gx100)

Question 5

What will create a shortage vs surplus regarding market equilibrium?

Answer 5

1) Price is below Equilibrium = Shortage (price ceiling)
2) Price is above Equilibrium - Surplus (price floor)

Question 6

Formula for the Cost of Preferred Stock?

Answer 6

Dividend / Issuance Price

Question 7

Total Value of Equity using DDM?

Answer 7

D (1+g) / (Cost of Equity or CAPM - g)

Question 8

How to calculate Current Dividend (Do)

Answer 8

Do = Current earnings per share (E0) X Dividend Payout

Question 9

What is the impact of price INCREASE on total revenue for Elastic, Inelastic, and Unit Elastic?

Answer 9

1) Elastic (>1) - Total revenue decreases
2) Inelastic (<1) - Total revenue increases
3) Unit Elastic (=1) - Total revenue is unchanged

Question 10

PPR (Partial Productivity) and TFP (Total Factor Productivity) Ratios?

Answer 10

PPR = Quantity Produced / Quantity Used
TFP = Quantity Produced / Cost of Materials Used

Question 11

EVA (Economic Value Added) Formula?

Answer 11

EVA = NOPAT - Required Return
Required Return = Investment x cost of capital

Question 12

Examples of conformance and non-conformance Costs?

Answer 12

Conformance = Prevention and Appraisal
Prevention = Training, Pre-inspections, Redesign
Appraisal = Testing, Maintenance, Post-inspections

Non-Conformance = Internal and External
Internal = Rework, Scrap, Tooling changes
External = Return costs, Liability claims, Warranty costs

Question 13

Margin of Safety Dollars Formula?

Answer 13

Margin of Safety in Dollars = Total Sales ($) - Breakeven Sales

Question 14

Enterprise Risk Management Components?

Answer 14

“GO PRO”
1) Governance and Culture (DOVES = Desired Culture, Oversight, Values, Employees, Structure)
2) Strategy and Objective-setting (SOAR = Strategies, Objectives, Analyzes, Risk appetite)
3) Performance (VAPIR = View, Assesses/Establishes, Prioritizes risks, Identifies risk, and Responses for risks)
4) Review and revision (SIR = Substantial Change, Improvement, Reviews Risk and Performance)
5) Ongoing Information, communication, and reporting (TIP = Technology, Informational Risk, Performance)

Question 15

What is the JE to initially record a NFP budget?

Answer 15

DB Estimated Revenue
CR Appropriations Control
CR Budgetary Control

Question 16

Describe the funds in GRaSPP?

Answer 16

General Fund - Other fund for everything else
Special Revenue - Special funds that are restricted/committed for specific purposes (Grant funds, special fees, sales tax fund)
Debt Service - Pay for the principal and interest related to general obligation debt
Capital Projects - construction, purchase or leasing fixed assets
Permanent - restricted use that benefits the government programs/public (art collection for museum, nonexpendable trust)

Question 17

Describe the funds in SE-CIPPOE?

Answer 17

Service (Internal)
Enterprise - proprietary fund w/ cap maintenance
Custodial - cash collected and given to another recipient
Investment Trust - sponsors external investment pools
Private Purpose - for specific individuals, private orgs, or other governments (escheat property funds, other trusts)
Pension & Other Trust

Question 18

Classifications of Governmental Expenditures?

Answer 18

1) Function - Purpose of the expenditure (General governments, Public Safety, culture & rec)
2) Org Unit - Police/fire departments
3) Activity - event, task or unit of work
4) Character - Current expenditures, Capital outlays, Debt Service, Intergovernmental,
5) Object - type of items purchased = Personnel services, salaries and wages, supplies, depreciation (usu proprietary funds)

Question 19

What are the steps to reconcile Gov Funds to Gov-wide F/S for I/S?

Answer 19

CPASRIDES:
+ Capital Outlay
+ Principal payments on debt
- Asset disposal adjustment
- Sources (other financing sources-debt proceeds)
+ Revenue (measurable but unavailable)
- Interest expense (accrued)
- Depreciation expense
+ Internal service fund net revenue

Question 20

What are the steps to reconcile Gov Funds to Gov-wide F/S for B/S?

Answer 20

CANS:
+ Capital assets (existing and current)
- Accumulation depreciation
- Non-current liabilities (+Eliminate/reverse deferred inflows, - Accrued interest payable)
+ Internal service fund net position

Question 21

How to calculate the annual amortization for capitalized software costs?

Answer 21

Multiply Capitalized Costs by the GREATER of the percentage of revenue or straight-line
(CY/Total Yrs) vs (CY Sales/Total Sales)

Question 22

SCOR card attributes?

Answer 22

Plan - assess suppliers
Source - select vendors, vendor payments, etc.
Make - activities turning raw material into FG
Deliver - managing orders, forecasting, AR & collections

Question 23

High-low method to derive total cost formula?

Answer 23

Total Costs Variance / Total Unit Variance = Cost per Unit
Remember to still solve for fixed costs

Question 24

What is the OWNES criteria for finance leases?

Answer 24

1) Ownership transfer
2) Written option to purchase
3) NPV >= 90%
4) Lease Term >=75% of Economic life
5) Equipment is Specialized

Question 25

What is the criteria for the Major Funds Rules?

Answer 25

1) 10% or more of the corresponding funds (Gov Or Enterprise)
AND
2) 5% or more of the total Gov & Enterprise funds

Question 26

What is the midpoint price elasticity of demand?

Answer 26

(New Demand - Old Demand)/(New Demand + Old Demand)
divided by
(New Price - Old Price)/(New Price + Old Price)

Question 27

What changes vs stays consistent over a relevant range?

Answer 27

• Total Fixed Costs and Cost per unit do NOT Change
• Total Variable Costs DO Change

Question 28

How to calculate net asset or liability on construction activity?

Answer 28

+ Cumulative Costs incurred
+ Cumulative Gross Profit
- Cumulative Billings
(Liability only exists when billing>GP+Costs)

Question 29

Pareto vs Fishbone Diagram?

Answer 29

Pareto - Individual and cumulative graphical analysis of errors
Fishbone - Describes a process and problems in a process (Cause & Effect)

Question 30

What are the 3 characteristics of a Derivative?

Answer 30

1) Underlying (ex. price/exchange rate)
2) No Initial Net Investment
3) Terms require or permit a net settlement
Notional Amt = base amount

Question 31

Variable Overhead Efficiency Variance calculation?

Answer 31

Flexible budget based on ACTUAL DL Hrs
- Flexible budget based on STANDARD DL Hrs

Question 32

What type of costs are included in R&D expense?

Answer 32

Costs included prior to technological feasibility for developed software that is to be sold, leased or marketed.
This DOES NOT INCLUDE internal use.