BEC - 5 Flashcards
Balanced Scorecard
Customer Satisfaction
learning and Growth (Innovation
Internal business process improvements
financial measures
Back-flushed costing under the Just-in-time method
Characteristics are:
pay point for purchases and materials
completion of manufacturing
point-of-sale transaction
Instead of recording every detail of the manufacturing process from acquisition of raw materials through completion of manufacturing, a triggerring event or events CAUSES accounting entries to be made that reflect (look back) on what has happened.
A system in operation with zero or very low inventories and fast throughput describes just-in-time, not back-flush costing.
What type of variances would a purchasing manager most likely influence?
Direct materials price
Purchasing manager contracts for purchases of raw materials, which affects the price per unit that is used in computing the direct materials price variance.
Direct Materials quantity is correct because the quantity purchase is determines by the requisition from the department. Not negotiated by the purchasing manager.
A job order cost system uses a predetermined factory overhead rate based on expected volume expected fixed cost. At the end of the year, underapplied overhead might be explained by:
Actual Volume - less than expected
Actual fixed costs - greater than expected.
Underapplied overhead means the actual overhead cost was more than the overhead applied to work-in-process.
To measure controllable production inefficiencies, what is the best basis for Flint to use in establishing standard hours allowed?
Average historical performance for the past three years
Production level to satisfy average consumer demand over a seasonal time span
Engineering estimates based on attainable performance
Engineering estimates based on ideal performance
Engineering estimates based on attainable performance.
Attainable performance recognizes normal loss of productivity and also is an annualized estimate covering an entire period, not just a season.
A company uses a standard costing system. The production budget for year 1 was based on 200,000 units of output. Each unit requires two standard hours of manufacturing labor for completion. Total overhead was budgeted at $900,000 for the year, and the budgeted fixed overhead rate was $1.50 per direct manufacturing labor hour. Both variable and fixed overheads are allocated to the product based on direct manufacturing labor hours. The actual data for year 1 are as follows:
Actual production in units 198,000
Actual direct manufacturing labor hours 425,000
Actual variable overhead $352,000
Actual fixed overhead $575,000
What is the amount of unfavorable variable overhead efficiency variance?
An efficiency variance is the difference between the budgeted overhead costs at the actual volume and the budgeted costs at the earned volume.
Total budgeted fixed overhead was 200,000 units × 2 hours per unit × $1.50 per hour, or $600,000. Since total budgeted overhead was $900,000, total budgeted variable overhead must be $300,000, or $0.75 per hour. (Remember, overhead is always calculated in terms of hours.)
The variable overhead efficiency variance is the difference between the budgeted overhead costs at the actual volume (198,000 units × 2 hours × $0.75) and the budgeted costs at the earned volume (425,000 hours × $0.75), or $297,000 − $318,750 = $(21,750).
Business Process modeling (BPM) is used in process-based management and systems engineering to diagram (or model) the activities of an organization. One of those modeling tools is extended business modeling language (xBML), which is:
a intuitive graphical language that unlocks the DNA of a corporation using a system of diagrams based on Five W’s (Who, What, Which, Where, and When)
Process-based Management focuses on internal processes;
Examples:
Internal processes:
customer satisfaction, quality of product, and security, as well as financial results
Balanced scorecard
a strategic planning and management tool, used to align business activities with the vision and strategy of the organization.
Material Requirements Planning
A planning system that is used to determine the amount and timing of inventories that are dependent on the demand for finished goods.
Drum - buffer - rope theory
- assumes that within a manufacturing system there is at least one (or a limited number of constraints created by scarce resources
- states that in order to best protect the throughput of a manufacturing operation, the limiting factor of the manufacturing operation the limiting factor of the manufacturing process must be protected.
- states that it is important to protect against inflationary inventory levels and the associated carrying costs which can occur at bottlenecks (constraints).
- focuses on only the queuing area within a manufacturing firm that is in front of the constraint.
When using a flexible budget, a decrease in production levels within a relevant range:
decreases total costs.
In a normal flexible budget situation (where both variable and fixed costs are present), a decrease in the level of production would be accompanied by a decrease in total costs.
Cyclical fluctuations, random variations, seasonal variations, and secular trend are all components of
Time series analysis.
Certainty Equivalent Adjustments
a risk analysis that is based upon utility theory and compels the decision maker to choose at what point he or she is indifferent to the choice between a certain amount of money and the expected value of a risky amount.
Sensitivity Analysis
Through the use of decision models, managers thoroughly analyze many alternatives and decide on the “best” alternative for the company.
measures the impact of a change in a single variable or a combination of variable on profits or on some other decision variable.
