BEC- ALL

Question 1

Quality programs

Answer 1

Pareto diagram: represents an individual and cumulative graphical analysis of errors by type. Individual error types are represented on a histogram (bar graph) while cumulative number of errors is presented on a line graph.

Control chart: shows performance of a particular process in relation to acceptable upper and lower limits of deviation.

Fishbone diagram: process the contributions to the process and the potential problems that could occur at each phase of a process.
The chronological sequence of events is represented by a single horizontal line while the contributions to the process are represented by diagonal lines that create the image of a fishbone.

Question 2

Cost driver

Answer 2

A cost driver is a causal factor (the cause) that increases the cost (the effect) of a cost objective.

Question 3

Residual income

Answer 3

Residual Income = Income - Imputed interest rate X Average invested capital

Question 4

Capital turnover

Answer 4

Capital turnover = Sales/ Average invested capital

Question 5

Cost of credit discount

Answer 5

=360/ (Total pay period - Discount period) X Discount %/ (100%-Discount %)

Question 6

Time interest earned

Answer 6

Earnings before interest and taxes (EBIT)/ Total interest expense

Question 7

Discounted cash flow analysis include the following:

Answer 7

1) future operating cash savings
2) current asset disposal price
3) tax effects of future asset depreciation
4) future asset disposal price

Question 8

Activity-based costing

Answer 8

ABC refines product cost information because the cost system emphasizes long-term product analysis (when fixed costs become variable costs).

Question 9

Public key infrastructure (PKI)

Answer 9

PKI represents the mechanisms used to issue and manage asymmetric keys and digital certificates.

Question 10

Return on assets

Answer 10

Return on assets= Income/ Average assets

can be further divided into components of profit margin times asset turnover (referred as the DuPont formula)

Return on assets= Income/Sales X Sales/Avg. Assets

Question 11

Value added networks (VANs)

Answer 11

• VANs normally batch transactions and transmit them at the end of day or overnight
• automatic error detection, protocol conversion, and message storing, and forwarding services
• very high security because they are private networks

Question 12

Return on equity (ROE)

Answer 12

ROE= Net income/sales X Sales/Assets X Assets/Equity

Question 13

Probability example

Answer 13

cost of insurance is $10,000

Probability of frost X earnings by using insurance= cost of insurance
Probability X $50,000=$10,000
Probability of frost = 20%