BEC CPA 4 Flashcards
The quality technique commonly used to determine zero defects and goalpost conformance
Control Chart
Net cash flows after taxes
Cash inflow from sales
Less: Cash outflows for materials & labor
Less: Taxes paid
Plus: salvage value less taxes paid on salvage
To allocate joint costs to join products, the sales price at the point of sale, less cost to complete after split-off, is assumed to be equal to…?
relative sales value at split-off
Which are basic approaches to allocation costs for costing inventory in joint-cost situations
- constant gross margin % NRV method
‘physical measures such as weights or column - sales value at split-off
The essence of responsibility accounting
Developing performance reports emphasizing costs and revenues that managers can control
Underlying assumptions of cost-volume-profit include
- Selling prices are to be unchanged
- volume is the only factor affecting cost
- All costs can be divided into fixed and variable elements
Economic order quantity
inventory order at the point where carrying costs equate nearest to restocking costs in order to minimize total inventory cost
Expected value with probabilities
(Any cost paid from award - out-of-pocket costs) x probability
do same thing for other probabilities and add them together
Economic value-added
residual income that remains after the cost of all capital, including equity capital, has been deducted
Supply Chain Operations Reference (SCOR) Model would include what in its planning
- Assessing capacity concerns and capabilities
- determining demand requirements
- making make/buy decisions
What is the underlying assumption of the Black-Scholes model?
there are no transaction costs for buying or selling the stock option
Common document found in the revenue process
Packing slip
Which factor is inherent in a firms operations if it utilizes only equity financing
Business risk
Net after-tax cost of debt
(Base points x .01% (150 = 1.5%) + RFR) - (1 - tax rate)
net cash flows for a year of a project
CM x units sold x (1-tax rate) + (salvage value x (1-tax rate)
Controllable margin used as a refined measure of SBU reporting is described as
CM net of controllable fixed costs (those costs that managers can impact in less then a year)
Units sold at a given profit
CM per unit x units = (Fixed costs + income)
Product A = 4 times B
(CM of A time x 4 + CM of B)
divided by (fixed costs + income) = units for B
plus ( units of B x 4)
Which cost is deducted from revenue of a manufacturing company in order to determine gross margin, but Not deducted from revenue to determine CM?
Fixed manufacturing
Activity-based costing refines product cost info because the cost system:
emphasizes long-term product analysis (when fixed costs become variable costs)
Weighted average cost per unit
(Beg. costs + current costs) / (units completed + units competed in ending Inv.)
same equation for material and conversion cost
benefits of debt financing over equity financing are likely to be highest when?
There is high marginal tax rates (interest on debt is deductible for tax purposes) and few noninterest tax benefits
cash discounts vs a bank loan
the cost of not taking a cash discount is higher than the cost of a bank loan
Cost of using a lock box
lock-box cost
Less: Investment income ((collection time days reduction / days in a year) x sales x interest rate)
The following are considered in the selection of appropriate cost drivers for ABC system
- behavioral effects
- Degree of correlation
- Cost of measurement
Contribution margin ratio
Contribution margin (sales price - variable price) / Sales price
Impact on total variable costs if desired pretax profit increases
more units will need to be sold; more units equal more total variable costs
Breakeven point in dollars
breakeven units x sales price
or
fixed costs / contribution margin ratio (CM / sales price)
Variable vs absorption costing methods
Variable = only DM, DL, and variable OH are included in the COGS calc and ending inventory; Fixed Factory OH is a period cost - expensed immediately
Absorption = DM, DL, Variable OH, and Fixed Factory OH are included in COSG and ending Inventory calc.; Fixed Factory OH is a product cost.
If Units produced > units sold, then net income is higher under absorption
The equation for sensitivity analysis (probability)
I.e sales
sales x increase or decrease % x probability
do for all probability scenarios and add together
Appropriate “end-of-life” cash flows on a piece of equipment
net of tax investment
Less: net of tax cost to remove
Plus: net of tax salvage value
Regression analysis
Estimates the dependent cost variable
Minimum sales price on a special order
Per-unit cost plus the profit margin
Which method most effectively minimizes risk when there is a surge in an exporting business
Hold AP and AR due in the same currency and amount
Economic value added equation
NOPAT - required return (investment x WACC)
What is considered of a cost driver for ABC system
- Behavioral effects
- Cost of measurements
- Degree of correlation
3 primary motives for holding cash
- Transactions demand
- Precautionary demand
- Speculative demand
relevance of a particular cost to a decision is determined by:
Potential effect on the decision
