BEC: Miscellaneous Flashcards
Define hedge.
To eliminate or reduce risk
What is a cash flow hedge designed to do?
Hedge exposure to variability in expected future CFs that could impact earnings
What is a fair value hedge designed to do?
Hedge exposure to changes in fair value of an asset or liability that could impact earnings
What is a foreign currency hedge designed to do?
Hedge exposure to foreign currency variability
Which one of the following is least associated with cost-based pricing?
a) price justification
b) target pricing
c) fixed-cost recovery
d) price stability
b) target pricing
Costs relevant to a make-or-buy decision model include variable labor and variable materials as well as what?
Avoidable fixed costs
Under a standard cost system, labor price variances are usually NOT attributable to:
a) labor rate predictions
b) payment of hourly rates instead of prescribed piecework rates
c) union contracts approved before the budgeting cycle
d) the use of a single average standard rate
c) union contracts approved before the budgeting cycle
REASON: If the contracts are approved before, they would be used as the basis for the budget
What is the production volume variance due to?
Difference from the planned level of the base used for OH allocation and the actual level achieved
If for a given period, the direct labor efficiency variance is unfavorable, the VOH efficiency variance will be what?
Unfavorable
REASON: If VOH is applied on the basis of std. DL hours and DL efficiency variance is unfavorable, then VOH efficiency will ALSO be unfavorable
The difference b/w the actual amounts and the flexible budget amounts for the actual output achieved is the what?
Flexible budget variance
REASON: = difference b/w actual amounts and the flexible budget amounts for the actual output achieved
What is the variance in an absorption costing system that measures the departure from the denominator level of activity that was used to set the fixed OH rate called?
Production volume variance
Why does sales volume variance arise?
B/c the quantity actually sold differs from quantity budgeted to be sold
Standard cost variance is the net difference b/w what?
Total actual cost and standard cost
What do you call the process of developing plans for a company’s expected operations and controlling the operations to help carry out those plans?
Budgetary control
A _______ budget is the quantification of the company’s overall plan.
Master
