Cost Finance Flashcards
What are the two elements common in budget?
First, every budget should list a set of specific goals that release to future operation
Second, every budget should provide for a periodic comparison of actual results and establish goal
What is budget?
A financial plan that covers a specific period
What are the steps in budgeting? (5)
A. Review goal and objective alignment
B. Defined needed resources
C. Estimate the dollar value of resources
D. Present the budget/obtain the appropriation
E. Variance analysis
What are the purposes of budget? (4)
A. Control expenditure
B. Pre-approved funding
C. Monitoring of expenditures
D. Development of standard costs
What are the 6 types of budgets?
A. Zero based budget B. Cash flow budget C. Line item budget D. Program/project budget E. Capital budget F. Flexible budget
What are the two type of cost savings?
Cost containment/avoidance
Cost reduction
What are the issue to considered when establishing cost management program?
Status of standardization program Coordination with other department Time requirement Effect on quality and service Effect on operations Calculating cost avoidance/reduction Market testing Top management support Design flexibility Product longevity Consumption management
What is value analysis?
Management process that focus on existing products and system
What is cost modeling?
Focus on the structure of a product or a supplier
What is standard cost setting?
The predetermined or planned cost of manufacturing a single unit or a certain number of product units during specific period in the immediate future
What is margin?
The ratio of operating income to sale
What is contribution to profit?
Sales revenue for a product minus variable cost. Represent the profit achieved by selling ice incremental unit.
How to calculate break even point?
Total fixed cost divided by unit contribution
What percentage of cost poor quality contribute?
30-40%
What are the four main category to quantity total cost quality?
Prevention costs
Appraisal costs
Internal failure
External failure
What are the characteristics of fixed cost?
The cost remains constant within a defined range of operation
The cost decrease per unit when output increase
The cost is assigned to department by managerial or cost allocation
Cost are incurred through decision by top level management
What are the criteria of variable cost?
The cost is directionally proportion to changes in the level of operation
The cost per unit relatively constant
The cost maybe assigned to operating departments in a simple and reasonable accurate
Incurrence and consumption of the cost are controlled by the dep head or manager
Carrying cost might be breaking down into 4 buckets. What are those?
Finance costs
Ownership costs
Risk costs
Overhead costs
What are the ownership cost in carrying cost consist of?
Insurance and taxes
Insurance are the premium paid for fire and theft protection
Taxes include the property taxes paid based on the value of inventory at the time
What are the ownership cost in carrying cost consist of?
Insurance and taxes
Insurance are the premium paid for fire and theft protection
Taxes include the property taxes paid based on the value of inventory at the time
What are the three way to allocate overhead?
Total plant direct costs/total plan direct labor dollars
Total plant indirect costs/total plan direct machine hour
Total company G&A costs/total sales $
