Cost Finance

Question 0

What are the two elements common in budget?

Answer 0

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

Question 1

What is budget?

Answer 1

A financial plan that covers a specific period

Question 2

What are the steps in budgeting? (5)

Answer 2

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

Question 3

What are the purposes of budget? (4)

Answer 3

A. Control expenditure
B. Pre-approved funding
C. Monitoring of expenditures
D. Development of standard costs

Question 4

What are the 6 types of budgets?

Answer 4

A. Zero based budget
B. Cash flow budget
C. Line item budget
D. Program/project budget
E. Capital budget
F. Flexible budget

Question 5

What are the two type of cost savings?

Answer 5

Cost containment/avoidance

Cost reduction

Question 6

What are the issue to considered when establishing cost management program?

Answer 6

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

Question 7

What is value analysis?

Answer 7

Management process that focus on existing products and system

Question 8

What is cost modeling?

Answer 8

Focus on the structure of a product or a supplier

Question 9

What is standard cost setting?

Answer 9

The predetermined or planned cost of manufacturing a single unit or a certain number of product units during specific period in the immediate future

Question 10

What is margin?

Answer 10

The ratio of operating income to sale

Question 11

What is contribution to profit?

Answer 11

Sales revenue for a product minus variable cost. Represent the profit achieved by selling ice incremental unit.

Question 12

How to calculate break even point?

Answer 12

Total fixed cost divided by unit contribution

Question 13

What percentage of cost poor quality contribute?

Answer 13

30-40%

Question 14

What are the four main category to quantity total cost quality?

Answer 14

Prevention costs
Appraisal costs
Internal failure
External failure

Question 15

What are the characteristics of fixed cost?

Answer 15

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

Question 16

What are the criteria of variable cost?

Answer 16

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

Question 17

Carrying cost might be breaking down into 4 buckets. What are those?

Answer 17

Finance costs
Ownership costs
Risk costs
Overhead costs

Question 18

What are the ownership cost in carrying cost consist of?

Answer 18

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

Question 19

What are the ownership cost in carrying cost consist of?

Answer 19

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

Question 20

What are the three way to allocate overhead?

Answer 20

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 $