Exam 2 Flashcards
Static Budget
Master budget, planned at start of period around single output level.
Static Budget Variance
Difference between actual result and static budget amount.
Flexible Budget
Budgeted revenues and costs based on ACTUAL output in budget period. Prepared at end of period.
Sales Volume Variance
Difference between flexible budget and static budget.
Flexible Budget Variance
Difference between actual result and flexible budget amount.
Selling Price Variance
(Actual Price - Budgeted Price) x Actual Units Sold
Efficiency Variance
(Actual Q of Input Used - Budget Q of Input for Actual Output) x Budget Price of Input
Variance levels
- Static
- Flexible Budget and Sales Volume
- Selling Price, Direct Materials, Direct Man. Labor, Variable Man. Overhead, Direct Man. Overhead
Unfavorable variances are always _______. Favorable balances are always _______.
Debits; Credits
Benchmarking
Comparing performance to best performance of similar companies.
Most decisions on _____________ are maid before the budget period.
Fixed overhead
Only ___________ costs are prorated.
unavoidable
__________ inefficiencies are written off in that period.
Avoidable
There is no _________ variance for fixed overhead costs.
Efficiency; these costs are unaffected by output because they are fixed.
Fixed overhead spending variance is the same as _____________________________.
Fixed overhead flexible budget variance.
Production volume variance
Budgeted fixed overhead - fixed overhead allocated ( budget rate is the constant)
Relevant costs and revenues
Expected future costs and revenues.
Sunk cost
Past cost, unavoidable.
Incremental costs
Additional cost incurred for an activity.
What are the two main strategies?
Product differentiation and cost leadership
What are the four components the balanced scorecard focuses on?
Financial, Customer, Internal Business Processes, Learning & Growth
Strategy map focal point vs trigger point:
Focal point have arrows going in, trigger point has arrows going out
Strategy map orphan objective:
an objective that only has weak ties to other objectives
Revenue Effect of Growth =
(Actual units sold CY - Actual Units sold PY ) x Selling $P in PY
Growth component
change in Operating Income from change in Q sold from year to year
Price Recovery Component
Change in Operating Income from prices of inputs and outputs
Productivity Component
Change in costs attributed to change in efficiency of inputs used per output
Cost of Unused Capacity =
Cost of Capacity committed to at beginning of year - Manufacturing resources using during the year
Value added cost
If removed, would decrease the value or perceived value of a product
Locked-in cost
Not yet incurred, but will happen due to future decisions already made
Product Life Cycle
From R&D to after customer service ends
Throughput margin
The only true VC are direct materials.
