Exam 3 Flashcards
Objectives Of Budgeting
Planning, Directing, Controlling
Responsibility Accounting Centers
Cost, Profit, and Investment center
Balanced Scorecard
Financial Performance
Customer Service
Innovation and Learning
Internal Process
Responsibility Accounting
Measuring and reporting operating data by responsibility center
Cost Center
Responsibility over costs only
Profit Center
Responsibility over revenues and costs
Investment Center
Compares actual results with planned results with the objective of highlighting areas where those differ so appropriate action can be taken
Standard Cost
Budge for the production of a single unit including the planned quantity of input as well as the planned cost of that input
“Should”
Liquidity
Company’s ability to convert assets into cash
Current Ratio
Quick Ratio
Solvency
Company’s ability to pay its debts
Fixed Assets to Long-term Liabilities
Profitability
Company’s ability to earn profits
Ratio of Net Sales to Assets
Rate Earned on Total Assets
Incremental Analysis Steps
Identify objective Determine alternative courses of action Gather relevant information Make a decision Assess results
Types Of Incremental Analysis
Lease or sell Discontinue a segment or product Make or buy Replace equipment Process or sell Special price
Relevant Cost
Future cost that differs between two or more alternative courses of action
Sunk Cost
Cost that has already been incurred and cannot be reversed by any future action
