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Managerial ACCT > Exam 3 Chp 8/9 > Flashcards

Exam 3 Chp 8/9 Flashcards

1
Q

Is Target Costing a (Price-Taker) or (Price-Setter)

A

Target Costing is Price-Taker

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2
Q

Is Cost-Plus Pricing a (Price-Taker) or (Price-Setter)

A

Cost-Plus Pricing is a Price-Setter

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3
Q

What is the definition of Relevant Information

A

Information that differs among alternatives that incur in the future

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4
Q

What is the definition of Irrelevant Information

A

Past information that we cannot change.

Example Sunk cost.

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5
Q

When do you use Target Costing and What is the Formula?

A

You use Target Costing when the product is not unique and the competition is fierce and the company has no influence on the market.

Revenue at Market Price
(-) Desired Profit
———————————-
Target cost

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6
Q

When do you use Cost-Plus pricing and what is the Formula?

A

You use Cost-Plus pricing when you are the Price setter you have influence in the market and can set your own prices.
(Unique Product)(Monopoly Market)

Total Cost
(+) Desired Profit
——————————-
Cost-Plus Price

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7
Q

What is a Special Order? What are key considerations on whether to accept or deny?

A

A One time order at a reduced price for a large quantity.

Key considerations-
- Do we have excess capacity to fill the order
- Will the reduced sale price be enough to cover costs
- Will the special order affect regular sales

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8
Q

How do you calculate return on assets?

A

Operating income (Divided by) Assets

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9
Q

If the plant is producing 630,000 cases a month, yet only operating at 90% of capacity, it must have a capacity level of? How do you find the total capacity?

A

Divide 630,000/.90 = 700,000 which is the total capacity

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10
Q

How do you calculate target variable cost? and Target fixed cost per unit)

A

Target total cost
(-)Fixed cost
———————-
Target Variable Cost
(Divide # of units)
—————————-
Target Variable cost per unit

To get Target total cost you would do target costing

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11
Q

How do you calculate target fixed cost?

A

Target total cost
(-)Variable cost
———————-
Target Fixed Cost

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12
Q

____ is extra inventory of finished goods that is kept on hand in case demand is higher than predicted or problems in the factory slow down production

A

Safety Stock

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13
Q

Managers will sometimes build _____ into their budgets to protect themselves against unanticipated expenses or lower revenues.

A

Slack

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14
Q

The sales budget and production budget are examples of _____

A

Operating Budget

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15
Q

The ______ is used to forecast how many units should be made to meet the sales projections.

A

Production Budget

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16
Q

_____ is a budgeting process that begins with departmental managers and flows up through middle management to top management.

A

Participative Budgeting

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17
Q

_____ is a budget that is continuously updated by adding months to the end of the budgeting period.

A

Rolling Budget

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18
Q

The _____ is the difference between actual and budgeted figures and is used to evaluate how well the manager controlled operations during the period.

A

Variance

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19
Q

The ______ is the all-inclusive planning document for the entire organization.

A

Comprehensive Budget

20
Q

When an organization builds its budgets from the ground up, it’s using _____

A

Zero-based Budgeting

21
Q

The _______ project both the collection and payment of cash and forecast the company’s budgeted balance sheet.

A

Financial budget

22
Q

______ is the process of setting long-term goals that may extend several years into the future

A

Strategic Budgeting

23
Q

What is the order of the operating budget?

A

1- Sales budget
2- production budget (In Units)
3- Operating Expenses
4- Income statement

24
Q

What is the order of a Financial budget?

A

1- Capital Expenditure budget
2- Cash collections
3- Cash payments
4-Combined Cash budget
5- Budgeted balance sheet

25
Q

What are the components of a Comprehensive (Master) Budget?

A

Operational budget and Financial Budget

26
Q

What’s the structure of the Production budget?

A

Sales Units
(+) Desired end inv
—————————-
Total units needed
(-) Beginning Inv
——————————
Budgeted units to produce

27
Q

What’s the structure of the Budgeted income statement?

A

Revenue
(-)COGS
—————-
Gross Profit
(-)Operating Expenses
——————————-
Operating Income
(-) Interest expenses
(-) Income Tax
—————————-
Net Income

28
Q

What’s the structure of the Cash Collection Budget?

A

Beginning cash
(+) Collections
————————-
Total cash available
(-) Payments
—————————
End Cash before financing
(+) Financing
——————————-
Ending Cash

29
Q

What is the name of the budget that is prepared by top management and passed down to the company?

A

Top-Down budget

30
Q

What is the name of the budget that is created with the help of departments?

A

Participative budget

31
Q

What are the benefits of a Top-Down budget?

A

It’s simple and less time consuming

32
Q

What are the benefits of a Participative budget?

A

More accurate and managers will have higher preferences

33
Q

What is a comprehensive budget?

A

It encompasses all budgets, including operating and financial budgets

34
Q

What is an operating budget?

A

It is related to day to day operations such as production budget, sales budget, Income statement

35
Q

What is a Financial Budget?

A

It is related to capital expenditure.

Example - Cash budget, budgeted balance sheet

36
Q

What’s the structure of the Direct Materials Budget?

A

Quantity of DM needed for production
(+) Desired ending DM inventory
——————————————————
Total quantity of DM needed
(-) Beginning DM inventory
——————————————-
Quantity of DM to purchase
(X) cost per unit of DM
———————————————
Budgeted total cost of DM purchases

37
Q

What’s the structure of the Direct Labor Budget?

A

Budgeted units to produce
(x) DL hours per unit
—————————————
Total DL hours required
(x) DL cost per hour
—————————————
Total budgeted DL cost

38
Q

What is a Capital Expenditure budget?

A

It provides information about when the expenditure is made at what cost

39
Q

What is a Cash Collections Budget?

A

(Receipts) It is generally prepared from credit sales

40
Q

What is a Combined Cash budget?

A

Merges the budget cash collections and cash payments to forecast the companies ending cash position

41
Q

What are the six V’s in Big data

A

1- Volume
2- Velocity
3-Variety
4- Veracity
5-Value
6-Vulnerability

42
Q

Which of the following is a benefit of budgeting which helps a manager motivate employees and evaluate performance?

A

Benchmarking

43
Q

What is relevant data?

A

Data that will be used in the future and data that defers among alternatives

44
Q

What is Prescriptive Analytics?

A

Prescriptive analytics help guide managers to what they should do to make the business more profitable. Prescriptive analytics seek to determine what should be done.

45
Q

What is Diagnostic Analytics?

A

Diagnostic analytics help uncover the root cause of the current state. In business, a company might use diagnostic analytics to uncover why the current customer order fulfillment time is slow.

46
Q

What is Predictive Analytics?

A

Predictive analytics seek to forecast what will happen in the future. In business, companies can use predictive analytics to build models that will predict the future state.

47
Q

What is Descriptive analytics?

A

Descriptive analytics describe what has happened or what is happening. This type of analytics is useful for understanding the current state.

Managerial ACCT (3 decks)

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