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Accounting > Exam 4 > Flashcards

Exam 4 Flashcards

1
Q

Advantages of responsibility centers

A

Frees up top management to focus on strategic planning. Improves motivation and retention

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2
Q

Disadvantages of responsibility centers

A

Potential duplication of cost and effort. Lower level managers might not see the big picture (goal congruence)

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3
Q

Cost center

A

Responsible for cost only

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4
Q

Revenue center

A

Responsible primarily for revenue. Sales region and marketing department

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5
Q

Profit center

A

Responsible for revenues and costs

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6
Q

Investment center

A

Responsible for revenues, costs, and effieciently managing long term assets

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7
Q

Investment departments

A

President and CEO and operations VP

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8
Q

Cost departments

A

Finance CEO, legal councial, HR, Bottling plant manager, warehouse manager, and distribution manager

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9
Q

Profit departments

A

Snacks divison, beverage divison, and confections division

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10
Q

Segment

A

A part or activity of an organization about which managers would like cost, revenue, or profit data

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11
Q

Segment margin

A

Sales-variable expensese=contribution margin-traceable fixed cost

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12
Q

Return on investment

A

Operating income/total assets

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13
Q

Roi extended

A

Sales margin (profitablility)* capital turnover (productivity)

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14
Q

Sales margin

A

Noi/sales

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15
Q

Capital turnover

A

Sales/total assets

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16
Q

Risidual income

A

Operating income- (total assets*minimum required rate of return)

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17
Q

Increase ROI

A

Increase sales,reduces operating expenses,reduced operating assets

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18
Q

Transfer price

A

The sales revenue for the selling divison and the cost for the buying division

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19
Q

Market price

A

Price that could be obtained in an open market. The fairest price

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20
Q

Negotiated price

A

Division managers negotiate; usually between variable cost and market price

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21
Q

Cost

A

Variable cost is the lowest

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22
Q

Perspectives on balance scorecard

A

Financial, customer, internal business processes, and learning and growth

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23
Q

Learning and growth questions

A

Are we maintaining our abilith to change and improve

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24
Q

Internal business processes questions

A

Have we improved key business processes so that we can deliever more value to our customers

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25
Q

Customers questions

A

Do customers recognize thst we are delivering more value?

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26
Q

Financial questions

A

Has out financial performance improved

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27
Q

KPI for learning and growth

A

Hours of training, certifications, retention

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28
Q

Internal business processes KPI

A

Quality checks, time to make product, MCE, error rates

29
Q

Customer KPI

A

Satisfaction, repeat sales, referrals, number of complaints

30
Q

Financial KPI

A

ROI, RI, Sales, CM

31
Q

Price variance

A

AQ*(AP-SP)

32
Q

Quantity Variance

A

SP*(AQ-SQ)

33
Q

Rate variance

A

AH*(AR-SR)

34
Q

Efficiency Variance

A

SR*(AH-SH)

35
Q

Advantages of standard cost

A

Cost benchmarks, useful budgeting, motivation, simplifying bookkeeping

36
Q

Disadvantages of standard cost

A

Outdated or inaccurate standards, lack of timliness, focus on operational performance measures and visual management, lean thinking, increase in automation, behavioral consequenses

37
Q

Fixed overhead budget variance

A

Budgeted-actual

38
Q

Fixed overhead volume variance

A

Budgeted-(standard direct labor hoursunits produced)standard fixed overhead

39
Q

Screening decisions

A

A budgeting decision that asks does the project meet or exceed a hurdle rate

40
Q

Preference decisions

A

A budgeting decision that are for those projects that meet or exceed a hurdle rate, which one is best

41
Q

Payback method

A

Number of years needed to recover the investment

42
Q

Payback method formula

A

Investment/net cash flows

43
Q

ARR

A

Used acrrual accounting for NOI

44
Q

ARR formula

A

NOI/investment

45
Q

NPV

A

Accept project if NPV>=0

46
Q

NPV formula

A

PV cash inflow-PV cash outflows

47
Q

IRR

A

Discount rate that results in a NPV of 0

48
Q

Depreciation

A

Cost-residual value/# of useful years

49
Q

Accrual NOI

A

Cash flows-depreciation

50
Q

Consider time value of mone

A

NPV and IRR

51
Q

Dont consider time value of money

A

Payback period and ARR

52
Q

Assumptions for NPV

A

Cash flows occur at end of period, all cash flows are immediatey reinvested at discount rate

53
Q

Profitability index

A

NPV/investment

54
Q

Accept proposal with IRR

A

Accept if IRR is equal to or greater than the MRRR

55
Q

Accept NPV

A

If it is zero or positive

56
Q

Computes unique rate of return

A

IRR

57
Q

Sustainability

A

The ability of a company to create products that meet the needs of today without impacting the ability of future generations to meet their needs

58
Q

Three Ps of Triple bottom line

A

Profit, people, and planet

59
Q

Sustainablilty vision

A

A sustainable global econ where organizations manage their econ, environmental, social and governance performance and impacts reponsiblolty and report transparently

60
Q

Sustainablu mission

A

To make sustainability reporting standard practice

61
Q

Business cases for sustainability

A

Reduce cost, improve image, reduce risks, create new revenue, attract labor talent, attract capital

62
Q

Monetary information

A

Directs materials cost, waste and emmison cost, preventation cost, RD cost, intangible cost materials, cost of non product outputs

63
Q

Physical information

A

Quanity of air emmisons, tons sould waste generated, gallons of waste water generated, pounds of packing recyled, toral amount of water consumed

64
Q

Uses of EMA

A

Compliance, strategy, developement, systems and info flow, costing, investment appraisal, performance management, exernal reporting

65
Q

Challenges of EMA

A

Communication issues, hidden cost, archaic info systems, historical orientation of accounting, undeveloped field

66
Q

Types of reports

A

Sustainibility, integrated annual report, corporate social responsiblity, balanced scorecard

67
Q

If NPV is positive the IRR is

A

Greater than discount rate

68
Q

If NPV is zero then IRR

A

Is equal to discount rate

69
Q

If NPV is negative then IRR

A

Is less then discount rate

Accounting (30 decks)

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