Exam 4 Flashcards
Return of Investment
Sales margin× capital turnover
OP. Inc./ total assets
Sales margin
OP. Inv./ sales
Capital turnover
Sales/ total asset
RI
OP inv. - (total assets x return rate)
Safety stock
Stock extra just in case for more demand
Parts of the master budget
Operating and financial budget
Parts of operation budget
Sales, production, DM, DL, manufacturing, operating budget
Production budget
units to be sold + desired ending -beg inventory
Dm budget
(#units to produce× dm per unit) +desired inventory- beg inv
DL budget
units to produce x dl hours per unit× DL cost
Manufacturing budget
(Budgeted var. MOH/Unit x Budgeted # units) +fixed MOH
Operating expenses budget
(Budg. OP Exp./unit x budg.# unit sold) + budgeted fixed OP exp
Financial budget
Capital expenditures, cash collection, cash payment, and combined cash budget
Cash collection budget
Cash sales + credit sales + credit sales from last month + “from 2 months ago” sales
Combined cash budget
Beg bal \+cash collection -cash payment Cash bal BF \+New bowwings -debt req - interest exp Ending cash balance
Cost center
Cost only
Revenue center
Revenue only
Profit center
Cost and revenue
Investment center
Cost, revenue, and assets
4 perspectives
Financial, customer, internal business, and learning/growth
Operating budgets culminate into the
Income statement
Balanced scorecard
Performance evaluation system that integrates financial and operational performance with the 4 perspectives
KPI
Summary performance metric used to measure goal congruence
Segment margin
OP inc before subtracting common fixed costs
Financial perspective
Increase rev, controlling cost, increasing productivity
Customer perspective
Price, quality, sales service, and delivery time
Internal business perspective
Innovation, operation, post-sales support
Learning and growth perspective
All about people, culture, and technology
