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1 MA > Exam > Flashcards

Exam Flashcards

1
Q

Expected Value

A

Multiply possibilities by outcome to get weighted amount.

Add to get EV.

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2
Q

Range

A

Difference between largest and smallest value.

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3
Q

Probability of independent combined events

A

probability of 2 events that don’t relate but occur at same time.
Multiply them together.

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4
Q

standard deviation

A

(expected profit - expected value) squared * by probability.
Add all weighted amount.
Square root total answer.

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5
Q

Coefficient of variation

A

CV = SD / EV

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6
Q

decision tree

A

used to clarify alternative course of actions

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7
Q

maximin

A

the worst possible outcome will occur so select the largest payoff under this assumption

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8
Q

maximax

A

the best possible outcome will occur so select the largest payoff under this assumption

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9
Q

regret criteria applied where:

A

it’s not possible to assign meaningful probabilities.

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10
Q

standard cost is

A

target costs for each operation built up to produce standard cost

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11
Q

budget

A

cost for total activity

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12
Q

standard

A

relates to cost per unit

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13
Q

purpose of standard costing system

A

prediction of future costs for decision making
assist in setting budgets
challenging target
trace costs

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14
Q

sales margin price

A

(AP-SP) x Actual sales volume

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15
Q

sales margin volume

A

(AV-BV) x standard unit contribution

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16
Q

Direct Materials Price

A

(SP-AP) x AQ

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17
Q

Direct Materials usage

A

(SQ-AQ) x SP

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18
Q

Variable overhead rate

A

(SP-AP) x AH

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19
Q

Variable overhead efficiency

A

(SH-AH) x SP

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20
Q

fixed overheads

A

budget overheads - actual fixed overheads

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21
Q

interest rate

A

multiply by NBV

22
Q

statement layout

A

Rev - costs = NCF
NCF - dep = Profit
Profit - Int rate = RI

23
Q

profit statement

A 
DM+DL+vo/hd
Contribution = selling price - above answer
* sales
answer
- fixed o/hd
profit
24
Q

Variances needed for Budgeted profit

A 
SMP, SMV
DMP, DMU
LBR, LBE
Vo/hd rate, V o/hd efficiency
fixed o/hd
25
Q

Return on income

A

net operating income /
average operating assets
(profit/NBV)

26
Q

Residual income

A

controllable profit - cost of capital charge on investment controllable by manager

27
Q

Economic Value added

A

divisional profit +/- accounting adj - cost of capital charge on divisional assets

28
Q

NPV

A

FV/ 1 + interest rate

29
Q

measuring managerial performance

A

only controllable assets to be included in investment base

30
Q

measuring economic performance

A

all assets and an allocation of corporate assets should be included

31
Q

advantages of divisionalisation

A

improved quality of decisions
speedier decisions
increase managerial motivation

32
Q

disadvantages of divisionalisation

A

costly structure

loss of control by top management

33
Q

functional organisational structure

A

organisation = investment centre

activities placed under departmental head

34
Q

divisionalised structure

A

organisation divided into separate IC or PC

functional structure below this

35
Q

differences between MA and FA

A 
legal requirements
individual focus
Framework
Time dimension
Report frequency
36
Q

High low method

A

difference in £ / difference in activity =

VC per unit

37
Q

breakeven

A

total fixed costs / contribution per unit

38
Q

contribution per unit

A

selling price - variable costs

39
Q

target profit

A

fixed costs + TP / contribution per unit

40
Q

contribution margin

PV ratio

A

contribution per unit /

sales price per unit

41
Q

margin of safety

A

exp sales - breakeven sales

/ exp sales

42
Q

traditional costing +

A

easy to use

useful for large quantities

43
Q

traditional costing -

A

not accurate

assumes indirect costs related to volume of measure

44
Q

ABC +

A

detailed info

more accurate

45
Q

ABC -

A

timely
costly to implement
difficult

46
Q

ABC step 1

A

Total o/hd cost

cost pool / price (%) / COST/ (divide) driver / RATE

47
Q

ABC step 2

A

use the rate to allocate it to the product

48
Q

ABC extra steps

A

if you need to reallocate do so using percentage but then get the rate by dividing again by the budgeted figure

49
Q

Labour Rate variance

A

(SP - AP) x AQ

50
Q

labour efficiency variance

A

(SH - AH) x SP

1 MA (1 decks)

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