Fin'l Plann. & Analysis Flashcards
What is a Static Budget?
Budget targeted for a specific segment of a company.
What is a Master Budget?
- Budget targeted for the company as a whole
- Includes budgets for Ops and CFs
- Includes set of budgeted F/S
How do Fixed Costs affect budgeting?
Costs independent of the level activity within the relevant range
- Property Tax = same regardless of units produced
However - Fixed Costs per unit vary given the amount of activity
- Fewer units, fixed costs per unit increase (less units to spread the cost over)
How do Variable Costs affect budgeting?
The more DM or DL used, the more VC per unit
However VC per unit don’t change with the level of activity like FC per unit
How are Material Variances calculated?
S - A = M
Standard Material Costs
- Actual Material Costs
= Material Variance
How are Labor Variances calculated?
S - A= L
Standard Labor Costs
- Actual Labor Costs
Labor Variance
How are Overhead Variances calculated?
O - A = T
OH Applied
- Actual OH Cost
= Total OH Variance
How does Absorption Costing
compare to Variable Costing?
Absorption Costing Variable Costing
- External Use - Internal Use
- Cost of Sales - VC
- Gross π - Contribution Margin
- SG&A - FC
How is Contribution Margin calculated?
Sales Price per unit
- Variable Cost per unit
Contribution Margin per unit
How is Break-even Point per unit calculated?
Total FC
Contribution Margin per unit
Assumption= Total Costs & Total Revenues are LINEAR
What is the focus in a Cost Center?
Management is concerned
only with costs
What is the focus in a Profit Center?
Management is concerned with
both costs and profits
What is the focus in an Investment Center?
Management is concerned with
costs, profits, and assets
What is the Delphi technique?
- Forecasting technique
- Data is collected & analyzed
- Requires judgement/consensus
What is Regression Analysis?
- A forecasting technique
- Sales is the dependent variable
- Simple Regression - 1 independent variable
- Multiple Regression - Multiple independent variables
