Fina

Question 1

Budgetary Slack

Answer 1

The cushion that managers intentionally put to help success in meeting budget goals

Question 2

Why do firms redesign products

Answer 2

to reduce costs and to achieve target level costs

Question 3

When is depreciation relevant?

Answer 3

During Tax Implications

Question 4

Relevant Cost Analysis - Short Term

Answer 4

Usually for short term/special orders. Focuses on variable costs rather than fixed costs

Question 5

Sales Forecasting

Answer 5

is not absolute, it is just an estimate determined by many factors

Question 6

Alternatives to traditional budget development

Answer 6

Zero-based budgeting, Activity-based budgeting, Kaizen Budgeting

Question 7

Theory of Constraints, 5 steps

Answer 7

Focuses on improving the speed of the constraints to decrease the overall cycle. 5 steps are

1) Identify Constraints
2) Determine the most profitable product mix
3) Maximize the flow
4) Add capacity
5) Redesign the manufacturing process for flexibility and fast cycle time

Question 8

Sensitivity Analysis

Answer 8

Same as “what if” analysis, changes variables to see “what if” this happens

Question 9

How does selling price change during the product life cycle?

Answer 9

depending on the type of product, it starts with a huge spike in sales, then it slowly decreases or cuts off and stays stagnant

Question 10

What is relevance?

Answer 10

relevance is whether or not something is needed, it is used to determine what costs are needed or not in decision making

Question 11

What is the Master Budget

Answer 11

Where organizations express their strategic goals and long term objectives. It shows the grand plan of action, short term objectives into steps, helps pro forma statements, shows an expectation of top management, helps coordinate interdepartmental activities

Question 12

Target Costing

Answer 12

Costing method where the firm determines the allowable cost for a product given a competitive market price and a target profit

Question 13

Goal Congruence

Answer 13

a term that refers to the degree of consistency between goals in the firm

Question 14

Just in time

Answer 14

materials/components are delivered immediately before they are required to minimize inventory costs

Question 15

Zero Based Budgeting

Answer 15

budgeting process that requires managers to start at a zero base, managers must justify each need, makes managers more aware of what they need and don’t

Question 16

Activity Based Budgeting

Answer 16

starts with a budgeted output and segregates costs required for the budget into cost pools,

Question 17

Kaizen Budgeting

Answer 17

incorporates continuous improvements in the budgets

Question 18

What are joint product costs

Answer 18

costs of two or more products that come from the same manufacturing processes

Question 19

The focus of budget in service organizations

Answer 19

because of the lack of manufacturing, the focus on making sure there is enough staff

Question 20

Throughput margin

Answer 20

calculates the number of profits obtained across the production cycle. focuses on variable costs and revenue