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Managerial Accounting > Final > Flashcards

Final Flashcards

1
Q

What is product undercoating

A

A product consumes a high level of resources but is reported to have a low cost per unit

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2
Q

What is product overcosting

A

A product consumes a low level of resources but is reported to have a high cost per unit

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3
Q

Product-cost cross subsidization means?

A

That if a company undercosts one of its products, it will overcoat at least one of its other products. And vice versa

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4
Q

What’s is activity based costing (abc)?

A

Refines a costing system by identifying individual activities as the fundamental cost objects

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5
Q

What is a cost hierarchy

A

Categorizes various activity cost pools in the basis of different types of cost drivers, or cost allocation based, or different degrees of difficulty in determining cause-and-effect relationships

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6
Q

What are output unit-level costs

A

Costs of activities performed on each individual unit of a product or service

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7
Q

What are batch level costs

A

Costs of activities related to a group of units of a product or service rather than each individual unit of product or service

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8
Q

What are product sustaining costs

A

Also know as service sustaining costs. Costs of activities u see taken to support individual products or services regardless of the number of units or batches in which the units are produced

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9
Q

What are facility sustaining costs

A

Costs of activities that cannot be traced to individual products or services but that support the organization s a whole

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10
Q

What is activity based management (ABM)

A

Using abc info to guide management decisions

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11
Q

What are value added activities

A

The costs plus some predictable profit will be fully recovered when the output is sold

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12
Q

What are non value added activities

A

Added costs that fail to improve desirability and for which customers will not pay

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13
Q

What is a budget

A

A quantitative expression of a proposed plan of action by management for a set time period

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14
Q

Why are budget constraints

A

The combination of limitations on bonfinancial and financial resources within a company’s management control

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15
Q

What is the master budget

A

It summarizes all the financial and nonfinancial plans into a single document

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16
Q

WhT is a standard

A

A carefully predetermined price, cost or quantity used for judging performance

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17
Q

What is a benchmark

A

A type of standard using information from outside of the firm

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18
Q

What are stretch goals

A

They challenge managers to achieve excellent performance rather than maintain the status quo

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19
Q

What are the advantages of budgets

A
  1. Compel planning and monitoring of the implementation of plans
  2. Provide reliable performance assessment criteria
  3. Promote communication and coordination within the organization
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20
Q

What is strategic analysis?

A

The evaluation of how well the organization has matched its own capabilities with the relevant features of the competitive environment to progress toward its future success

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21
Q

What are the approaches to budgeting

A
  1. Traditional incremental/decremental
  2. priority
  3. Zero-based
  4. Activity based
  5. Kaizen
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22
Q

What is traditional incremental/decremental approach

A

Classic every department gets the same percentage increase or decrease next year

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23
Q

What is the priority approach

A

Direct contrast to traditional approach. The organization uses its strategic plan to establish the priorities for allocating new resources or areas that need to be protected if resources have to be cut

24
Q

What is zero based budgeting

A

Involves all areas of the organization building their budgets from the ground up or from starting point of zero

25
Q

What is activity based budgeting

A

(ABB) develops budgets based on the level of the various activities needed to fulfill the organizational goals

26
Q

What is kaizen budgeting

A

Concept of continuous improvement and lean manufacturing. Steadily decreases or increases in budget instead of sudden changes

27
Q

What is a rolling budget

A

A budget or plan that is always available for a specified future period by adding a month, quarter, or year in the future as the current month, wuarter or year is completed.

28
Q

Why is the operating budget

A

It presents the results of operations in many value-chain business functions prior to financing and taxes

29
Q

What is padding or budgetary slack

A

Underestimating budgeted revenue or overestimating budgeted costs to make budgeted targets easier to achieve

30
Q

What is the cash budget

A

A schedule of expected cash receipts and disbursements, and is essential for forecasting any expected interest expense as a result of borrowing

31
Q

What is a self liquidating cycle sometimes called a working capital cycle, cash cycle, or operating cycle

A

The movement of cash from producing inventories to receivables and back to cash

32
Q

What is organizational structure

A

The arrangement of centres of responsibility within an entity.

33
Q

What is a responsibility centre

A

A part, segment or sub unit of an organization whose manager is accountable for a specified set of activities

34
Q

What is responsibility accounting

A

A system that measures the plans and actions of each responsibility centre

35
Q

What are the four major types of responsibility centres

A
  1. Cost centre
  2. Revenue centre
  3. Profit centre
  4. Investment centre
36
Q

What is the cost centre

A

The manager is accountable for costs only not revenue

37
Q

What is a revenue centre

A

The manager is accountable for revenue only not costs incurred to generate the revenue

38
Q

What is profit centre

A

The manager is accountable for revenue and costs and has some authority over others who decide upon key factors affecting both revenue and cost

39
Q

What is the investment centre

A

The manager is accountable for investments, revenue and costs

40
Q

What is controllability

A

The degree of authority that a specific manager has over costs, revenue, or other items in question

41
Q

What is a controllable cost

A

Any cost that is primarily subject to the authorization of a specific manager of a specific responsibility centre for a specific time span.

42
Q

What is cost volume profit analysis (cvp)

A

A model to analayze the behaviour of net income in response to changes in total revenue, total costs, or both.

43
Q

What is the breakeven point (bep)

A

The point at which total revenue minus total business function costs is 0$

44
Q

What is the contribution margin per unit

A

The difference between selling price and variable cost per unit

45
Q

What is a contribution statement of comprehensive income

A

Groups costs as either variable or fixed according to their behaviour

46
Q

What is a contribution margin percentage

A

Equals the contribution margin per unit divided by the selling price per unit or contribution margin over revenue

47
Q

Gross margin

A

A measure of competiveness- how much a company can charge for its products over and above the cost of either purchasing or producing them

48
Q

What is operating margin

A

Same meansing as operating income

49
Q

Net income margin percentage

A

Calculated by diving net income by revenue

50
Q

What is sensitivity analysis

A

A ‘what if’ technique that managers use to examine how an outcome will change if the original predicted data are not achieved or if an underlying assumption changes

51
Q

what is risk

A

the possibility that actual future results will differ from expected results

52
Q

What is risk tolerance

A

the risk of loss measure in percent that a person or team is willing to take

53
Q

what is operating leverage

A

describes the effects that fixed costs have on changes in operating income as changes occur in units sold and contribution margin

54
Q

what are capital intensive companies

A

companies with a high percentage of fixed costs in their cost structure

55
Q

what is the expected value

A

the sum of the risk-weighted average of the outcomes of each choice.

56
Q

what does risk neutral mean

A

looking at the expected operating income under each alternative contract

Managerial Accounting (2 decks)

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