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acc 5361 > Final Exam > Flashcards

Final Exam Flashcards

1
Q

Cash budgets are often prepared how often?

A

Monthly or even weekly

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2
Q

A performance budget compares

A

actual costs with budgeted costs

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3
Q

Variable overhead variance is affected by

A

input price changes and efficiency

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4
Q

Materials price variance formula

A

= (AP x AQ) - (SP x AQ)

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5
Q

On a segmented income statement, fixed costs are

A

broken down into direct fixed costs and common fixed costs

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6
Q

Fixed overhead volume variance is

A

=AFOH - BFOH

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7
Q

Turnover forumla

A

= sales / average operating assets

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8
Q

Normal sequence for budget preparations

A

Sales Budget, Budgeted Income Statement, Budgeted Balance Sheet

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9
Q

Required production =

A

= budgeted sales - beginning inventory + desired ending inventory

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10
Q

Margin formula

A

= net operating income / sales

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11
Q

A top-down approach to budgeting is one that is

A

imposed

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12
Q

Formula for budgeted raw materials purchases

A

= materials needed for prod + ending raw materials - beginning raw materials inventory

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13
Q

Budgeted direct labor hours

A

Budgeted production units x direct labor requirements per unit

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14
Q

Purpose of a cash budget

A

help managers plan ahead to make certain they will have enough cash on hand to meet operating needs

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15
Q

How to make a cash budget

A

Beginning cash balance + Budgeted cash collections - Budgeted cash payments +/-
Cash borrowed or repaid = Ending cash balance

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16
Q

Comparing the master budget with the flexible budget creates

A

a volume variance

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17
Q

Standard cost systems depend on which 2 types of standards?

A

Quantity and Price

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18
Q

Labor efficiency variance formula

A

= SR x (SH - AH)

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19
Q

Fixed overhead volume variance is

A

the difference between applied fixed overhead and budgeted fixed overhead

20
Q

Rate variance

A

= AH x (SR - AR)

21
Q

Cost center

A

responsibility center in which the manger does NOT have responsibility and authority over revenues

22
Q

Investment center

A

responsibility center in which the manager has responsibility and authority over revenues, costs and assets

23
Q

ROI formula

A

= operating income / average invested assets

= margin * turnover

24
Q

Profit margin

A

= operating income / sales revenue

25
Q

Turnover

A

= sales revenue / average invested assets

26
Q

If the ROI of a project is greater than the hurdle rate, the residual income will be

A

greater than zero

27
Q

Hurdle rate

A

minimum required return

28
Q

Transfer price

A

= additional cost outlay - opportunity cost per unit

29
Q

Residual Income (RI) formula

A

= operating income - (hurdle rate * operating assets)

30
Q

RI greater than zero

A

company is earning more than minimal rate of return

31
Q

Economic Value Added (EVA)

A

= net income after taxes - (cost of capital * total capital employed)

32
Q

Positive EVA

A

creating economic wealth

33
Q

Negative EVA

A

not generating enough after tax profit to cover cost of capital

34
Q

Decentralization benefits

A

frees up sr mgmt time, breaks big problems into smaller pieces, supports use of expert knowledge, improves customer relations, leads to faster decision making, improves motivation and retention, provides training

35
Q

Decentralization cons

A

duplication of costs, goal incongruence, suboptimal decision making

36
Q

ending finished goods budget supplies information needed for the

A

cost of goods sold budget

37
Q

Increasing sales will ___ the ROI (all else constant)

A

increase

38
Q

A revenue variance is favorable if

A

the actual revenue exceeds what the revenue should have been for the actual level of activity of the period.

39
Q

Contribution income statements are used to measure the performance of

A

both profit centers and investment centers

40
Q

Spending Variance is composed of

A

Budget v Actuals
On manufacturing: Quantity variance and price variance
On labor: Rate variance and hours variance

41
Q

Material price variances arise from

A

Untaken purchase discounts
Using a different (better/worse)quality material
Changes in market demand/supply
Great/Poor negotiation by the procurement staff
Better purchasing procedures, multiple bids
Larger order better discount

42
Q

Material efficiency variances arise from

A 
More experienced or inexperienced workers
Lower or higher quality material
Not making allowance for defects
Workforce training
Process automation/outdated equipment
43
Q

Labor price variances arise from

A

Overall wage rates rise or fall
Hiring of more/less skilled labor (See offset in efficiency variance)
Bad budgeting
Ineffective/effective union negotiations

44
Q

Labor efficiency variances arise from

A

Hiring of more/less skilled labor
Lower or higher quality material
Higher or lower learning curve than anticipated
Workforce training in improved production techniques
Poor staff morale and motivation
Excess idle time not charged correctly

45
Q

Transfer price when capacity is available

A

variable price

46
Q

Transfer price when operating at full capacity

A

selling price

acc 5361 (1 decks)

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