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BEC > Financial Planning > Flashcards

Financial Planning Flashcards

1
Q

What is a Static Budget?

A

Budget targeted for a specific segment of a company.

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2
Q

What is a Master Budget?

A

Budget targeted for the company as a whole Includes budgets for Operations and Cash Flows Includes set of budgeted Financial Statements

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3
Q

Financial Budget

A

Capital

Cash

B/S

Cash Flow

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4
Q

Operating Budget

A

Income Statement

Supporting Schedules

(production stuff)

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5
Q

Kaizen Budget

A

Project costs based on improvement which have not yet been implememented

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6
Q

Activity Based Budget

A

Operating budgets for each activity

Management insight to causes

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7
Q

How do Fixed Costs affect budgeting?

A

Costs independent of the level activity within the relevant range

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8
Q

How do Variable Costs affect budgeting?

A

The more Direct Materials or Direct Labor used- the more Variable Costs per unit

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9
Q

How are Material Variances calculated?

A

SAM:

Stnd Mat Costs - Act Mat Costs = Mat Var

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10
Q

Price Variance

A

AQ x AP

AQ x SP

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11
Q

How are Labor Variances calculated?

A

SAL

Stnd Labor Costs - Act Labor Costs = Labor Var

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12
Q

How are Overhead Variances calculated?

A

OAT

OH Applied - Act OH Cost = Total OH Variance

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13
Q

How does Absorption Costing compare to Variable Costing?

A

Absorption Costing - External Use

  • Cost of Sales- Gross Profit- SG&A

Variable Costing - Internal Use

  • Variable Costs- Contribution Margin- Fixed Costs
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14
Q

How is Contribution Margin calculated?

A

Sales Price (per unit)

  • ALL Variable Cost (per unit)
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15
Q

How is Break-even Point (per unit) calculated?

A

Total Fixed Costs / CM (per unit)

Assumption: Total Costs & Total Revenues are LINEAR

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16
Q

What is the focus in a Cost Center?

A

Management is concerned only with costs

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17
Q

What is the focus in a Profit Center?

A

Management is concerned with both costs and profits

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18
Q

What is the focus in an Investment Center?

A

Management is concerned with costs- profits- and assets

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19
Q

What are Naive Forecasting Models?

FORECAST

A

Very Simplistic “Eyeball” historical trends and make a subjective estimate

20
Q

What is the Delphi technique?

FORECASTING

A

Technique where group Data is collected and analyzed

Requires judgement/consensus

structured approach to qualitative forecast

21
Q

Consumer Behavior

FORECASTING

A

Markov Analysis

forecast purchases based on brand loyalty and such

22
Q

How does a Moving Average compare to Exponential Smoothing?

FORECAST

A

Both project estimates using average trends from historical periods

Difference: Exponential Smoothing weighs recent data more heavily

23
Q

What are Econometric Models?

FORECAST

A

Observed associations with Economic Data

Regression analysis

24
Q

What is Regression Analysis?

FORECAST

A

Quantitative technique, observed relationships

Simple Regression - One independent variable (predictor)

Multiple Regression - Multiple independent variables

25
Q

Goodness of Fit

A

Coefficient of Determination

Adjusted R2

Closer to 1 the better

26
Q

F-Statistic

A

Significance

% chance it occurred by chance

27
Q

t-Statistic

A

significance of independent variable

P-value is % chance it occurred by chance

28
Q

Regression Analysis Assumptions

A
  • linear relationshps
  • variance/error constant
  • error/residual is independent
  • normally distributed
29
Q

Multi-collinearity

A

bad: high correlation among independent variables

30
Q

Auto-correlation

A

indication that error is not random

measured by Durbin-Watson statistic

31
Q

What are the characteristics of Short-term Cost Analysis?

A

Uses Relevant Costs Only

Ignore Sunk Costs

Opportunity Cost is a Must

32
Q

Efficiency Variance

A

AQ x SP

SQ x SP

33
Q

Diff in NI between Variable v Absorption Costing

A

(change in EndInv) x (FMOH/unit)

34
Q

Assumptions if CVP Analysis

A
  1. Selling price does not change
  2. Product mix constant
  3. Fix/Var split-able
  4. Variable are constant
  5. Total fix constant over range
  6. Productivity-efficiency constant
  7. Units produced = sold
35
Q

Standard error of the estimate

A

Standard Deviation

2 = 95%

36
Q

Project Elements (4)

A

Resources

Time

Money

Scope

37
Q

Project Management Process (5)

A
  • Initiation
  • Planning
  • Execution
  • Monitoring-Control
  • Closure
38
Q

Project Initiation

A

Select Project

Recognize benefits

Authorize

Assign PM

Project Charter

39
Q

Project Planning

(SOW)

A

Define Requirements

Define Quality/Quantity of Work

Identify resources

Schedule Activities/Tasks

Identify/Assess Risk

40
Q

Project Execution

A

Problems:

Project organization uncertaintity (PM v Functional)

Unusual decision pressure

Inadequate Sr. Mgt support

41
Q

Project Monitoring-Control

A

Track progress

Compare actual to predicted

Analyze variances

Adjust

42
Q

Network Diagrams

Project Scheduling-Controlling

A

Critical Path (CPM) - one time est./actsivity

PERT - addsd probability est./activity

PERT Cost - adds resource cost

GERT - adds looping & branching

43
Q

Gantt Chart

Project Scheduling-Controlling

A

Bar Chart with start/finish

44
Q

Milestone Chart

Project Scheduling-Controlling

A

Milestones over time

45
Q

Risk Management Steps

Project Mangement

A

Identify

Quantify

Prioritize

Respond

BEC (9 decks)

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