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Undeleted > Financial Planning > Flashcards

Financial Planning Flashcards

BEC

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 Maser 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

How do Fixed Costs affect budgeting?

A

Costs independent of the level activity within the relevant range

Property Tax is the same whether you produce 100-000 units or zero units

However - Fixed Costs per unit vary given the amount of activity

If you produce fewer units- fixed costs per unit will be greater than if you produce more units - i.e. less units to spread the cost over

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4
Q

How do Variable Costs affect budgeting?

A

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

However - Variable Costs per unit don’t change with the level of activity like Fixed Costs per unit

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5
Q

How are Material Variances calculated?

A

SAM:

Standard Material Costs
- Actual Material Costs
= Material Variance

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6
Q

How are Labor Variances calculated?

A

SAL

Standard Labor Costs
- Actual Labor Costs
= Labor Variance

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7
Q

How are Overhead Variances calculated?

A

OAT

Overhead Applied
- Actual Overhead Cost
= Total Overhead Variance

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8
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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9
Q

How is Contribution Margin calculated?

A

Sales Price (per unit)
- Variable Cost (per unit)
= Contribution Margin (per unit)

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10
Q

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

A

Total Fixed Costs / Contribution Margin (per unit)
= Break-even Point Per Unit

Assumption: Total Costs & Total Revenues are LINEAR

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11
Q

What is the focus in a Cost/Revenue Center?

A

Management is concerned only with costs/revenues

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12
Q

What is the focus in a Profit Center?

A

Management is concerned with both costs and profits

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13
Q

What is the focus in an Investment Center?

A

Management is concerned with costs- profits- and assets

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14
Q

What is the Delphi technique?

A

Forecasting technique where Data is collected and analyzed

Requires judgement/consensus

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15
Q

What is Regression Analysis?

A

A forecasting technique where Sales is the dependent variable.

Simple Regression - One independent variable

Multiple Regression - Multiple independent variables

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16
Q

What are Econometric Models?

A

Forecast sales using Economic Data

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17
Q

What are Naive Forecasting Models?

A

Very Simplistic

- Eyeball past trends and make an estimate

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18
Q

How does a Moving Average compare to Exponential Smoothing?

A

Both project estimates using average trends from recent periods

Difference: Exponential Smoothing weighs recent data more heavily

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19
Q

What are the characteristics of Short-term Cost Analysis?

A

Uses Relevant Costs Only

Ignore Sunk Costs

Opportunity Cost is a Must

20
Q

Target Cost Formula

A

Target Cost=Market Price-Required Profit

21
Q

Kaizen Method

A

The product may have to be redesigned to provide for the reduction of costs throughout the life cycle of a product.

22
Q

Sensitivity Analysis Slope

A

DIF TC/ DIF Volume

23
Q

Simple Linear Regression Model

A

y=A+Bx

TC=FC+VC(U)

24
Q

Y is the what is the regression model

A

Dependent variable

25
Q

X is the what in the regression model

A

Independent variable

26
Q

A is the what is the regression model

A

Y-intercept

27
Q

B is the what in the regression model

A

Slope

28
Q

-1 Coefficient of Correlation means?

A

Perfect Inverse Relationship

29
Q

0 Coefficient of correlation means?

A

No relationship

30
Q

1 Coefficient of correlation means?

A

Perfect direct relationship

31
Q

Coefficient of correlations measures?

A

(r) Measures the STRENGTH of the linear relationship between the independent variable(x) and the dependent variable(y).

32
Q

Coefficient of determination means?

A

(r^2) the PROPORTION of the total variation in the dependent variable(y) explained by the independent variable (x)

Higher(R^2)=greater proportion of the total variation in y that is explained by x. The higher the(r^2) the better the fit of the regression line.

33
Q

Budgeted Production formula

A 
Budgeted Sales
\+ Desired ending inventory
<                  Beg, Inventory>
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
           Budgeted production
34
Q

Units of DM to be purchased for the period formula

A

Units of DM for production period
+ Desired End, INV at the end of the period
< Beg, INV at the start of the period>
___________________________________
Units of DM to be purchased for the period

35
Q

Desired END, CASH Formula

A

Beg, Cash
+ Cash Collected

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
                      End, cash 
<    Cash Requirements>
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Desired         End, Cash
36
Q

Sales Variance Includes?

A
  1. Sales Price Variance

2. Sales Volume Variance

37
Q

Sales Volume Variance Includes?

A
  1. Sales Quantity Variance

2. Sales Mix Ratio

38
Q

Sales Quantity Variance Includes?

A
  1. Market Size Variance

2. Market Share Variance

39
Q

Sales Mix Variance Formula

A

(Ac. product sales mix ratio- Budg. Product sales mix ratio)
X Actual sold units
X Budgeted CM per unit of that product
_____________________________________________
Budg. CM per unit of that product

40
Q

Sales Quantity and Market Variances Formula

A 
(Ac. Sold product- Budg. sales product)
X Budg. product sales mix ratio
X Budg. CM per unit of that product
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Budg. CM per unit of that product
41
Q

Market Size Variance Formula

A

(Ac. Market size U’s- Budg. Market size U’s)
x Budg. market share %
X Budg. CM per unit Weighted Average)
__________________________________
Market Size Variance

42
Q

Market Share Variance Formula

A 
(Ac. Market Share % - Budg. market Share%)
X Ac. Industry U's 
X Budg. CM per unit(Weighted Average)
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Market Share Variance formula
43
Q

Components of the Balanced Scorecard

A
  1. F-inancials
  2. I- nternal
  3. C-ustomer satisfaction
  4. A-dvancement of innovation and HR development
44
Q

F-inancial component of Balanced Scorecard means

A

Profits are pointed “At Us”

45
Q

I-nternal business processes component of Balanced Scorecard means?

A

Efficient Production

46
Q

C-ustomer Satisfaction component of Balanced Scorecard means?

A

Market Share

47
Q

A-dvancement of innovation and human resources development component of Balanced Scorecard means?

A

Retention of Key Employees: Learning and Growth

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