Financial Planning Flashcards
Budget targeted for a specific segment of a company.
Financial Planning & Analysis
Budget targeted for the company as a whole
Includes budgets for Operations and Cash Flows
Includes set of budgeted Financial Statements
Financial Planning & Analysis
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
Financial Planning & Analysis
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
Financial Planning & Analysis
SAM:
Standard Material Costs
- Actual Material Costs
= Material Variance
Financial Planning & Analysis
SAL
Standard Labor Costs
- Actual Labor Costs
= Labor Variance
Financial Planning & Analysis
OAT
Overhead Applied
- Actual Overhead Cost
= Total Overhead Variance
Financial Planning & Analysis
Absorption Costing - External Use- Cost of Sales- Gross Profit- SG&A
Variable Costing - Internal Use- Variable Costs- Contribution Margin- Fixed Costs
Financial Planning & Analysis
Sales Price (per unit)
- Variable Cost (per unit)
= Contribution Margin (per unit)
Financial Planning & Analysis
Total Fixed Costs / Contribution Margin (per unit)
= Break-even Point Per Unit
Assumption: Total Costs & Total Revenues are LINEAR
Financial Planning & Analysis
Management is concerned only with costs
Financial Planning & Analysis
Management is concerned with both costs and profits
Financial Planning & Analysis
Management is concerned with costs- profits- and assets
Financial Planning & Analysis
Forecasting technique where Data is collected and analyzed
Requires judgement/consensus
Financial Planning & Analysis
A forecasting technique where Sales is the dependent variable.
Simple Regression - One independent variable
Multiple Regression - Multiple independent variables
Financial Planning & Analysis
