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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 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 Center?

A

Management is concerned only with costs

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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

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20
Q

Cm Ratio

A

Cm/revenu

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21
Q

Variable Costing

A 
or Direct
Rev
-VC= DM, DL, Var MoH, var SG&A
CM
-Fiex Cost=Fixed MOG, Fixed SG&A
Net Income
22
Q

Absoroption Costing

A 
GAAP
Rev
-COGS= DM, DL, Var &Fixed MOH
=Gross margin
-Op Expenses =SG&A (var & fixed)
=NI
23
Q

BE Unit Formula

A

TFC/CM per unit

24
Q

BE $

A

TFC/CM ratio

25
Q

CM Ratio

A

CM/Sale

26
Q

Target Proft

A

Fc+Proft/CM Ratio

27
Q

When does a company start making money?

A

After break even

28
Q

Margin of Safety

A

Excess sales over BE

29
Q

Margin of Safety calculation

A

Total sales-BE=Margin

30
Q

Special Order and Pricing

A

Consider variable and incremental costs

All FC sunk as already incurred

31
Q

Special Order: Presumed Excess Capacity

A

Compare selling price to variable

32
Q

Special Order: Full Capacity

A

Compare sp to variable cost plus opp cost

33
Q

What are joint costs?

A

cost of a single process that yields multiple results

sunk costs

34
Q

What is the split off point?

A

point where product becomes idenfitiable

35
Q

What are separable costs?

A

costs incurred after plit off traceable to products

36
Q

EVA Calcation

A

Income after tax-required return*

required return=Invcost of capital

37
Q

What is a regression analysis?

A

trys to predict total cost

one independent varibale

38
Q

Componenets of Simple Regression

A

y=a+bx

y=TC
x=volume
a=Fixed costs
b=slope=vc per unit*

*Change in TC/Chnage in vc

39
Q

High Low Method VC per unit

A

Diff High Low cost/Diff High Low units

40
Q

What is the annual plan driven by?

A

sales budget

41
Q

What are the opearting budegts?

A

sales
production
Selling & admin
personnel

42
Q

What are the financial budgets?

A

cash

pro forma

43
Q

Components of production

A

DM
DL
OH
COGS

44
Q

BUdgeted Porduction Calc

A

Budgeted Sales
+Desired ending
-beg inc
=production

45
Q

Steps in calculating variances for Dm, DL

A
  1. SAD= Std-Actual=difference
  2. Price (dm)
    Usage (dm)
    Rate (dl)
    Effecicieny (dl)
  3. DA
    DS
    DA
    DS
  4. PDA
    U    DS
    RDA
    E    DS
46
Q

What is strategic planning used for?

A

long term

47
Q

What is most likely another way of saying?

A

greatest probability

48
Q

For regression correlation, what position represents the poorest fit?

A

closest to zero

49
Q

Production Budget Calc

A

Production Needs
+Desired EI
-Beg Inb

50
Q

Inv Budget Needs

A

Desired Sales
+Desired EI
-Beg Inv

BEC (11 decks)

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