Financial Planning & Analysis (Ninja Notes)

Question 1

BUDGETING:

What is a Static Budget?

Answer 1

Targeted for a specific segment of the company

Question 2

BUDGETING:

Whet is a Master Budget?

Answer 2

• For company as a whole
• Includes budgets for
  • Operations
  • Cash Flows
• Inchrdes a set of budgeted Financial Statements

Question 3

BUDGETING:

What are Fixed Costs?

Answer 3

• Independent of the level of activity within the relevant range
  (property tax same whether or not you produce 10 units or 200 units)
• However - Fixed Costs per unit vary given the amount of activity
• Fewer units produced = higher Fixed Costs per unit
• Greater units produced = lower Fixed Costs per unit

Question 4

BUDGETING:

What are Variable Costs?

Answer 4

• the more Direct Labor/ Direct Material, the more Variable Costs

Question 5

STANDARD COSTING:
Formula: Material Variances
(SAM)

Answer 5

Std Material Costs - Actual Material Costs

Question 6

STANDARD COSTING:
Formula: Labor Variances
(SAL)

Answer 6

Std Labor Costs - Actual Labor Costs

Question 7

STANDARD COSTING:
Formula: Overhead Variances
(0AT)

Answer 7

Over head Applied - Actual Overhead Costs

Question 8

Absorption VS Variable Costs:

Which one is used for Internal Reporting?
Which one used for External Reporting?

Answer 8

Variable = Internal
Absorption = External

Question 9

Absorption VS Variable Costs:

What is included in Inventory of Absorption Costing that is NOT included in a Variable Costing?

Answer 9

Fixed mfg. overhead

Question 10

Absorption VS Variable Costs:

If production is Greater than Sales, which method has the Highest Gross Profit?

Answer 10

Absorption - because COGS is going to be lower

Question 11

Formula: Contribution Margin

Answer 11

Sales Price (per unit) - Variable Costs (per unit)

= Contribution Margin

Question 12

Formula: Break Even Point (units)

Answer 12

Fixed Costs / Contribution Margin (per unit)

assumes: total revenues are linear

Question 13

Special Orders: Incremental Approach 
(Impact on Operating Income)
 - Factory has Idle Capacity
- special Order for 30,000 Shirts
- $10 per shirt
-  Var. Mfg. Costs $6 per shirt
-  Fixed Mfg. Costs $4 per shirt

Answer 13

• 30,000 x 10 = 300,000 Incremental Revenue
• 30,000 x 6 = 180,000 Incremental Costs

• 300,000 - 180,000 = 120,000 Op Income Impact

FIXED costs are IGNORED for Special Orders

Question 14

Cost VS Profit VS Investment Center :

What is MGMT. Concerned w/ in a Cost center?

Answer 14

Oaly w/ Costs

Question 15

Cost VS Profit VS Investment Center :

What is MGMT. Concerned w/ in a Profit Center?

Answer 15

Costs and Protits

Question 16

Cost VS Profit VS Investment Center :
Cost VS Profit VS Investment Center :
What is MGMT. Concerned w/ in an Investment Center?

Answer 16

Costs, Profits, and Assets

Question 17

FORECASTING:
which technique requires data to be
- Collected and analyzed
- Requires judgement / consensus

Answer 17

Delphi Technique

Question 18

FORECASTING: 
which technique 
- Sales as the dependent variable
- if Simple _ ?
- Multiple _?

Answer 18

Regression Analysis

Simple Regression = 1 independent variable

Multiple Regression = multiple independent variables

Question 19

FORECASTING:

Forecasts Sales using Economic Data

Answer 19

Econometric Models

Question 20

FORECASTING:
which technique is:
- very Simplistic
- “Eyeball” past trends to make an estimate

Answer 20

Naive Models

Question 21

FORECASTING: 2 Methods

• Estimates using average trends
• which one focuses more heavily on recent data?

Answer 21

Moving Avg. and Exponential Smoothing

Exponential Smoothing focuses more heavily on Recent Data

Question 22

Short -Term Cost Analysis: which costs
• are used
• ignored
• must be included

Answer 22

used: Relevant Costs
ignored: Sunk Costs

Must: Opportunity