Financial planning and control Flashcards
Definition learning
List the 7 advantages of CVP analysis
- Attention is focused on critical relationships.
- Targets can be established.
- Performance evaluation is enhanced.
- Projections can be presented clearly and directly.
- Data can signal the use of alternative strategies.
- The method of organizing information supports sensitivity and risk analysis.
- The process of organizing information is appropriate for establishing rates.
T/F - IRS and reporting standards REQUIRE accounting information be presented according to whether costs are fixed, variable, or mixed
FALSE - This description of cost behavior is not needed for public reporting purposes or taxation.
Variable costs are a function of _______.
Activity
- The greater the level of activity, the greater the total cost
It is essential to seek ways to reduce the per-unit variable rate through ____________, especially when the usage rate is high
effective procurement
A logical strategy for controlling variable costs?
Conservation
Primary control strategies for variable costs?
Procurement and conservation
T/F - The amount spent is the same regardless of the activity level for fixed costs
True
_________________ of a fixed-cost resource is a logical strategy for controlling a fixed cost
Better utilization
T/F - It is essential to carefully analyze the level at which fixed costs are acquired (procured)
TRUE
The primary control strategies for fixed costs emphasize ___________
procurement and utilization
T/F - Many resources can be acquired either as fixed or variable
True
What are 4 things CVP models do?
- provide a foundation for financial planning and control
- illuminate critical financial relationships in planning process
- facilitate sensitivity analysis
- provide management with indicators of operating success and operating problems
