L5 Flashcards
Explain what adverse material mix and favourable material yield indicates about production?
Material experiences occur when actual mix material is different from standard mix more focused on input and the adverse variance indicates that actual mix was more expensive than standard mix.
Material yield variance on the other hand arises when actual output differs from expected output based on input. It focuses on outputs and the favourable yield varies from both suggesting the input produced more output that expected.
In assess the performance of the production manger questions
Talk about the in increase in cost if there’s any , how it makes variance lead to adverse ,how much they actually pay
,how might have been an increase in any material use and overall cost , are some change not in the control of the manger like product degin
Use your knowledge about target costing technique to calculate cost and price information for the company
Discuss target price how it’s based on market research and customer expectations aligned with price with customer values and critical for competitive positioning
Target profit per unit state the profit margin is determined by the companies objectives, shareholders and terms sustainability
Total cost per unit discuss the total cost indicates both fixed and variable cost stress at the maintaining control cost over cost insured the company meets his profit target
Fix cost emphasise the allocated cost production volumes required efficiency improves to reduce units of fixed cost
Target costing discussion
Are the customers willing to pay more target price then selling price
Is the cost of the product less then current variable cost
Saving more money
Is the design cost becoming more adverse
Are the customer willing to pay more for in any feature
Target costing discussion
Are the customers willing to pay more target price then selling price
Is the cost of the product less then current variable cost
Saving more money
Is the design cost becoming more adverse
Are the customer willing to pay more for in any feature
Advantage and disadvantage is ceo set a budget for the year instead of mangers getting involved
Helps with motivation and decision making , different opinions that can help the business in terms of responding to and to trends
Advantages
Better control and decision making
Quicker response to market demands
Disadvantage
Demotivating
Lots of pressure on one manger
Not enough understanding as a whole
What does responsible accounting mean and three examples of different types of responsibility centre
Responsible accounting is making reports that would help managers to make better decisions to help the organization helps with motivation
Cost centre have control costs and not income e.g administration
Profit centre have control over both costs and income e. Retail organization
Investment centre have control over income and investment in operating assets
Advantages of a budget
-Help you plan
Can help you with profit levels as you decreasing your expenditure
Can help allocate funds based on the companies priorities
Helps compare actual versus budgeted
Helps with decision-making like cutting costs or expanding
Disadvantage of budgets
Can be only based on short term focus
Can be seen as outdated because they’re looking at the past
Budget can be hard to adjust because of changes
Time consuming as you have to update
budget may lead to poor decisions
Why should or shouldn’t the operational manger be included in the budget
Should
Have experience on how to do it and the process
They may be more motivated to achieve it
By motivating the team can need to motivation
Shouldn’t
The manager might not be financially experienced
Can be too competitive with other departments and seen as bias
They may spend a lot of time arguing about internal process causing arguments
Budgets rolling budget set
A rolling budget is updated regularly every month or quarter
advantages
Always upto date
Flexible to change
Disadvantages
Time consuming
Can be difficult to predict in unstable environments
Continuous budget
Budgets zero based budget
Advantages
Starts from 0 so you can pick what’s really needed
Reduce unnecessary spending
Disadvantage
Might miss important thing they need to save money
Always need a reason to spend money can be tiring
Complex for large companies
Incremental budget
Advantages
Last years budget and this years inflation
Easy and simple
Disadvantage
Not much changes
Not help with cutting cost
Six objectives of a budgetay control system
To help planning
Help managers to prepare for the future to help meet long term plans . By looking at the year ahead and changing things to meet the conditions
To coordinate activities
Bring together all departments into a plan . Helps organization upcoming events different departments need to be able to help and comprise to meet the companies goals as well as what’s best for each department.
To communicate activities
Top management communicates to lower management’s expectations. So that each department do there part help the company to stay on budget communication is important
To motivate managers to perform well
Helps us see how managers and employees are performing, which can help see motivation, it’s better for lower management to be involved in discussing budgets to help prevent demotivate
To establish a system of control
Budgets help keep contorl in a business . Actual vs budget and any big changes are investigated sometimes the manger can or can’t control this , they may or may not be held accountable
To evaluate performance
Employees are rewarded with bonuses on staying on budget more than performance. Might be hard because of economical conditions
What is participative style budgeting in terms of six objectives of budget control sytem (bottom to up) setting budget
To make a plan
Help with budgeting planning at all levels from bottom to up management
Helps with accurate and realistic help with day to day operations
To coordinate activities
Can be time consuming all departments and management but helps with overall plan
To communicate activities
Everyone needs to communicate and getting everyone involved in the process. May lead to budget changing up on reviews and low management need to adjust to higher management final budget
