Lecture 2

Question 1

instruments of management accounting

Answer 1

budgeting and profitability

Question 2

proportional (variable) cost

Answer 2

related manifacturing of product: material costs and direct labour

Question 3

fix costs

Answer 3

indipendent from manufacturing activity (marketing, R&D, administration..)

Question 4

ways to allocate fix costs

Answer 4

1) proportional costs (more fix costs on the product that costs the most)
2) labour time
3) sales revenue (more fix costs on the product that sells the most)

Question 5

if a product seems to create losses

Answer 5

can still make contribution to cover fixed costs

Question 6

types of cost accounting

Answer 6

1) full cost

2) cost contribution: flexible prices to contribute to fix costs

Question 7

problem with full-cost

Answer 7

additional volume given away

Question 8

cost contribution= gross profit

Answer 8

sales revenues -proportional costs

Question 9

gross margin (=contribution intensity)

Answer 9

gross profit/sales reveneu *100

Question 10

Net profit

Answer 10

gross profit- fix costs

Question 11

Net margin

Answer 11

Net profit/sales revenue*100

Question 12

risk of c.c.

Answer 12

sales people sell below full costs to receive more orders, could be that the sum is smaller that the fixed costs

Question 13

Break even

Answer 13

fix cost/contribution intensity

Question 14

not really proportional costs

Answer 14

1) with declining sales we cannot immediately dismiss workers
2) short-term increase of sale –> overtime (higher rates)
3) larger volume favorable purchase price

Question 15

distribution of fix costs variantions depending on the client

Answer 15

1) sale to a large customer requires less sales- and acquisition-costs
2) adaptation of a product for specific needs requires effort

Question 16

not really fix costs

Answer 16

1) more equipment and structure to produce more
2) more people in marketing and sales to sell more
3) more administrative staff to manage more volume

Question 17

valuation of investment

Answer 17

productivity life and impact

Question 18

definition of investment

Answer 18

measures that quantitavely or qualitatively alter the production and sales capacity to achieve higher returns or lower costs

Question 19

methods for investment analysis

Answer 19

1) static: time value of money not taken into account

2) dynamic method: future expenditures and reveneus are convertet to current value

Question 20

paypack period calculation

Answer 20

1) avarage calculation (uniform surplus over time)

2) the cumulated cash flow calculation ( for each period reveneu and surplus)