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Management Accounting > Lectures 8 - 10 > Flashcards

Lectures 8 - 10 Flashcards

1
Q

Standard costs

A

a budget for the production of one unit of product or service

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2
Q

Actual costs

A

incurred and recorded in the production of the product or service

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3
Q

Cost variance

A

the difference between the actual cost and the standard cost

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4
Q

price variance

A

the difference between the actual price and the standard price

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5
Q

quantity variance

A

the difference between the actual quantity and the standard quantity

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6
Q

price/rate variance =

A

AQ * AP - AQ * SP

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7
Q

Quantity/efficiency variance =

A

AQ * SP - SQ * SP

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8
Q

variances are favourable when

A

the actual costs are less than the budget

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9
Q

variances are unfavourable when

A

the actual costs are higher than the budget

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10
Q

Fixed o/hd budget variance =

A

actual fixed o/hd - budgeted fixed o/hd

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11
Q

fixed o/hd volume variance =

A

budgeted fixed o/hd - applied fixed o/hd

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12
Q

applied fixed o/hd =

A

predetermined fixed o/hd rate * standard hours allowed

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13
Q

cost-benefit decision

A

the decision to investigate a variance is a cost benefit decision

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14
Q

behavioural effects of standard costing

A

they can influence behaviour when they’re used to determine salary increases and bonuses

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15
Q

criticisms of standard costing

A

reports are given too late to be useful and not applicable to short lived products

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16
Q

Decentralisation

A

assigning of specific responsibilities to sub-units of organisations

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17
Q

Goal congruence

A

when sub-unit managers in the organisation hold a common set of objectives

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18
Q

Individual goal congruence

A

when the members personal goals match that of the organisation as a whole

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19
Q

behavioural congruence

A

when individuals behave in the best interest f the organisation regardless of their own goals

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20
Q

responsibility accounting

A

a system of internal reporting tailored to specific organisational structures

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21
Q

centralised

A

decisions are handed down from the top and subordinates carry them out

22
Q

benefits of decentralisation

A

shares workload, specialised people focus on depts.

23
Q

costs of decentralisation

A

some tasks could be duplicated, local managers might make decisions that wont match top managers

24
Q

Return on Investment

A

the ratio of profits to investment in the assets that generate those profits

25
Q

ROI =

A

income/ invested capital * 100

26
Q

Weighted average cost of capital

A

weighted average cost of debt and equity

27
Q

what is the most commonly used measure of business unit performance ?

A

ROI

28
Q

non financial performance measures

A

these measures help managers focus on profit drivers and recognise time lags

29
Q

performance measurement in non profit organisations

A

they may have different controls than those found in business environments

30
Q

transfer prices

A

TP is one responsibility centres sales price and anothers purchase price

31
Q

balance scorecards are

A

performance measurement systems or business models that tie together knowledge of strategy, processes, activities and operational and strategic performance measures

32
Q

An incentive system communicates

A

strategy, motivates employees and reinforces achievement of organisational goals

33
Q

leading indicators

A

are measures that identify future financial and non financial outcomes to guide managements decisions

34
Q

lagging indicators

A

are measures of the final outcomes of earlier management pans and their execution

35
Q

organisational learning and performance

A

employee training, education, satisfaction and turnover

36
Q

business and production process performance

A

new service development, service costs and process improvements

37
Q

customer performance

A

customer satisfaction, retention, loyalty and risk

38
Q

financial performance

A

revenue growth, net interest margin and return on assets

39
Q

benefits of a bsc

A

works in lots of organisations and makes employees think about their decisions

40
Q

costs of a bsc

A

choosing and validating measures, training and managing multiple measures

41
Q

relative performance evaluation

A

compares an individuals performance to that of others

42
Q

absolute performance evaluation

A

compares individual performance to set objectives or expectations

43
Q

expectancy theory

A

people are motivated to act in ways that they expect to provide them with desired rewards

44
Q

agency theory

A

an employee contracts with an employer to perform certain work, incentives must motivate the employee to work.

45
Q

current rewards

A

are given now, based on current performance (immediate cash bonuses)

46
Q

deferred rewards

A

rewards given later if sustained performance is desired (cash stocks payable later)

47
Q

Cash bonuses

A

most liquid and immediate

48
Q

share awards

A

usually not redeemable right away

49
Q

share appreciation rights

A

confer a bonus to employees based on increases in stock price for a predetermined number of shares

50
Q

share options

A

give an individual the right to purchase a number of shares at a specified price of a specified time period

51
Q

incentive plans in non profit organisations

A

despite NPO’s being different they use features of executive incentive plans developed in the private sector

52
Q

financial performance reflects the achievement of financial goals such as

A

cost control, revenue growth, earnings residual income

Management Accounting (5 decks)

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