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management Flashcards

1
Q

what is management accounting

A 
generating informartion needed by management 
elements;
planning
directing and motivating
controlling decision making
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2
Q

name the elements of management accounting

A

no requirement
internal to company; unplublished + confidential
used to plan budget and forecast any period
flexible timely and aproximate
focus on one area of a company
no presribed rules
any time period

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3
Q

name the elments of financial acccounting

A 
legal requirement
external to company; published + registered
focuses on historic performance
accurate and audited 
focuses on whole company 
must comply with regulations
annualy done
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4
Q

what are the thics to accounting

A 
integrity
objectivity
proffessional competance/ due care
confidentiality 
professional behaviour
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5
Q

what are direct materials

A

materials that become integregal part of the cost unit and can be conviently tradced direct to it

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6
Q

what is manufacturing overhead mean

A

it is the cost of manufacturing that cant be traced directly to specific with produced

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7
Q

what is a cost object

A

something for which seperate cost information is desired

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8
Q

what is cost unit

A

individual unit of production or service for cost information desired

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9
Q

what is a cost centre

A

production or service location a function an activity or an item of equipment for which costs are accumulated

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10
Q

what is prime cost made up of

A

direct cost
+
direct materials

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11
Q

what is the relevant range

A

range of activity within which assumptions about variable + fixed costs are valid

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12
Q

what is the formula for semi variable costs

A

y = a + bx

y= semi variable cost
a= fixed cost
b=unit veriable cost

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13
Q

how to do high low method (step by step)

A

highest and lowest activity leveks with corresponding total costs
unit variable cost = change in costs/ change in units
then implement y=a+bx

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14
Q

how to work out unit variable costs

A

change in cost/change in units

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15
Q

disadvantages of high low method

A

only uses two data points

uses most extreme values may be anomalous

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16
Q

what is residual

A

distance each point on scatter diagrams and line of best fit

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17
Q

what are the methods of inventory valuation

A

AVCO
LIFO
FIFO

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18
Q

what is AVCO formula

A

total cost of inventory in store/ number of items in store

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19
Q

closing inventory formula

A

opening inventory + purchases of inventory - issues of inventory

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20
Q

what is full/absorption cost

A

total resources used to achieve a given objective

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21
Q

what is OAR

A

cost centre overhead/ absorbtion basis

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22
Q

how to workout overhead applied

A

POHR * actual activity

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23
Q

formula for POHR

A

predetermined overhead rate =

estimate total manufacturing overhead cost coming period / estimated total units in allocation basis for coming period

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24
Q

when is item underabsorbed

A

overhead absorbed - actual absorbtion

<0

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25
when is it overabsorbed
overhead absorbed - actual absorbtion | >0
26
name types of costing systems
marginal costing Activity Based Costing absorbtion/total costing
27
what is a cost driver
activity thats a root cause of why a cost occurs
28
contribution formula
selling price - variable costs
29
profit formula
contribution - fixed costs or margin of safety * contribution
30
what is breakeven point and formula
it is the point at which no profit or loss is made so fixed costs equal to contribution total fixed cost/contribution per unit
31
formula for magin of safety units
budgeted sales unit - breakeven sales unit
32
formula margin of safety %
(budgeted sales unit - breakeven sales unit)/budgeted sales unit
33
difference between marginal and absorbtion cost
fixed cost overhead is put in product cost for absorbtion where as for marginal its included in period cost
34
how to allocate scarce resources
``` identify limiting factor calculate contributions per unit calculatre contributions per limiting factor carry out ranking on previous step dtermine scarce resources required allocste scarce resources determine optimal mix of resources determine optimal product mix ```
35
full cost pricing advantages and disadvantages
``` adv price easy quick calculate ensure cover all costs price increase costs rise dis no reflection impact prices of sales demand reduce initative for cost control ```
36
marginal cost plus pricing advantages and disadvantages
``` adv simple to use avoids abitrary apportionkent and absorb good decision making short term dis doesnt gurantee recovery of full cost not reflect any impact price on sales demand ```
37
gross profit margin formula
gross profit/ (cost of sales +gross profit) OR gross profit/sales
38
gross profit mark up formula
gross profit /(sales-gross profit) OR gross profit/cost of sales
39
what is gross profit formula
selling price - cost of prodcution --------------------------------------------------- cost of sales
40
what is net profit formula
gross profit - operating costs ------------------------------------------ expenses
41
what is a budget
a detailed plan for acqusition and use of financial and other resources over a specified time period
42
what is budgetting
the act of preparing a budget
43
why have budgets
``` to define goals and objectives communicate ideas and plans improve allocation of resources goals and objectives serve as benchamrks for performance evaluation establishing a system of controls motivate employees means of performance evaluation co ordinates activities whole organisation by integrating plans different parts ```
44
what is the master budget and what does it include
comprehensive expression of managements plan for future and how to acomplish these in a acash budget SOP/L budgeted SOFP
45
types of budgets and explain them
Incremental zero based rolling
46
what is responsibility accounting
holding management accountable for only what they can control to a significant extent
47
what is top down budgetting
top management prepare budget with little input from operations
48
what are the adv and dis of top budgetting
advantages use top management big picture awareness enhance coordination between areas of budget quicker to draw up and implement disadvantages demoralising for staff esp targets too tough reduce initative for lower management ignores knowledge those doing day to day jobs
49
what is bottum up budgetting
developed by lower managers who fed upwards to senior managers
50
whata re the adv and dis of bottum up budgetting
``` adv based knowledge employees familiar with work plus knowledge together various sources better for morale/motivation maybe more realistic dis employees introduce budget slack more time consuming any changes senior management make demoralising ```
51
what is required production formula
sales + closing stock - opening stock
52
what are the measures of correlation
coefficent of correlation r perfect negative is -1 and posotive perfect + 1if r=0 then not correlated coefficent of determination r^2 mesasure proportion of change one variable explained variation in value of other variables; values between 0 and 1
53
what is the difference between interpolation and extrapolation
interpolation is independent variabke c within range of sample data so reliable extrapolation where independent variable x outside range of sample data not reliable
54
what is working capital
amount that can be used to measure both a company operational efficency and its short term financial health --> DIFFERENCE CURRENT ASSETS AND CURRENT LIABILITIES
55
what is formula for current ratio
current asset/ current liabiltiies
56
what is quick ratio formula
(current asset-inventories)/current liabiltiies
57
what is the formula for inventory turnover period
inventory/cost of sales *365
58
what is the formula for rate of inventory turnover
cost of sales/ avergae inventory
59
what is the formula for recievables collection period
average recievables/annual sales revnue *365
60
what is the formula for payables payment period
average payables/annual purchases *365
61
why hold cash
transactions precautionary investment finance
62
what are standard costs
benchmark for measuring performance
63
what is a materials price variance
actual quantity(actuap price-standard price)
64
what is the formula for materials quanity variance
standard price (actual quantity - standard quantity)
65
what is the formula for labour rate variance
actual hours(actual rate-standard rate)
66
what is the formula for labour efficency variance
standard rate (actual hours-standard hours)
67
what is the formula for variable overhead spending variance
actual hours(actual rate - standard rate)
68
what is the formula for variable overhead efficency variance
standard rate(actual hours-standard hours)
69
examples of an unfavourable efficency variance
``` poorly trained employeed poor quality materials poorly maintained equipemtn poor supervision of workers insufficent demand to occupy workers ```
70
when is a variance unfavourable
when actual cost exceeds standard costs
71
what is the formula for return on investment ROI
operating profit/ average operating assets
72
what is the formula for avergae operating assets
opening assets + end of year assets ----------------------------------------------------- 2
73
how to improve ROI
increase sales reduce assets reduce expenses
74
what are criticisms of ROI
focus on short term peformance evaluate ROI reject profitable investment opputunities managers inherit commited costs over which no control
75
how to work out residual income RI
controllable dividional profit x imputed interst cost of capital (x) residual income
76
what are the capital budgetting techniques
screening decisions | preference decisions
77
what is discounting formula
x = v / (1+r)^n

Accounting (17 decks)

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