Management Accounting Flashcards
Explain the dupont model
ROA = Operating margin * ATO = (operating income+financial revenue)/sales * sales/assets
What are the six main purposes of a budget
Planning, coordinating, communicating, controlling, motivating and evaluating
What is capital employed
Assets - liabilities
What is process costing
Total cost/ number of products, to use when all products are the same
What is over or under recovery of costs
Over is when the amount allocated to costs in the budget is to large and under recovery is when the amount allocated to costs is to small
Four reasons why knowing costs is useful
Pricing, Decision making, Efficiency and Valuing the inventory
What is the difference between direct and indirect costs
Direct costs can specifically and exclusively be identified with a given cost object while indirect costs cannot. F.ex direct costs would be the cost of a lid on a jar while an indirect cost could be the cost to transport a batch of jars to the store.
What is another word for indirect costs
Overhead
What is prime cost a sum of
Direct material and labor cost
What is total manufacturing cost a sum of
Manufacturing overhead and prime cost
What is total cost a sum of
Total manufacturing cost and non manufacturing overhead
What are ABC systems
Absorption based costing systems that allocate overhead to individual cost objects in addition to the direct costs in contrast to direct costing systems that only allocate the direct costs to the cost objects.
What is contribution margin
sales revenue - variable cost
Where is the break even point
Fixed costs = contribution margin & sales revenue = total cost
What is the margin of safety in units and money
In money: sales revenue - break even; In units: units sold - break even in units
Is an increase in account receivables recorded on the income statement
No becouse the revenue is not yet recognised
Why is ROCE better than ROA for mananging managers
CE is more suitable for evaluating managers, since it gives them credit for contributing to finances by working actively with good payment terms from suppliers?
What is the return in ROA
Operating income + financial revenue
If you are given the budget for a year and balance sheet from the past with diferent asset values what is the assets value to use when calculating ROA
The average
What do you need to do before using assets in ATO
remove short term liabilities for the current period
How is changes in inventory calculated in the cashflow budget
past inventory - present inventory
How are changes in operating recivables calculated in the cashflow budget
past current recievables - present current recievables
How are changes in operating liabilities calculated in the cashflow budget
present short term liabilities - past short term liabilities
A positive change in loans means a negative cashflow
False, taking out more loans means you get more money right now
How do you calculate dividends payed for current period
Current retained earnings - past retained earnings - past net income
How do you calculate non current assets on the budgeted balance sheet using the other budgets
Past non current assets - cashflow investments + depreciation from
How do you calculate return on equity
Income before tax/ average equity
How do you calculate return on liabilities
negative financial expenses / average long term liabilities
How do you calculate return on capital employed
operating income + financial revenue)/Avg(assets - short term liability)
How do you calculate profit margin
Profit from operations / sales
How do you calculate asset turnover ratio
Sales / (CE=avg. assets - short term liabilities)
How do you get ROCE using the du pont model
Profit margin * ATO
