Midterm Flashcards
Planning
•Identify alternatives
- develop budgets to guide progress toward the selected alternative
Directing and motivating
Directing and motivating involves managing day to day activities to keep the organization running smoothly.
• employee work assignments.
• Routine problem solving
• conflict resolution
• effective communications
Controlling
To control function ensures that plans are being followed.
- performance reports
Decision making
The most basic managerial skill is the ability to make intellegent,data driven decisions. Many of these decisions revolve around these three questions
. What should we be selling?
. Who should we be serving?
. How should we execute?
Big Data
Big Data refers to large collections of data that are gathered from inside or outside a company to provide opportunities for ongoing reporting and analysis.
What are the 5 v’s
Variety, volume, velocity, veracity, value
Descriptive analytics
What happened?
Diagnostic analytics
Why did it happen?
Predictive analytics
What will happen?
Prescriptive analytics
What should I do?
Strategy
A strategy is a “game plan” that enables a company to attract customers by distinguishing itself from competitors.
Ethics
•Confidentiality
• Integrity
• Objectivity
What three categories are manufacturing costs divided into?
• Direct materials
• Direct Labour
•Manufacturing Overhead
Direct materials
Direct materials are those that become an integral part of a product and can be easily traced.
Indirect materials
Included in manufacturing overhead, can not be easily traced and are not worth tracing.
Direct labour
Labour costs that can be easily traced.
Indirect labour
part of manufacturing overhead, not worth tracing and not easy to trace.
Manufacturing overhead
Includes all costs of manufacturing except direct materials and direct labour.
Prime Cost
Direct materials, direct labour
Conversion costs
Direct labour, manufacturing overhead
Product costs
Include direct materials, direct labour and manufacturing overhead.
Period costs
Include all selling costs and administrative costs
Total variable cost
Change when activity changes.
Total fixed costs
Remain unchanged when activity changes
Relevant Range
The relevant range is the range of activity within which the assumptions about variable and fixed cost behaviour are valid.
Sunk costs
Sunk costs have already been incurred and cannot be changed now or in the future. They should be ignored when making decisions.
Variable cost per unit
Remains the same over wide ranges of activity.
Fixed cost per unit
Average fixed cost per unit goes up and down as activity level goes up.
Committed fixed costs
Long-term, cannot be significantly reduced in the short term. Ex) depreciation on equipment.
Discretionary fixed costs
May be altered in the short-term by current managerial decisions. Ex ) advertising and research and development.
Variable Cost Formula
Change in cost/ Change in activity
Account Analysis
Each account is classified as either variable or fixed based on the analyst’s knowledge of how the account behaves.
Engineering approach
Cost estimates are based on an evaluation of production methods, and materials labour and overhead requirements.
Total fixed cost formula
Total fixed cost = total cost - total variable cost
Five elements of cost-volume-profit (cvp)
- Prices of products
2.Volume or level of activity - Per unit variable costs
- Total fixed costs
- Mix of products sold
Contribution Margin Ratio
CM ratio = Total CM / Total Sales
Profit formula
Profits = (sales - variable expenses) - fixed expenses
Break-even point in units sold
= fixed expenses/ Unit CM
Break-even point in total sales dollars
= fixed expenses/ CM Ratio
Margin of safety formula
= total sales - breakeven sales
Margin of safety percentage formula
= margin of safety in $/ total budgeted (or actual) sales
Degree of operating leverage formula
= CM/ operating income
Percent change in operating income
= degree of op. leverage x % change in sales
Sales mix
The relative proportion in which a company’s products are sold.
Activity driver
A measure of what causes the incurrence of a variable cost, ex) units produced, machine hours, labour hours.
Contribution margin formula
Sales- total variable cost = CM
