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BAR > Operations Management > Flashcards

Operations Management Flashcards

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1
Q

What does PIE stand for?

A

Product Costing
Income Determination
Efficiency

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2
Q

Prime Costs =

A

Direct Materials + Direct Labor

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3
Q

Conversion Costs=

A

Direct Labor + OH

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4
Q

Product Costs=

A

Direct Material + Direct Labor + Manufacturing OH Applied

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5
Q

What is the best cost driver to use in activity based costing?

A

The driver with the highest correlation with the incurrence of manuf overhead

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6
Q

Electricity costs are most likely considered what type of costs?

A

Overhead costs, not direct materials or prime costs

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7
Q

What is the formula for FIFO method equivalent units?

A

units completed + % ending inventory - % Beginning Inventory

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8
Q

What are conversion costs made up of?

A

=LABOR + OH

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9
Q

What is the weighted average method equivalent units calculation?

A

Units completed + % of ending inventory

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10
Q

To calculate weighted average cost per equivalent unit?

A

total costs (beginning cost + current costs)/equivalent units (units completed + % of ending inventory

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11
Q

What is another way to calculate conversion costs other than Labor + OH?

A

Cost of goods manufactured - materials

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12
Q

How do you calculate cost of good manufactured?

A

= COGS + Ending Inventory - Beginning Inventory

OR

= Beg WIP + Raw Materials used + Direct Labor + OH Applied - Ending WIP

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13
Q

What does the financial scorecard acronym CRPI stand for?

A

C - costs
R - revenue generating
P - profit generating
I - investment returns

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14
Q

What does the financial scorecard acronym FICA stand for?

A

F - CRPI (financial)
I - Internal business processes (non-financial)
C - customer satisfaction (non-financial)
A - advancement of innovation and human resources (non-financial)

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15
Q

What is the cost of quality acronym stand for? APIE

A

Conformance: A - appraisal costs to detect
Conformance: P - prevention
Non-Conformance: I - internal failure
Non-Conformance: E - external failure

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16
Q

What is ABSOLUTE CONFORMANCE in relation to cost of quality?

A

The most rigorous standard. Zero defects

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17
Q

What is the difference between contribution margin and controllable margin?

A

Contribution margin is revenue - variable costs, controllable margin is contribution margin - controllable fixed costs

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18
Q

Responsibility accounting is associated with what type of performance reporting?

A

Reports that focus on revenues and costs that are within the control of the manager being evaluated.

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19
Q

What is the breakeven units formula?

A

breakeven units =

total fixed costs/Contribution Margin per unit

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20
Q

The correlation coefficient can only be between

A

-1 and 1

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21
Q

The coefficient of determination will always be a number between

A

0 and 1

22
Q

Under the absorption method what is the calculation for COGS?

A

Direct Materials +
Direct Labor +
Variable OH +
Fixed OH

23
Q

How is variable costing different than absorption costing in reference to fixed product costs?

A

Fixed costs under variable costing are immediately expensed, treated as period costs.

24
Q

What is the formula for breakeven $?

A

Fixed Costs/Contribution Margin Ratio

CM Ratio = CM/Revenue

25
Q

What is the Margin of Safety when discussing breakeven sales?

A

margin of safety is how much additional $ you have from your breakeven $

26
Q

What is the difference between a master budget and a flexible budget?

A

Master Budget: Overall budget, consisting of smaller budgets, one specific level of production

Flexible Budget: Series of budgets based on different activity levels within the relevant range.

27
Q

What happens when a cash dividend is declared?

A

Increase in current liabilities. Assets remain unchanged until the payment happens.

28
Q

What is the formula for operating profit margin?

A

Operating profit = EBIT/Sales

29
Q

What is the calculation for ROA?

A

Net Income/Total Assets

OR

Net Income/Sales * Sales/Total Assets

30
Q

What is the calculation of working capital?

A

Current Assets - Current Liabilities

31
Q

What is the calculation of current ratio?

A

Current Assets/Current Liabilities

32
Q

what is the quick ratio calculation?

A

Cash & Equiv + Marketable Sec + AR/Current Liabilities

33
Q

What is the debt to asset ratio?

A

Total Liab/Total Assets

34
Q

What is the DSO Calculation?

A

AR (ending)/Sales*number of days

35
Q

What is the operating cycle?

A

Inventory Days + AR Days

36
Q

What is a descriptive analytic technique?

A

Explains what has already happened but not why it has occurred. Diagnostic analytics would focus on why.

37
Q

How do you calculate the material price variance?

A

AP-SP * AQ

38
Q

How to calculate direct labor usage variance?

A

(Difference in standard and actual hours) * standard rate

39
Q

How do you calculate a selling price variance?

A

(Actual Sales price per unit - Budgeted) *actual sold units

40
Q

What is the formula for direct materials quantity usage variance or efficiency variance?

A

Standard price * (Actual QTY - Std QTY)

41
Q

Formula for Direct Labor Efficiency variance?

A

= Standard rate * (Actual hours worked - Standard hours allowed)

42
Q

How do you calculate the OH Rate?

A

Budgeted OH/Budgeted Cost Driver

43
Q

How do you calculate the applied OH?

A

OH Rate * Actual Cost Driver

44
Q

How do you calculate the partial productivity ratio?

A

the ratio of specific item to the output
what you put in of a specific item, what you got out

ex: amount of iron (4800lbs) to units of pipes produced (12,000) = 2.5

45
Q

How do you calculate total factor productivity?

A

total amount of inputs in a common size to what you got out

ex: amount of iron and copper to units produced

46
Q

How do you calculate Economic Value Added?

A

NOPAT - (Investment * WACC)

47
Q

What is the formula for contribution margin?

A

Sales - Direct Labor - Direct Materials - Variable OH

48
Q

What is the formula for payback method?

A

Initial investment/incremental cashflow

49
Q

When doing a high/low analysis how do you calculate the variable cost per unit?

A

=Delta between HighLow Cost/Delta between HighLow Units

50
Q

When doing a high/low analysis how do you calculate the fixed cost?

A

Take either High or Low Units * Variable cost per unit

Compare amount vs. either High or low total cost

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