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BEC > Operations Management: Planning Techniques > Flashcards

Operations Management: Planning Techniques Flashcards

1
Q

Projections

A

Multiple, hypothetical scenarios
Precursor to forecasts
Prepared for internal use

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2
Q

What is a sensitivity analysis?

A

Process of experimenting with different parameters & assumptions, risk management tool, determine which variables are most sensitive to change

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3
Q

What is scenario analysis?

A

Multiple different scenarios which represent alternative possible outcomes

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4
Q

Forecasting Techniques

A

Driven by historical data & actual expectations
Internal & external audiences
Qualitative & quantitative methods

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5
Q

What is the high-low method?

A

Estimates fixed & variable portions of costs

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6
Q

What is a flexible budget?

A

Series of budgets prepared for range of activity levels

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7
Q

What is a learning curve?

A

Workers become more familiar with a specific task, per-unit hours decline

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8
Q

Breakeven point in units

A

Total fixed costs / contribution margin per unit

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9
Q

Breakeven point in dollars

A

Unit price x breakeven point in units
OR
Total fixed costs / contribution margin ratio

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10
Q

Sales unit to obtain desired profit

A

(Fixed cost + pretax profit) / contribution margin per unit

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11
Q

Sales dollars to obtain desired profit

A

Variable costs + fixed costs + pretax profit
OR
(Fixed cost + pretax profit) / contribution margin ratio

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12
Q

Margin of safety in sales dollars

A

Total sales - breakeven sales

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13
Q

Margin of safety as percentage

A

Margin of safety in dollars / total sales

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14
Q

Target cost

A

Market price - required profit

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15
Q

What does marginal analysis focus on?

A

Relevant revenues & costs associated with a decision

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16
Q

What are relevant costs?

A

If they change as a result of selecting different alternatives, fixed or variable

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17
Q

What are direct costs?

A

Identified to a cost object, usually relevant

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18
Q

What are prime costs?

A

Direct material & direct labor costs, generally relevant

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19
Q

What are discretionary costs?

A

Arise from periodic budgeting decisions by management to spend in areas not related to manufacturing, usually relevant

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20
Q

What are incremental costs?

A

Additional costs incurred to produce additional amount of unit over present output, relevant & include variable costs & any avoidable fixed costs

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21
Q

What are opportunity costs?

A

Foregoing next best alternative, relevant costs

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22
Q

What are irrelevant costs?

A

Do not differ among alternatives, irrelevant, ignored in marginal cost analysis

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23
Q

What are sunk costs?

A

Unavoidable because incurred in past & cannot be recovered, not relevant

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24
Q

What are controllable costs?

A

Costs authorized by business unit manager/decision maker, relevant if they change as result of selecting different alternatives

25
Q

What are uncontrollable costs?

A

Costs authorized at a different level in the organization, not relevant

26
Q

What are avoidable costs & revenues?

A

Result from choosing one course of action instead of another, relevant

27
Q

What are unavoidable costs?

A

The same regardless of chosen course of action, not relevant, have no effect on decision

28
Q

What are special order decisions?

A

Opportunities that require a firm to decide whether a specially priced order should be accepted or rejected

29
Q

What are joint costs?

A

Costs of a single process that yields multiple products, sunk costs not relevant

30
Q

What are separable costs?

A

Costs incurred after split-off point, relevant

31
Q

What is operational & tactical planning?

A

Process of determining the specific objectives & means by which strategic plans will be achieved

32
Q

What are single-use plans?

A

Apply to specific circumstances during a specific time frame

33
Q

What is an annual budget?

A

Translate the strategic plan & implementation into a period-specific operational guide

34
Q

What are ideal standards?

A

Costs that result from perfect efficiency & effectiveness

35
Q

What are currently attainable standards?

A

Costs that result from work performed by employees with appropriate training & experience

36
Q

What are authoritative standards?

A

Set by management

37
Q

What are participative standards?

A

Set by both managers & individuals held accountable to those standards

38
Q

What is a master budget?

A

Operating budget & financial budget outlining sources of funds & detailed plans for expenditures, normally one year or less

39
Q

What are operating budgets?

A

Describe resources needed & manner in which those resources will be acquired

40
Q

What are financial budgets?

A

Detailed sources & uses of funds in operations

41
Q

What is a direct materials purchases budget?

A

Represents dollar amount of purchases of direct materials required to sustain production requirements

42
Q

What is a direct materials usage budget?

A

Represents number of units of direct materials required for production along with related costs of direct materials

43
Q

What is a direct labor budget?

A

Anticipates hours & rates associated with workers involved in meeting production requirements

44
Q

What is a factory overhead budget?

A

Includes fixed & variable production costs, applied to inventory based on a representative statistic

45
Q

What is a cost of goods manufactured & sold budget?

A

Accumulates information from direct labor, direct material, & factory overhead budgets

46
Q

What is a selling & administrative expense budget?

A

Represents fixed & variable nonmanufacturing expenses anticipated

47
Q

What is a cash budget?

A

Represents detailed projections of cash receipts & disbursements

48
Q

What are the three cash budget sections?

A

Cash available
Cash disbursements
Financing

49
Q

What are capital budgets?

A

Evaluate capital additions over multiyear period, dependent on availability of cash/credit

50
Q

What is flexible budgeting?

A

Allows for adjustments for changes in production or sales & accurately reflects costs for adjusted output

51
Q

What is variance analysis?

A

Tool for comparing measure of performance to a plan, budget, or standard

52
Q

What are standard costing systems?

A

Measure costs the firm expects it should incur during production

53
Q

Variable overhead rate variance

A

Actual hours x (actual rate - standard rate)

54
Q

Variable overheard efficiency variance

A

Standard rate x (actual hours - standard hours allowed for actual production volume)

55
Q

Fixed overheard budget variance

A

Actual fixed overhead - budgeted fixed overhead

56
Q

Fixed overhead volume variance

A

Budgeted fixed overhead - standard fixed overhead cost allocated to production

57
Q

What are sales & contribution margin variances?

A

Can be used to evaluate effectiveness of identification of target markets & strategies to capture those markets

58
Q

Sales price variance

A

(Actual SP /unit - budgeted SP/unit) x actual sold units

59
Q

Sales volume variance

A

(Actual sold units - budgeted sales unit) x standard contribution margin per unit

BEC (4 decks)

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