Operationsl Finance, Feedback control, Resource Planning Flashcards
What is a Line Item Expense Budget
reviewing expenses from previous period, possible changes for the next period, and budgeting at the line level
when does a line item expense budget work best?
in a consistent work environment with stable activity, and selected accounts
what is a program budget
budgeting approach associated with large scale projects or programs
when is a program budget best?
Not for profit organizations, and when it’s more than just one department, so a line item expense budget doesn’t work
What is performance based budgeting
budgeting that is can flex resources to meet changes.wh
when is performance based budgeting best?
uncover waste or hidden costs, review WHY resources are being sent, and provide a way to evaluate the resource impact of process and technology changes
what is activity based planning
a type of performance budget that focuses on workload, not headcount.
why is activity based planning beneficial?
budgets resources through flexing activities,
providing greater granularity on what’s going on
helps understand what the understanding between resources and activities
what is object costing
connecting resources to activities
generally done with a chart and connecting lines
what is activity based budgeting
connecting activities back to resources
what is the feedback control loop
planning, execution, feedback control, repeat.
what is profit reporting
revenue - variable costs = contribution margin
what is Management control
Price x Quantity - (price costs) x Quantity = contribution margin
what are the five things that explain the delta to contribution margin
Sales Price
Sales Volume
Variable Cost Price
Variable Cost Volume
Variable Cost Efficiency
what is price deflation
the sales that would have occured if prices didn’t drop, expressed as a percent.
in other words, change in sales if you keep the price the same
