PLANNING AND MEASUREMENT

Question 1

margin of safety?

Answer 1

difference between your actual or current sales and the break even point. It shows how far sales revenue decrease before operating income become negative.

Question 2

what is the floor and ceiling in a transfer pricing decision?

Answer 2

the floor is opportunity cost plus costs of outlay. the ceiling is the market price

Question 3

target pricing?

Answer 3

set prices based on what you think customers are willing to pay based on perceived value

Question 4

economic value added?

Answer 4

net operating profit after taxes less cost of capital

Question 5

how is the overhead rate calculated?

Answer 5

dividing estimated overhead costs(both variable and fixed) by a budgeted or estimated quantity of a cost driver. Example: total overhead costs of 75,000 divided by 20,000 budgeted direct labor hours for a overhead application rate of 3.75 per direct labor hour

Question 6

conversion cost?

Answer 6

direct labor + overhead

Question 7

how is a spoilage question done?

Answer 7

normal spoilage is a manufacturing cost because it’s an inherent part of production, so it is included in finished goods.Abnormal spoilage is treated as a period cost.If total units completed are 5500 with 5000 being saleable, 200 being normal spoilage, and 300 being abnormal spoilage, then 5200 is included in finished goods. so 5200/5500 times the total cost:(5200/5500)*99,000=93,600 which is what will be debited to finished goods

Question 8

how to use high-low method:

Answer 8

total costs y=a+b(x)y=total costsa=fixed costsb=variable cost per unitx=number of kilos,etcb is change in costs divided by change in kilos, or (y2-y1)/(x2-x1)

Question 9

what does a JCL do?

Answer 9

Job control language initiates programs, specifies priorities and running sequences, and which databases are used and which files are used

Question 10

What is the order of creating master budget?

Answer 10

sales budget is first, then production budget, budgeted income statement then budgeted balance sheet

Question 11

absorption costing?

Answer 11

assigns all 3 factors(direct material, direct labor, and both fixed and variable manufacturing overhead) to inventory

Question 12

direct costing?

Answer 12

assigns only variable manufacturing costs to inventory- which means variable manufacturing overhead

Question 13

what does r squared actually mean?

Answer 13

percentage of variation in the dependent variable explained by the variation in the independent variables

Question 14

what are x and y in a line equation?

Answer 14

x is the independent variable, and y is the dependent variable.

Question 15

overhead efficiency variance?

Answer 15

The overhead efficiency variance is the difference between actual direct labor hours worked, and the standard quantity of hours allowed for actual production, times the variable overhead rate per hour.

Question 16

overhead volume variance?

Answer 16

The overhead volume variance equals the difference between the master budget for fixed overhead and applied fixed overhead. The variance has one cause only: producing a number of units different from that specified in the master budget.

Question 17

labor efficiency variance

Answer 17

The labor efficiency variance is the difference between actual direct labor hours worked, and the standard quantity of hours allowed for actual production, times the direct labor wage rate per hour.

Question 18

material usage variance?

Answer 18

This variance is the difference between the actual quantity of material used, and the standard quantity allowed for the output achieved, times the standard price of material.

Question 19

Diff between spending variance for fixed overhead and variable overhead?

Answer 19

The spending variance for variable overhead is the difference between the actual overhead and the budgeted overhead based on actual direct labor hours. The spending variance for fixed overhead is the difference between the actual overhead and the master budget for fixed overhead. Neither variance is affected by the denominator used for allocating fixed overhead.

Question 20

what is incremental or differential cost?

Answer 20

the total difference in cost of two alternatives.

Question 21

using PERT or CPM, activity slack is?

Answer 21

max amount of time an activity can be delayed without delaying the entire project

Question 22

financial planning process:

Answer 22

1) analyzing the investment and financing alternatives available to a firm, 2) forecasting the future consequences for each of the alternatives, 3) deciding which alternatives to undertake, 4) measuring subsequent performance against established goals. Measuring the subsequent performance is the final step in that process.

Question 23

what are the steps to process improvement?

Answer 23

1) design, 2) modeling (which involves simulation of the process), 3) execution (including training of personnel and testing of the process), 4) monitoring, and 5) optimization.

Question 24

what is a pareto chart?

Answer 24

a bar chart or histogram that ranks the causes of variations in a process from most to least frequent, which is intended to indicate their effects on quality

Question 25

what is a control chart?

Answer 25

measures deviations from process standards, a fishbone diagram identifies causes of defects and their effects

Question 26

steps in project management:

Answer 26

project initiation, project planning, project execution, project monitoring and control, and project closure

Question 27

a cost management system is:

Answer 27

a planning and control system that measures the cost of significant activities, identifies non value-added cost, and identifies activities.

Question 28

relevant range?

Answer 28

level of activity where fixed costs remain fixed

Question 29

diff between theoretical capacity and practical capacity?

Answer 29

Theoretical capacity assumes output is produced 100% of the time. Practical capacity adjusts theoretical capacity for non-production time such as holidays and maintenance shutdowns.

Question 30

Utilizing the expected annual capacity approach to overhead application, can result in overapplied overhead when:

Answer 30

Actual overhead costs were less than expected and/or production was higher than expected.Overhead is applied based on a calculated rate per unit. This calculated rates uses estimate overhead costs divided by an estimated activity level. If either the estimated overhead is higher than the actual overhead or the estimated activity level is lower than the actual activity level, overhead can be overapplied.

Question 31

labor rate variance?

Answer 31

actual rate paid minus standard hourly rate times the total hours worked

Question 32

labor efficiency variance?

Answer 32

number of hours worked less hours supposed to have been worked times the standard rate

Question 33

material price variance?

Answer 33

diff of total price paid and total price should have paid for the same amount

Question 34

fixed overhead spending variance

Answer 34

It is the difference between the actual overhead spending and the budgeted overhead spending.

Question 35

most likely strategy to reduce breakeven point?

Answer 35

decrease fixed costs and increase contribution margin

Question 36

what is six sigma similar to?

Answer 36

total quality management

Question 37

what are the 4 types of costs of quality?

Answer 37

prevention costsappraisal costsinternal failure costsexternal failure costs

Question 38

steps for business continuity plan

Answer 38

create framework and structure, identify the scope of the plan, its key roles, and assign individuals to roles. Understand and evaluate organizational risks. Define alternative methods to ensure delivery of products and services. Strategy for handling crisis incidents. embed plan in organizational culture. educate, train, and make aware.