Planning, Control, & Analysis (M47)

Question 1

At the breakeven point, the contribution margin equals total…

Answer 1

Fixed Costs

Question 2

The most likely strategy to reduce the breakeven point, would be to…

Answer 2

Decrease the Fixed Costs (Numerator) & Increase the Contribution Margin (Denominator)

Question 3

This is a budgeting approach that focuses on the cost of activities required to produce and sell products. It is an extension of activity-based costing

Answer 3

Activity based budgeting

Question 4

These are costs that will not continue to be incurred if the department or product is terminated

Answer 4

Avoidable costs

Question 5

This requires the products, services, and I activities be continually measured against the best levels of performance either inside or outside the organization

Answer 5

benchmarking

Question 6

This is a quantification of the plan for operations

Answer 6

Budget

Question 7

This is a budget that is adjusted for changes in volume

Answer 7

A flexible budget

Question 8

These are reports that are comparing budgeted an actual performance

Answer 8

Performance reports

Question 9

This is the practice of underestimating revenues and overestimating expenses to make budget targets more easily achievable

Answer 9

Budgetary slack

Question 10

These costs arise from a company’s basic commitment to open its doors and engage in business

Answer 10

Committed costs

Question 11

This equals revenue less all variable costs

Answer 11

Contribution margin

Question 12

This can be affected by manager during the current period.

Answer 12

Controllable costs

Question 13

These costs cannot be affected by the individual in question

Answer 13

Uncontrollable costs

Question 14

This refers to the approaches and activities used by management to make planning and control decisions for the firm

Answer 14

Cost management

Question 15

This is a planning tool used to analyze the effects of changes in volume, sales mix, selling price, variable expense, fixed expense, and profit

Answer 15

Cost volume profit analysis

Question 16

This is the difference in cost between two alternatives

Answer 16

Differential or incremental cost

Question 17

These are fixed costs who’s level is set by current management decisions

Answer 17

Discretionary costs

Question 18

This supports the financial planning process by making it easier to construct projected financial scenarios. These models incorporate the interrelationships among operating activities, financial activities, and other factors that affect the business, and range from simple models to those that incorporate hundreds of equations

Answer 18

Financial planning models

Question 19

The cash budget, the capital budget, the budgeted balance sheet, and the budgeted statement of cash flow’s are all examples of this

Answer 19

Financial budgets

Question 20

These costs are not very with the level of activity within the relevant range for a given period of time

Answer 20

Fixed costs

Question 21

This involves developing budgets that require only justification for increases in the funding over the prior period

Answer 21

Incremental budgeting

Question 22

This involves estimating the revenues and costs attributable to each product from initial research and development to its final customer and support

Answer 22

Lifecycle budgeting

Question 23

This focuses attention on material deviations from plans while allowing areas operating as expected to continue to operate without interference

Answer 23

Management by exception

Question 24

This is a comprehensive expression of managements operating in financial plans for a future period that is summarized as budgeted financial statements. It consists of the operating and financial budgets

Answer 24

Master budget

Question 25

These costs have a fix component and a variable component. They are separated by using the scattergraph, high-low, or linear regression methods

Answer 25

Mixed or semi-variable costs

Question 26

This model estimates the relationship between independent variable and two or more independent variables. It may be used to develop sales forecasts

Answer 26

Multiple regression

Question 27

This is the budgeted income statement and related schedules

Answer 27

Operating budget

Question 28

This is the maximum income or savings benefit for gone by rejecting an alternative

Answer 28

Opportunity cost

Question 29

This is the cash disbursement associated with a specific project

Answer 29

Outlay or out-of-pocket costs

Question 30

This involves selecting goals and choosing methods to attain those goals

Answer 30

Planning

Question 31

This is the implementation of the plans and a valuation of their effectiveness in attaining goals

Answer 31

Control

Question 32

These are future costs that will change as a result of a specific decision

Answer 32

Relevant costs

Question 33

This is the operating range of activity in which cost behavior patterns are valid. Thus it is the production range for which fixed costs remain constant

Answer 33

Relevant range

Question 34

This measures subunit performance based on the cost and or revenues assigned it to responsibility centers

Answer 34

Responsibility accounting

Question 35

These are predetermined target costs

Answer 35

Standard costs

Question 36

These are committed costs which are not avoidable and are therefore irrelevant to the decision process

Answer 36

Sunk,past, or unavoidable costs

Question 37

This is a defined short-term financial plan that includes assigned responsibilities at all levels

Answer 37

Tactical profit plan

Question 38

This identifies the estimated cost of a new product that must be achieved for that product to be priced competitively and still produce an acceptable profit. Often the product is redesigned and the production process simplified several times before the target cost can be met

Answer 38

Target costing

Question 39

This is the determination of the price at which goods and services will be sold to profit or investment centers via internal company transfers

Answer 39

Transfer pricing

Question 40

These costs very proportionally in total with the activity level throughout the relevant range

Answer 40

Variable costs

Question 41

These are differences between standard and actual results

Answer 41

Variances

Question 42

This involves developing budgets from the ground up by requiring each program or department to justify its level of funding

Answer 42

Zero based budgeting

Question 43

What is the formula for the Contribution Margin?

Answer 43

Selling Price - Variable Costs

Question 44

What is the formula for the Contribution Margin Ratio?

Answer 44

[Selling Price - Variable Costs] / Selling Price

Question 45

How do you calculate the Break Even Point in units when the problem does NOT mention profit?

Answer 45

Total Fixed Costs / | [CM/Unit}

Question 46

How do you calculate the Break Even Point in dollars when the problem does NOT mention profit?

Answer 46

Total Fixed Costs / | CMR

Question 47

How do you calculate the Break Even Point in units when the problem DOES mention profit?

Answer 47

Total Fixed Costs + Before Tax Profit / | CM/Unit

Question 48

How do you calculate the Break Even Point in dollars when the problem DOES mention profit?

Answer 48

Total Fixed Costs + Before Tax Profit / | CMR

Question 49

How do you calculate after tax profit?

Answer 49

Before Tax Profit * (1 - Tax Rate)

Question 50

How do you calculate the before tax profit?

Answer 50

After Tax Profit / (1 - Tax Rate)

Question 51

How do you calculate the Margin of Safety (in units or dollars)?

Answer 51

Current Sales Level (in units/$) - BEP (in units/$)

Question 52

How do you calculate the CM/Unit?

Answer 52

Net Income / Margin of Safety in Units

Question 53

How do you calculate CMR?

Answer 53

Net Income / Margin of Safety in Dollars

Question 54

What is the Flexible Budget Formula?

Answer 54

Budgeted OH = Total Fixed Costs + | Hrs) * (Variable OH Rate/Hr

Question 55

Contribution Margin - Fixed Costs = ____

Answer 55

Profit

Question 56

Sales - Margin of Safety =

Answer 56

Revenues

Question 57

Which budgeting process projects costs on the basis of improvements to be implemented?

Answer 57

Kaizen Budgeting

Question 58

What budgeting process focuses on the ability of the manager to control the cost?

Answer 58

Responsibility Budgeting

Question 59

What budgeting process uses cost driers to determine budgeted costs?

Answer 59

Activity Based Budgeting

Question 60

What budgeting process focuses on budgeting operating costs?

Answer 60

Operational Budgeting

Question 61

T/F The budgeted income statement is included in a firm's financial budgeted

Answer 61

FALSE This is part of the operating budget

Question 62

T/F The capital budget is included in a firm's financial budgeted

Answer 62

TRUE

Question 63

T/F The production schedule statement is included in a firm's financial budgeted

Answer 63

FALSE This is part of the operating budget

Question 64

T/F The Cost of Goods Sold Budget is included in a firm's financial budget

Answer 64

FALSE This is part of the operating budget

Question 65

T/F Markov techniques is a quantitative approach used to develop sales forecasts based on analysis of consumer behavior

Answer 65

TRUE

Question 66

T/F Regression Analysis is a quantitative approach used to develop sales forecasts based on analysis of consumer behavior

Answer 66

FALSE Regression Analysis forecasts sales base don the relationship between sales and one or more predictors

Question 67

T/F Econometric Models are a quantitative approach used to develop sales forecasts based on analysis of consumer behavior

Answer 67

Econometric Models forecast sales based on the relationship between sales and economic data

Question 68

T/F Exponential Smoothing is a quantitative approach used to develop sales forecasts based on analysis of consumer behavior

Answer 68

Exponential Smoothing is used to forecast sales based on historical data

Question 69

T/F The Delphi Technique is a quantitative approach to developing a sales forecast

Answer 69

FALSE The Delphi Technique is simply a structured approach to developing a subjective estimate from a group of people

Question 70

T/F Customer Surveys are a quantitative approach to developing a sales forecast

Answer 70

FALSE This is a qualitative approach

Question 71

T/F Moving Average is a quantitative approach to developing a sales forecast

Answer 71

TRUE

Question 72

T/F Executive Opinions are a quantitative approach to developing a sales forecast

Answer 72

FALSE This is a qualitative approach

Question 73

________ are the reduction in average total cost of production when a firm expands plant production.

Answer 73

Economies of scale