Presentation: Factoids Flashcards
Is super accurate numbers needed in profit measurement and inventory evluation
No
Is super accurate numbers important regarding decision making and improvement work
Yes, to the best of abilities
Explain semi fixed costs
Fixed costs that vary when they reach a threshold. Digram like a staircase
Explain semi variable costs
Costs with a fixed and a variable part. Graph like a linear equation kx + m = y
Why are budgeted overheads used instead of actual fixed ones
Because companies need to do calculations before they have reports and because overhead rates based on fixed costs vary with volume.
How might fixed overhead variation with volume mislead you
When you produce less your fixed overhead per unit becomes larger. Out of context this might lead you to increase prices when operating under capacity
How is over or under recovery calculated
Budgeted OH*(real base - budgeted-base)
Are budgets mandatory in public organizations
Yes
What are the functions of budgeting
Planning, coordination of different parts, communicating expectations, base for controls, motivation and base for performance evaluation
What measures can improve budgeting
Rolling budgets, team based rewards, required justification, sorting decisions based on priority
What are relevant costs
Costs that can be affected by decisions
- incremental costs
- avoidable costs
What are irrelevant costs
Costs that cannot be changed or avoided
- sunk costs
- unavoidable costs
Should you account for sunk and unavoidable costs when calculating npv
No
What assumptions ate required for cvp analysis
Short time horizon, only volume varies with x all other costs are constant, linear relationship, single product or constant mix, fixed and variable costs are known
What assumptions are often made when comparing investments
No taxes or inflation, certain profits, available funds
