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
What are action controls
Behavioral constraints like rules, prediction reviews and action accountability. Focuses on prevention
What are social controls
Selection, training, job design, shared culture and values
What responsibility centers are there
Cost, revenue, profit, investment
What is eva
Residual value that uses coc and counts rnd and marketing as an asset
Where is profit taken from when calculating financial ratios and investment choices
Income statement
What are some disadvantages of using financial ratios to evaluate performance
Encourages short term thinking and sub-optimization like canceling education
How do you compensate for the negative affects of financial performance metrics
Longer measurement periods and usage of non financial performance metrics
Ate finical measures best at performing overall economic performance
Yes
What are the alternatives to the balanced scorecard
Performance prism and pyramid as well as results/ determinant frameworks
What is ERP
Enterprise resource planning which includes the accounting system and management accounting applications
How can you present data in time
On period, rolling average, accumulated and trends
How is coc calculated
(Budgeted Net income (budgeted Roe * equity) + interest(liabilities * interest rate)) / assets. Sum of owners and creditors required rate of return per assets
How can RoI be divided into debt and equity
Roi = RoeE/A + RolL/A
Why use CE instead of A
Because only creditors and owners get returns from company performance
OM
Operating income + financial revenue / net sales
