Redeveloped Answer points Flashcards
What are the main issues of a competitor launching a Backpack at same time?
- Brand Dilution (may lose high brand rep by lowering prices)
-May lose out on first mover advantage (loss of audience and brand loyalty)
-Risk of loss of market share (lose prime/peak time to sale)
How can we combat risks of launching Backpacks at same time?
- Move release date to earlier date
-Offer special discount or bundle
-Extend marketing (e.g celeb endorsements)
Which Financial reporting standard is Capitalization of expenditure on new machines?
IAS 16 (PPE)
1) expenditure must be recorded as an asset.
2) 2 critertias need to be met:
-expenditure needs to result in econ benefit
- it can be reliably measured
What does IAS 16 state about expenditure being capitalized?
- Part of purchase price
- set up costs (contributes to getting asset ready)
TRAINING not included (these are expensed to P&L
What does IAS 16 say about the useful life of new equipment?
-the Period business expects asset to be available for
-number of production units expected to be created from the asset
(Asset is only recorded for intial years) - extra yrs are treated separately
What does an efficiency variance refer to?
Skill of workers/machine issues
What does expenditure variance refer to?
It refers to expenses (money spent on stuff like staff salary or equipment etc)
What is responsiblilty accouting?
- Holding people accountable for only areas they can control (staff recruitment, maintenance checks etc)
-Individual targets and responsibilities can be given out
What are 3 short term options to utilise cash surplus?
-Settle any outstanding debt
-Money Market Deposits (Done through banks- high interest so better income)
-Treasury Bills (low risk and issued by government)
What are the 3 things to discuss for Aggressive or Conservative Working Capital?
- Inventory position (Less days leads to more revenue)
-Payables
-Recievables
What are the benefits of Flexible Budgeting?
- Allows us to forsee possible constraints
-Increases accuracy
-Helps with planning and control
-Encourages innovation and growth
What is the principal budget factor?
The main factor that limits company’s operations (usually sales)
What are functional budgets?
Budgets where plans are created for individual functions of business (results in ‘master budget’ - cover whole business)
What are the steps for Principal budget factor?
1) prepare forecast of principal budget
2)Determine costs of (production and manufacturing)
3) You then have master budget