Redeveloped Answer points Flashcards

1
Q

What are the main issues of a competitor launching a Backpack at same time?

A
  • 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)

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2
Q

How can we combat risks of launching Backpacks at same time?

A
  • Move release date to earlier date
    -Offer special discount or bundle
    -Extend marketing (e.g celeb endorsements)
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3
Q

Which Financial reporting standard is Capitalization of expenditure on new machines?

A

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

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4
Q

What does IAS 16 state about expenditure being capitalized?

A
  • Part of purchase price
  • set up costs (contributes to getting asset ready)

TRAINING not included (these are expensed to P&L

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5
Q

What does IAS 16 say about the useful life of new equipment?

A

-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

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6
Q

What does an efficiency variance refer to?

A

Skill of workers/machine issues

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7
Q

What does expenditure variance refer to?

A

It refers to expenses (money spent on stuff like staff salary or equipment etc)

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8
Q

What is responsiblilty accouting?

A
  • Holding people accountable for only areas they can control (staff recruitment, maintenance checks etc)

-Individual targets and responsibilities can be given out

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9
Q

What are 3 short term options to utilise cash surplus?

A

-Settle any outstanding debt
-Money Market Deposits (Done through banks- high interest so better income)
-Treasury Bills (low risk and issued by government)

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10
Q

What are the 3 things to discuss for Aggressive or Conservative Working Capital?

A
  • Inventory position (Less days leads to more revenue)
    -Payables
    -Recievables
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11
Q

What are the benefits of Flexible Budgeting?

A
  • Allows us to forsee possible constraints
    -Increases accuracy
    -Helps with planning and control
    -Encourages innovation and growth
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12
Q

What is the principal budget factor?

A

The main factor that limits company’s operations (usually sales)

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13
Q

What are functional budgets?

A

Budgets where plans are created for individual functions of business (results in ‘master budget’ - cover whole business)

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14
Q

What are the steps for Principal budget factor?

A

1) prepare forecast of principal budget

2)Determine costs of (production and manufacturing)

3) You then have master budget

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