Theory Q's Flashcards
What are advantages of standard costing?
Helps with decision making - pricing decisions
Helps control costs - allows the organisation to track performance for costs
Plan - Helping businesses anticipate costs and revenures
Advantages of ABC costing?
More accurate cost per unit
Provides insight into how activites drive costs and so recognises that costs are not just related to production and sales
What are the 4 standards
Ideal
Basic
Attainable/Target
Normal
Advantages and disadvantages of cloud accounting?
Advantages:
System can be accessed anywhere with internet
Automation capabilities
Real time info
Disadvantages:
Costs
Potential data breaches
What is data analytics?
Looks beyond just numerical data
Includes data about customer preferences, email and online queries
Cost to be considered
Ethical considerations (data protection)
Disadvantages of life cycle costing?
Hard to predict future sales prices and demand
Predicting life of project
Predicitng future costs
Other factors: Inflation etc
What do the terms exchange value and Esteem value mean?
Exchange value - market price of product
Esteem Value - Prestige the customer attaches to product.
What is the impact of absorbing overheads based on labour hours rather than ABC?
Poor decision making including pricing decisions, production scheduling and product viability.
What is value engineering?
Concerned with ensuring that quality is built into prodcuts without unnecessary costs that do not add value, resulting in lower cost for a paticular product.
The impact of this will be consumers will still be satisfied with the product ensuring it meets their needs in nterms of prestige value.
Sufficient consumers are willing to pay the price so target share is met.
Drawback of flexing?
Skill and time
Cost behaviours and techniques aren’t very reliable
State three purposes of a budget?
Planning, controlling, motivation
What is the affect of a higher cost of capital?
Discount factor will be greater, reducing the impact of positive and negative cash flows which occur in the future.
If product has positive cash flows it makes the product less viable.
