Details Title: Acc 272 Conceptual Description: Acc 272 Conceptual Total Flash Cards: 17 Created: 04/15/2008 16:59:19		New Users: To study from this flashcard set, or to create your own your own study flash cards, REGISTER HERE. Existing Users: CLICK HERE. Additional Accounting Flashcards
Cards in this set: Term Benefits to the Organization from Budgeting Definition -Communicate to the organization - Better than verbal communication -Define goals and objectives- Benchmarking & performances evaluations -Discover positive and negative ares of the firm- Identify the more effective ares and identify problem areas - Allocate Resources -Focus on the future - forces the organization to be forward looking Term What are standards? Definition -Quantity expected to be used given a specific planned or actual production level -Costs expected to be incurred Term Why or when would we want to use standards Definition -To assist in the budgeting process Direct Materials budget Direct Labor budget VOH budget -Evaluation purposes Management by exception Term Ideal versus practical standards Definition Ideal- Everything goes perfectly Practical- Historical Data Term Normal versus abnormal inefficiencies Definition In ideal budget, any inefficiencies is an abnormal inefficiency. In a practical budget abnormal inefficiencies are the inefficiencies that are greater than alotted Term Advantages of Variance Analysis Definition -Assists the management-by-exception model -Facilitates cash planning & inventory control through the budget process -Promotes economy and efficiency by providing benchmarks -Simplifies bookkeeping for quarterly financial statement preparation (add up only individual variance. Only to create total?? -Useful tool for responsibility accounting Term Disadvantages or problems of Variance Analysis Definition -Timeliness and materiality issues- Waisting time on little variances -Morale issues -Assumptions about labor force that are not always true (Assume they're variable also machines are involved in labor) -A favorable variance is a good variance? (Think McDonalds example (big mac) -Focus on variances at the expense of everything else -Goal of meeting the standards versus continuous improvement Term The Balanced Scorecard Definition Integrated set of performance measures specific to each firm because the performance measures are derived from the firm's strategy and support the implementation of that strategy Term Advantages of decentralization for a firm Definition -Allows lower level managers to make decisions -Top level management can focus on strategy rather than day-to-day business -Increase job satisfaction, not being bossed by people unfamiliar -Allows for better performance evaluation -Helps train people to move up in a company Term Disadvantages of decentralization Definition -Lower management might make bad decisions without big picture in mind -Could start competing against yourself, segments behave independently Term Margin;Operating Assets; Turnover Definition Margin-% of revenue dollars that become income dollars Operating Assets- all assets used to generate revenues (not land held for use) Turnover- How well the assets are used to generate revenue Term How does a firm increase ROI Definition -Increase Sales -Reduce expenses -Reduce operating assets Term How does a firm set prices for sales transactions between segments within the company? Definition -Negotiate -Set the price at the cost using either variable or absorption costing -Set the price at the market price Term Benefits and limitations of setting transfer prices Definition -Negotiated transfer price --Preferred Method --Assumes that both segments negotiate fairly and reasonably -Transfer prices at cost --How do we define cost --Motivation Problem- Lack of Cost Control & no profit -Transfer prices at market --Ignores idle capcity Term Other types of situations where relevant costing and incremental analysis are useful Definition -Introducing a new product/discontinuing an old product -Accepting special-orders of products -Working with joint products and sell-or-process-further products Term What are intangibles? Definition Qualitative benefits from a project that are difficult to measure ex. Increased reputation, employee morale Term How are intangibles measured for the purpose of capital budgeting? Definition -If a project has negative NPV -Determine what additional annual cash flows inflows would make the NPV ZERO -COuld the intangible