Term
| Long-term planning horizon |
|
Definition
| Strategic orientation that should pervade the org because it encourages farsightedness by all employees. |
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Term
| Strategic Management Steps |
|
Definition
Mission Statement
Strategic planning
Implementation
Control |
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Term
|
Definition
| Formalized in a written doc. Should define the org's ultimate purpose. |
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Term
|
Definition
| Developed in a mission statement to describe how the organization's mission will be achieved. |
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Term
|
Definition
| Considers an org's strengths, weaknesses, and interactions with environmental opportunites and threats (SWOT) |
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Term
|
Definition
| Formulates specific and measurable objectives, plans, policies and budgets. |
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Term
|
Definition
| Strategic plans filtered down through lower levels of an org. Should succeed if 1, structure is compatible with strategic planning, 2. personnel have necessary abilities, 3. org culture is favorable or can be changed, and 4. control exist to facilitate implementation. |
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Term
|
Definition
| Should be established to monitor progress, isolate problems, identify invalid assumptions and take prompt corrective action. Made to determine whether objectives have been achieved. Objectives flow down the org hierarchy and controls flow up. |
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Term
| Two categories of Strategic control measures |
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Definition
1. relates to external effectiveness. Measures a. performance in the marketplace at the business unit level. b. customer satisfaction and flexibility at the business operating level. c. Quality and delivery at the departmental or work center level.
2. relates to internal efficiency. Measures a. financial results at the business unti level. b. flexibility at the business operating level adn c. Cycle time and waste at the departmental or work center level. |
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Term
|
Definition
| when the combination of formerly separate elements has a greater effect than the sum of their individual effects. |
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Term
|
Definition
| arises when products or services have positive complentary effects. (Example; shopping malls) |
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Term
|
Definition
| Results in cost reduction. Could be the recycling of by products or could be a result of design, production, marketing, and sales of a line of producst by the same enterprise. |
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Term
|
Definition
| the transfer of technology among applications. (Example: technology developed for military purposes often has civilian uses. ) |
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Term
|
Definition
| ENtails knowledge transfer. (Example: a company may hire a manager with skills it lacks.) |
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Term
| Stages of the Product Life Cycle |
|
Definition
Precommercialization
Introduction Stage
Growth Stage
Maturity Stage
Decline Stage |
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Term
|
Definition
Product development. Innovate by conducting R&D, marketing research, and production tests.
NO SALES, HIGH INVESTMENT COSTS |
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Term
|
Definition
SLOW SALES GROWTH, LACK OF PROFITS, because of the high expenses of promotion and selective distribution. PER CUSTOMER COST IS HIGH. COMPETITORS ARE FEW. Prices may initially be high to permit cost recovery.
Strategy to infiltrate the market, plan for financing to cope with losses, build supplier relations, increase production and marketing efforts and plan for competition. |
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Term
|
Definition
SALES AND PROFITS INCREASE RAPIDLY
COST PER CUSTOMER DECREASES. new competitors enter, new product models and features are introduced and promo spending declines. Mass market is targeted through advertising. Strategy is to advance means through these means and by achieving economies of productive scale. |
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Term
|
Definition
| SALES PEAK, but GROWTH DECLINES. MOST COMPETITORS, PER CUSTOMER COST IS LOW. Profits are high. Strategy is to defend market share and maximize profits through DIVERSIFICATION of brands and models. |
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Term
|
Definition
| Sometimes included in life cycle as a separate stage between growth and maturity. Overal growth rate FALLS, price cutting occurs and weaker firms LEAVE the market. |
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Term
|
Definition
| SALES AND PROFITS DROP as prices are cut. Some firms leave the market. The customers include laggards. PER CUSTOMER COST IS LOW. Strategy is to withdraw by reducing production, promotion and inventory. |
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Term
| Criticisms of the Product Life Cycle |
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Definition
Some stages may be hard to distinguish and length may vary in different industries
Sales growth may not follow pattern
Industry characteristics may differ among industries
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Term
| Competitive Strategies Model (Michael Porter) |
|
Definition
Cost Leadership
Differentiation
Cost Focus
Focused Differentiation |
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Term
|
Definition
| generic strategy favored by enterprises that seek competitive advantage through lower costs and have a broad competitive scope |
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Term
|
Definition
| generic strategy favored by enterprises that seek competitive advantage through providing a unique product and that have a broad competitive scope. |
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Term
|
Definition
| generic strategy that seek competitive advantage through lower costs and that have a NARROW competitive scope ( a regional or smaller market) |
|
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Term
|
Definition
| generic strategy favored by enterprises that seek competitive advantage through providing a unique product and that have a narrow competitive scope (a regional or smaller market) |
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Term
|
Definition
| Formulates a longterm plan for using enterprise resources to reach strategic objectives. |
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Term
|
Definition
COst
Quality
Delivery
Flexibility
Service |
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Term
| Cost (Operations) Strategy |
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Definition
| Successful when enterprise is a low cost producer. Product tends to be undifferentiated (a commodity), market is often LARGE, competition INTENSE because of possibilty for high volume sales. |
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Term
| Quality (operations) Strategy |
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Definition
| competition based on product quality or process quality. Product quality relates to design ( difference between a luxury car and an economy car). Process quality concerns the degree of freedom from defects. |
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Term
| Delivery (operations) Strategy |
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Definition
| May permit an enterprise to charge a higher price when teh product is consistently delivered rapidly and on time. ( UPS is an example) |
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Term
| Flexibility (operations) strategy |
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Definition
| Entails offering many different products. Make reflect an ability to shift rapidly from one product line to another. ( a publisher that can write, edit, print, and distribute a book within days.) |
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Term
| Service (operations) strategy |
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Definition
| seeks to gain competitive advantage and maximize customer value by providing services, especially post-purchase services such as warranties on automobiles and home appliances. |
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Term
|
Definition
| an attempt to affect customer wants, which becomes tangible in an offering. |
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Term
|
Definition
|
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Term
|
Definition
| Sum of functional and emotional benefits divided by the sum of monetary, time, energy and psychic costs. |
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Term
|
Definition
| an estimate of a given offering and the alternative |
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Term
|
Definition
| what the customer believes to be the financial value of all benefits of an offering. |
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Term
|
Definition
| the sum of all costs to the customer related to the offering. |
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Term
|
Definition
| the relation between the offering's perceived performance and the customer's expectations. |
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Term
|
Definition
| a function of a customer's experience, marketing information, and other factors. Marketers shouldn't raise expectations above the level to which they can be satisfied. |
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Term
| Total customer satisfaction approach |
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Definition
| when firms elevate customer expectations and then satisfy them. |
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Term
|
Definition
| is an emotional as well as rational bond that develops when a firm provides high customer value. Must develop a value proposition that has superior competitiveness in the target market segment. |
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Term
|
Definition
| the accumulation of all the experiences the customer has with the offering |
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Term
| High performance business model |
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Definition
| a business should establish satisfaction objectives for stakeholder groups. To achieve them is must devise strategies, reengineer and coordinate its core processes, and appropriately allocate resources in accordance with organizational arrangements. |
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Term
|
Definition
| consists the activities of a firm that create customer value and incur costs. |
|
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Term
| 5 primary activities of a Value Creation Chain |
|
Definition
Inbound logistics
Operations
Outbound logistics
Marketing and sales
Service |
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Term
| Four support activites of a Value Creation Chain |
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Definition
| Infrastructure, procurement, human resources and technology |
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Term
|
Definition
| activities that involve the firms' capture of materials to be processed. |
|
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Term
|
Definition
| activities are conversion processes. |
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Term
|
Definition
| activities include shipment of products. |
|
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Term
|
Definition
| activities are the promotion and sale of final products. |
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Term
|
Definition
| activities provide customer service |
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Term
|
Definition
Market Sensing
New offerering realization
customer aquisition
customer relationship management
fulfillment management |
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Term
| Key to continuous improvement technique |
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Definition
| Seek continuous improvement of value creating activities, set benchmarks, and emulate best practices of top firms. |
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Term
|
Definition
| obtaining, distributing, and acting upon market intelligence. |
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Term
|
Definition
| should be timely and efficient. Involves R&D and the launch of new products, services, and other elements of offerings |
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Term
|
Definition
| defines target markets and researches customers. |
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|
Term
| customer relationship management |
|
Definition
| seeks to increase the value of the customer base by developing long term relationships with individual customers by such methods as customer service, customized offerings adn choice of marketing messages and media. |
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Term
|
Definition
| relates to order processing, ontime delivery and collection. |
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|
Term
| Partner relationship management |
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Definition
| involves coordination with suppliers and distributors in this network (the supply chain) to provide better customer value. |
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Term
| Customer Relationship Management (CRM) |
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Definition
| an attempt to tie together three traditionally separate functions; marketing, sales and service. Employs large databases and integrated info systems to link these three functions. |
|
|
Term
| A firm should seek to minimize customer loss because |
|
Definition
| CUSTOMER RETENTION through CUSTOMER SATISFACTION is a key to profitability. |
|
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Term
|
Definition
| firms should measure customer satisfaction frequently, facilitate complaints and suggestions, and act rapidly on the results. |
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Term
|
Definition
| cost for a customer to switch to a different product or company. (Example loss of discounts) Less effective method of customer retention |
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Term
|
Definition
| = the net present value of the cash flows (purchases- costs of acquiring, selling to, adn servicing the customer) |
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Term
|
Definition
| the summ of the customer lifetime values for all firm customers. |
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Term
|
Definition
| an estimate of the benefits to cost ratio. Based on quality, price and convenience. Most important when products are differentiated or require a formal assessment by the buyer. |
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Term
|
Definition
| a subjective evaluation. Subdrivers are the customer's awareness of, attitude toward, the brand and the customer's belief about the brand ethics. This is most significant when the product is not differentiated but has emotional appeal. |
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Term
|
Definition
| the likelihood that customer loyalty is not based on any appraisal of the brand's value. Subdrivers are programs to build customer loyalty, recognition, community and knowledge. Most significant when the supplier-customer relationship is vital or when a customer may simply be habit bound. |
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Term
|
Definition
| Programs to build customer loyalty, recognition, community and knowledge |
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|
Term
| Jill Griffin's processing of attracting and retaining customers |
|
Definition
identifying suspects
separating prospects from suspects
persuading prospects to be customers
giving preferred treatment to repeat customers
creating a membership program to transform clients into members
converting members into advocates for the firm
making advocates into partners |
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Term
| Kotler's levels of relationship marketing |
|
Definition
Basic Marketing
Reactive Marketing
Accountable marketing
Proactive marketing
Partnership marketing |
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Term
|
Definition
Merely selling. Low Margin-Many Customers
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|
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Term
|
Definition
| Included encouragement of customer communication. Low to Medium Margin- Many Customers or Low Margin- and Medium number of Customers |
|
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Term
|
Definition
| involves seller-initiated communication to ask about problems or suggestions. Low Margin and Few Customers, Medium Margin and Medium Customers, or High Margin and Many Customers. |
|
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Term
|
Definition
| Entails continuous assistance to big customers. High Margin- Few Customers |
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|
Term
| Customer Profitability Analysis |
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Definition
| determines all revenues and all costs assignable to specific customers. |
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|
Term
| Kotler's classification of customers |
|
Definition
Platinum- most profitable (highest investment)
Gold- Profitable (high investment, with objective of converting to platinum)
Iron- Low profit but desirable (lower investment with objective of converting to Gold.)
Lead- Not profitable or desirable. (drop or provide low investment while raising prices or lowering costs of serving. |
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|
Term
|
Definition
| WHAT to be done, HOW, WHEN, WHERE, and BY WHOM, it is to be done. |
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|
Term
|
Definition
| The basis of planning because it projects the future |
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|
Term
| Planning establishes the means to reach organizational ends (objectives) |
|
Definition
| Means-end relationship extends throughoug the organizational hierarchy and ties together the parts of the org so that the various means all focus on the same end. |
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|
Term
| Management by Objective (MBO) |
|
Definition
| identifies relationships between an individual's job objectives adn teh immediate superior's objectives. Thus the subordinate can understand his/her job is the means by which the supervisor's job is accomplished. |
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|
Term
| Long-range strategic planning |
|
Definition
| has a horizon of 1-10 years or more. Difficult because of uncertainty about future events and conditions. |
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|
Term
| External environmental factors |
|
Definition
| Market trends, changes in technology, international competition, and social change. |
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|
Term
|
Definition
| a planning process for choosing and financing long term projects and programs. |
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|
Term
|
Definition
| an element of planning closely related to capital budgeting that includes, among other things, consideration of business combinations or diverstitures. |
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Term
|
Definition
| 6 months to 2 years. Are developed by middle management |
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Term
|
Definition
| 1 week to 1 month. are developed by lower level management. |
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Term
|
Definition
Based on different sets of premises. Stipulates different sets of actions for management based on these premises.
Contingency planning allows for forecasting error
Contingency planning is more expensive than formulating a single plan, so this additional cost must be more than balanced by improved performance. |
|
|
Term
| The Primary General Planning Principle |
|
Definition
| That the lowest possible relevant units in management should be involved in the planning process. Form of upward communication. |
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Term
|
Definition
| the underlying assumptions about the expected environment in which the strategic plan will be carried out. |
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Term
|
Definition
| the generation of planning assumptions |
|
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Term
|
Definition
| the determination of organizational objectives |
|
|
Term
| Primary task of management |
|
Definition
| to reach organizational objectives effectively and efficiently. |
|
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Term
|
Definition
maximizing the output for a given quantity of input.
Doing things right |
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|
Term
|
Definition
the degree to which the objective or goal is accomplished.
Doing the right things |
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|
Term
|
Definition
Clearly stated in specific terms
Easily communicated to all concerned
Accepted by the individuals concerned. |
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Term
|
Definition
| Broad objectives should be established at the top and retranslated in more specific terms as they are communication downward. |
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Term
|
Definition
| General statements that guide thinking and action in decision making. |
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Term
|
Definition
| provided by policies and procedures because they anticipate and prevent problems and provide guidance on how an activity should be performed to best ensure that an objective is achieved. |
|
|
Term
| Strong Organizational Culture |
|
Definition
| means that the organization's key values are intensly held and widely shared. The need for written formal policies is minimized. |
|
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Term
|
Definition
| Specific directives that define how work is to be done. |
|
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Term
|
Definition
| are specific, detailed guides that restrict behavior. |
|
|
Term
| Management by objectives (MBO) |
|
Definition
| a behavioral, communications-oriented, responsibility approach to management and employee self-direction. It is a comprehensive management approach and therefore is relevant to planning and control. |
|
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Term
|
Definition
Philosophy which is a basis of MBO. It says that employees:\
a. want to work hard if they know what is expected
b. like to understand what their jobs actually entail
c. are capable of self-direction and self-motivation. |
|
|
Term
| Steps necessary to implement an MBO program |
|
Definition
| Include establishing objectives and action plans and periodic review and final appraisal. |
|
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Term
|
Definition
| Are the basis for business plans. Are used to project product demand, inventory levels, cash flow, etc. |
|
|
Term
| Qualitative methods of forecasting |
|
Definition
| rely on the manager's experience and intuition. |
|
|
Term
| Quantitative methods of forecasting |
|
Definition
| use mathematical modes and graphs. |
|
|
Term
| Casual Relationship Forecasting |
|
Definition
| when some factor in the organization's environment is plotted on teh x-axis. |
|
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Term
|
Definition
| the foundation of any quantitative method of forecasting. |
|
|
Term
|
Definition
ranges from 1 to -1
1= a perfect direct relationship
-1= perfect inverse relationship
0= the relationship cannot be expressed in a linear equation or no relationship exists. |
|
|
Term
The coefficient of determination (r^2)
|
|
Definition
| the coefficient of correlation squared. a measure of how good the fit between two variables is. |
|
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Term
|
Definition
| Least squared analysis. A process of deriving the linear equation that describes the relationship between two variables with a nonzero coefficient of correlation |
|
|
Term
|
Definition
used when there is one independent variable
Simple regression equation:
y=a + bx
y= the dependent variable
a= the y intercept
b= the slope of the regression line
x= the independent variable |
|
|
Term
|
Definition
| the fixed portion of the costs |
|
|
Term
|
Definition
| the variable portion of the costs |
|
|
Term
|
Definition
| used when there is more than one independent variable. |
|
|
Term
|
Definition
| used to generate a regression line by basing the equation on only the highest and lowest of a series of observations. |
|
|
Term
| Time Series or Trend Analysis |
|
Definition
Relies on past experience. Changes in the value of a variable over time may have several possible components.
the dependent variable is regressed on time. |
|
|
Term
|
Definition
| the long term change that occurs in a series. it is represented by a straight line or a curve on the graph. |
|
|
Term
|
Definition
| variations in the level of activity in business periods. Some of the fluctuations are beyond the control of the firm, they need to be considered in forecasting. They are usually incorporated as index numbers. |
|
|
Term
| Irregular or random variables |
|
Definition
| any variations not included in the categories on the previous page. Businesses can be affected by random happenings (weather, strikes, fires, etc) |
|
|
Term
| Percentage of Sales Method |
|
Definition
| Widely used for sales forecasting. Adjust the current level of sales by a specified percentage increase or decrease. This is a convenient method of trend analysis and is easy to apply. Also useful for developing pro-forma financial statements |
|
|
Term
|
Definition
| a technique used to level or smooth variations encountered in a forecast. This technique also adapts the forecast to changes as they occur. |
|
|
Term
|
Definition
| Reflect the increased rate at which people perform tasks as they gain experience. The time required to perform a given task becomes progressively shorter, but this technique is applicable only to hte early stages of production or of any new task. |
|
|
Term
|
Definition
| time to produce the last unit. |
|
|
Term
|
Definition
| a technique for experimenting with logical and mathematical models using a computer |
|
|
Term
|
Definition
| neither new or uncommon in business. Buidling a mockup of a new automobile, having one department try out new accounting procedures, and testmarketing a new product are all forms of experimentation. |
|
|
Term
|
Definition
| can be either physical or abstract. Physical models include automobile mockups. airplane models, and breadboard models of electronic currents. Abstract models may be pictorial, verbal, or logical mathematical. |
|
|
Term
| 5 Steps of a simulation procedure |
|
Definition
1. Define the objectives
2. Formulate the model
3. Validate the model
4. Design the experiment
5. Conduct the simulation- evaluate results |
|
|
Term
| The Monte Carlo Technique |
|
Definition
| often used in simulation to generate the individual values for a random variable. A random number generator is used to produce numbers with a uniform probability distribution. The second step is to transform these numbers into values consistent with the desired distribution. |
|
|
Term
| Limitations of simulation |
|
Definition
Cost- can be costly to develop. Can be justified only if the information to be obtained is worth more than the costs to develop the model and carry out the experiment.
Risk of error- A simulation results in a prediction of how an actual system woul behave. As in forecasting, the prediction may be an error. |
|
|
Term
|
Definition
After a problem has been formulated in which the sensitivity of the solution to changes in any given variable or parameter is calcuted:
a. The rist of the project being simulated may also be estimated.
b. The best project may be the one that is least sensitive to changes in probabilistic (uncertain) inputs. |
|
|
Term
| Linear programming problems sensitivity |
|
Definition
| is the range within which a constraint value, such as a cost coefficient or any other variable, may be changed without changing the optimal solution. Shadow price is a synonym for sensitivity in that context. |
|
|
Term
|
Definition
| A variant of intuitive forecasting by well informed managers. This technique involves developing formal written descriptions of equally likely future alternatives. It is a qualitative procedure reflecting an understanding that future events involve many variables not susceptible to quantification. |
|
|
Term
|
Definition
| concern how future conditions will develop from current conditions |
|
|
Term
|
Definition
| describes a future state as a certain moment in time. |
|
|
Term
|
Definition
| Developed by RAND corp in the late 60's as a forecasting methodology. Later the US gov enhanced it as group decisionmaking tool with the results of project HINDSIGHT, which established a factual basis for the workability of Delphi. Developed a tool in which a group of experts could reach a consensus when the decisive factors were subjective not knowledge based. |
|
|
Term
|
Definition
| Designed to aid in the planning and control of large scale project having many interrelated activities. |
|
|
Term
|
Definition
| a temporary undertaking with specified objectives that often involve a cross-functional team and working outside customary organizational lines. |
|
|
Term
| Project Life Cycle consists of |
|
Definition
Conceptualization- setting overall objectives, budgets, adn schedules
Planning- obtaining resources, assigning duties, and coordinating activities.
Execution- monitoring, correcting, meeting expectations, and finishing the project within a time frame or budgetary limits.
Termination- turning the project over to the user and redistributing the project resources. |
|
|
Term
|
Definition
| includes building construction, R&D projects, new product planning, feasibility studies, audit studies, movie production, and conversion to a new computer info system. |
|
|
Term
| Common techniques for project management |
|
Definition
| Gantt charts, PERT, and CPM. |
|
|
Term
|
Definition
| simple to construct and use. Biggest disadvantage is its simplicity. Shows projected start and end dates for each task as well as a project as a whole. |
|
|
Term
| PERT- Program evaluation and review technique |
|
Definition
| developed by the Navy to aid managers in controlling large scale, complex projects. PERT diagrams are free-form networks showing each activity as a line between events. More complex than Gantt. Have advantages of incorporating probablistic time estimates and identifying the critical path. |
|
|
Term
| Two components of a PERT network |
|
Definition
Events- discrete moments in time representing the start of finish of an activity. Depicted by nodes
Activities- tasks to be accomplished. They consume resources and have a duration over time. Depicted by lines. |
|
|
Term
|
Definition
| the longest path in time through a network. It is critical because, if any activity on the critical path takes longer than expected, the entire project will be delayed. Every network has at least one, some have more than one. |
|
|
Term
|
Definition
| What a non critical path has. PERT identifies this, which represents unused resouces that can be diverted to the critical path. |
|
|
Term
|
Definition
| activity times can be expressed probabilistically. Three time estimates are made. Optimistic, most likely, and pessimistic. |
|
|
Term
|
Definition
| variation of PERT. Entails combining activities into work packages to facilitate cost control . |
|
|
Term
| CPM- Critical Path Method |
|
Definition
| developed independently of PERT. Widely used in construction. It is a network technique. Uses deterministic time and cost estimates. advantages include cost estimates plus the concept of "crash" efforts and costs. |
|
|
Term
|
Definition
| the time to complete an activity assuming that all available resources were devoted to the task. |
|
|
Term
|
Definition
| finding the minimum cost for completing the project in minimum time. |
|
|
Term
|
Definition
| used to solve managerial problems pertaining to project scheduling, info systems design, and transportation systems design. Networks with nodes and arcs may be created to represent in graphic forms the problems related to transportation, assignment, and transshipment. The shortest route, minimal spanning tree, and maximal flow problems are other applications of network models |
|
|
Term
|
Definition
| minimizes total travel time from one site to each of the other sites in a transportation system. |
|
|
Term
|
Definition
| maximizes throughput in networks with distinct entry and exit points. |
|
|
Term
| Minimal spanning tree algorithm |
|
Definition
| identifies the set of connecting branches having the shortest combined length. A group of branches (arcs) that connects each node in the network to every other node. |
|
|
Term
|
Definition
Tool for project management. The difference between actual cost of work performed and the budgeted cost of work scheduled may be analyzed in terms of two variances.
JOb project-performance cost variance
Job project- schedule cost variance. |
|
|
Term
| Job project-performance cost variance |
|
Definition
| the difference between the actual CWP and the budgeted CWS. this variance may be further divided into price and efficiency variances. Measure cost overruns and underruns. |
|
|
Term
| Job project schedule cost variance |
|
Definition
| the difference between the actual CWP and the budgeted CWS. It measures the extent to which the project is ahead of or behind schedule. |
|
|
Term
|
Definition
PERT approximates the mean of beta distribution by dividing the sum of the optimistic time(a), the pessimistic time(b), adn 4 times the most likely time(c) by six.
(a+4c+b) /6 |
|
|
Term
|
Definition
| a realistic plan for the future expressed in quantitative terms. |
|
|
Term
|
Definition
| a form of a long-range planning based on identifying and specifying organizational objectives. |
|
|
Term
|
Definition
| underestimation of probably performance. Should be avoided if a budget is to have its desired effects . |
|
|
Term
| Master (static) or comprehensive budget |
|
Definition
| encompasses both the operating and financial budget processes. |
|
|
Term
|
Definition
| describes how a budget is prepared. |
|
|
Term
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Definition
| schedule of activities for the development and adoption of the budget. Should include a list of dates indicating when specific information is to be provided to other by each information source. |
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Definition
| encompasses the organization's operating and financial plans for a specified period. |
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Definition
| part of the master budget, that consists of pro forma income statment and related budgets. Its emphasis is on obtaining and using resources. |
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Definition
| presents sales in units at their projected selling prices and is usually the first budget prepared. |
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Definition
| Critical. considers factors such as the trends in sales, conditions in the economy and industry, activities of competitors, credit and pricing policies, marketing methods, and the existance of back orders. |
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Definition
| based on the sales forecast, in units, plus or minus the desired change in inventory. |
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Definition
| determined by direct materials, together wih beginning inventory and targeted ending inventory data. |
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Definition
| depends on wage rates, amounts and types of production, numbers and skill levels of employees to be hired. May also depend on employee benefits. |
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Definition
| a function of how a factory overhead varies with particular cost drivers. Should distinguish between overhead items that are fixed and those that are variable. |
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Term
| Cost of goods sold budget |
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Definition
| reflects direct materials usage, direct labot, factory overhead, and change in finished goods inventory. |
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Term
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Definition
| part of the master budget that includes cash budget, capital budget, proforma balance sheet, and pro forma statement of cash flows. Its emphasis is on obtaining funds needed to purchase operating assets. |
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Term
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Definition
| not part of the operating budget because it is not part of normal operations. |
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