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37 Cards in this Set
- Front
- Back
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profit center |
has the responsibility and authority for making decisions that affect revenues and costs and, thus, profits. R & D, Legal, Telecommunications, Information and Computer Systems, Facilities Management, Purchasing, Advertising, Payroll Accounting, Transportation, HR |
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investment center |
has the responsibility and authority to make decisions that affect not only costs and revenues but also the assets invested in the center. Rate of return on investment, residual income |
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ROI = |
income from operations / Invested assets |
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calculate income from operations before service department charges |
Revenues - operating expenses |
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calculate gross profit |
sales - cost of goods sold |
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calculate income from operations |
sales - cost of goods sold = gross profit gross profit - selling expenses = income b4 serv. income b4 serv. - service dept. charges = income from op. |
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calculate profit margin |
income from op. / sales |
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calculate residual income |
Income from operations - minimum acceptable income from operations as a % of invested assets |
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decentralized unit |
managers of separate divisions or units are delegated operating responsibility |
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cost centers |
responsibility over costs |
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investment turnover is |
operating efficiency by computing the number of sales dollars generated by each dollar of invested assets |
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calculate income change from discontinuance |
Revenues: Costs: Variable Fixed Total costs Income (loss) |
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calculate differential cost – buy or make |
Unit costs: Purchase Price: Freight: Variable costs: (assembly cost - fixed) Fixed FO: Income (Loss) |
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calculate differential cost of continued processing |
Revenues: Proceeds from sale of old Costs Purchase Price Direct Labor: (* yrs) Total costs Total income (loss) |
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calculate differential revenue of continued processing |
Revenues costs per unit income (loss) per unit |
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calculate sunk cost |
costs that have been incurred in the past, and cannot be recouped, are not relevant to future decisions |
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calculate opportunity cost |
revenue that is forgone from an alternative use of an asset |
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calculate differential revenue – special order |
Revenues Costs Variable manufacturing costs export tariffs total costs income (loss) |
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bottleneck profitability |
is a point in the manufacturing process where the demand for the company's product exceeds the ability to produce the product |
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bottleneck contribution margin |
unit selling price - unit variable cost / hours per unit |
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identify present value methods |
net present value method internal rate of return method |
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calculate cash payback |
amt to be invested / equal annual net cash flows |
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calculate net present value |
total present value of net cash flow / amt to be invested |
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relative proposal ranking method order |
total present value of net cash flow less amt to be invested net present value Present value index |
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cash flow type |
Internal rate of return |
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calculate estimated cash payback period |
amt to be invested / equal annual net cash flows |
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present value index |
total present value of net cash flow / amt to be invested |
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calculate plant-wide overhead rate |
total budgeted FO / total budgeted plantwide allocation base |
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plant-wide overhead rate distorts . . . |
product costs |
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calculate activity rate |
budgeted activity cost / total activity base usage |
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calculate activity-based cost per unit |
given in problem (dlh, setup, moves, etc) |
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example of value-added time |
time spent in converting raw mats into finished unit of product |
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lead times |
time from beginning to end |
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determine prevention costs |
costs of preventing defects before or during the manufacture of the product or delivery of services Ex: costs of engineering good product design, controlling vendor quality, training equipment operators, maintaining equipment |
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determine appraised costs |
costs of activities that detect, measure, evaluate, and inspect products and processes to ensure that they meet customer needs Ex: costs of inspecting and testing products |
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determine internal failure costs |
costs associated w defects discovered before the product is delivered to the consumer Ex. cost of scrap and rework |
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determine external failure costs |
costs incurred after defective products have been delivered to consumers Ex: cost of recalls and warranty work |
