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Summary Business Economics 1IBM
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This is a complete summary of the course Business Economics. I passed immediately and it also helped friends of mine pass theirs. Good luck
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By: anne-juliecnudde • 1 year ago
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Business economics[ONDERTITEL VAN DOCUMENT]
HELENA ROOSE
,Table of Contents
CHAPTER 1.........................................................................................................................................5
ACCOUNTING INFORMATION SYSTEM..........................................................................................................5
ROLES OF ACCOUNTING INFORMATION (A QUESTION)....................................................................................5
WHY ACCOUNTING IS ESSENTIAL FOR DECISION MAKERS AND MANAGERS...........................................................6
COST-BENEFIT AND BEHAVIORAL CONSIDERATIONS........................................................................................6
PRODUCT LIFE CYCLE...............................................................................................................................7
THE VALUE CHAIN........................................................................................................................................7
ACCOUNTING’S POSITION IN THE ORGANIZATION..........................................................................................7
CONTROLLER AND TREASURES FUNCTION.........................................................................................................7
CURRENT TRENDS IN MANAGEMENT ACCOUNTING.............................................................................................7
ETHICAL CONDUCT..................................................................................................................................7
EXERCISES.............................................................................................................................................7
CHAPTER 2.........................................................................................................................................8
COST BEHAVIOR.....................................................................................................................................9
COST DRIVERS AND COST BEHAVIOR...........................................................................................................9
VALUE CHAIN FUNCTIONS, COSTS AND COST DRIVERS.....................................................................................9
VARIABLE AND FIXED COST BEHAVIOR.........................................................................................................9
EXAMPLE VARIABLE – FIXED COSTS.................................................................................................................9
RELEVANT RANGE.................................................................................................................................10
CHAPTER 3 MEASUREMENT OF COST BEHAVIOR.............................................................................12
LINEAR-COST BEHAVIOR.........................................................................................................................12
MANAGEMENT’S INFLUENCE ON COST BEHAVIOR........................................................................................12
PRODUCT AND SERVICE DECISIONS AND THE VALUE CHAIN.................................................................................12
CAPACITY.................................................................................................................................................12
TECHNOLOGY...........................................................................................................................................13
COST-CONTROL INCENTIVES........................................................................................................................13
COST FUNCTIONS.................................................................................................................................13
COST FUNCTION EQUATION.........................................................................................................................14
DEVELOPING COST FUNCTION......................................................................................................................14
METHODS OF MEASURING FUNCTIONS......................................................................................................14
ENGINEERING ANALYSIS..............................................................................................................................14
ACCOUNT ANALYSIS...................................................................................................................................15
EXERCISES...........................................................................................................................................15
CHAPTER 4 COST MANAGEMENT SYSTEMS AND ACTIVITY-BASED COSTING ...................................17
COST MANAGEMENT SYSTEM (CMS)........................................................................................................17
COST OBJECT.......................................................................................................................................17
COST ACCOUNTING SYSTEMS...................................................................................................................17
COST ALLOCATION................................................................................................................................17
STATEMENT OF OPERATING INCOME.............................................................................................................18
EXERCISES...........................................................................................................................................19
TRADITIONAL COSTING SYSTEM...............................................................................................................20
ABC SYSTEM.......................................................................................................................................20
EXERCISES...........................................................................................................................................20
2
,CHAPTER 5 RELEVANT INFORMATION FOR DECISION MAKING WITH A FOCUS ON PRICING
DECISIONS.......................................................................................................................................21
THE CONCEPT OF RELEVANCE..................................................................................................................21
DECISION MODEL.................................................................................................................................21
ACCURACY AND RELEVANCE...................................................................................................................21
RELEVANCE OF ALTERNATE INCOME STATEMENTS.......................................................................................22
SPECIAL SALES ORDER............................................................................................................................23
ACTIVITY-BASED COSTING, SPECIAL ORDERS, AND RELEVANT COSTS..............................................................23
INFLUENCES ON PRICING IN PRACTICE.......................................................................................................24
COST-PLUS PRICING..................................................................................................................................24
TARGET COSTING......................................................................................................................................24
EXERCISES...........................................................................................................................................25
CHAPTER 8 FLEXIBLE BUDGETS AND VARIANCE ANALYSIS...............................................................27
FAVORABLE AND UNFAVORABLE VARIANCES...............................................................................................27
STATIC AND FLEXIBLE BUDGETS...............................................................................................................27
STATIC-BUDGET VARIANCES AND FLEXIBLE-BUDGET VARIANCES....................................................................27
EXERCISES...........................................................................................................................................29
ROLE OF STANDARDS IN DETERMINING VARIANCES.....................................................................................31
VARIANCES FOR MATERIAL AND LABOR STANDARDS...................................................................................31
EXERCISE.................................................................................................................................................31
VARIABLE-OVERHEAD SPENDING AND EFFICIENCY VARIANCES.......................................................................32
EXERCISES...........................................................................................................................................32
CHAPTER 16 UNDERSTANDING CORPORATE ANNUAL REPORTS: BASIC FINANCIAL STATEMENTS ...33
CORPORATE ANNUAL REPORT.................................................................................................................33
OPERATING CYCLE................................................................................................................................34
CASH EQUIVALENTS..............................................................................................................................34
SHORT TERM INVESTMENTS....................................................................................................................35
ACCOUNTS RECEIVABLE..........................................................................................................................35
INVENTORIES.......................................................................................................................................35
PREPAID EXPENSES AND OTHER CURRENT ASSETS........................................................................................35
NONCURRENT ASSETS: PROPERTY, PLANT, AND EQUIPMENT.........................................................................35
WORKING CAPITAL...............................................................................................................................36
EXERCISE WORKING CAPITAL........................................................................................................................37
COMMON STOCK..................................................................................................................................37
INCOME STATEMENT.............................................................................................................................38
EXERCISES...........................................................................................................................................38
CHAPTER 17 UNDERSTANDING AND ANALYZING CONSOLIDATED FINANCIAL STATEMENTS ...........39
ANALYSIS OF FINANCIAL STATEMENTS.......................................................................................................39
COMPONENT PERCENTAGES....................................................................................................................39
USES OF RATIO....................................................................................................................................39
TYPICAL FINANCIAL RATIOS.....................................................................................................................39
1. CURRENT RATIO....................................................................................................................................40
2. AVERAGE COLLECTION PERIOD IN DAYS (RATIO)...........................................................................................40
3. DEBT-TO-EQUITY RATIO..........................................................................................................................41
4. GROSS PROFIT OR %..............................................................................................................................41
5. RETURN ON SALES IN %..........................................................................................................................41
6. RETURN ON STOCKHOLDER’S EQUITY.........................................................................................................41
3
, 7. BASIC EARNINGS PER SHARE....................................................................................................................41
8. DIVIDEND PAY-OUT RATIO.......................................................................................................................42
9. PRICE EARNINGS RATIO...........................................................................................................................42
10. DIVIDEND YIELD..................................................................................................................................42
EXERCISES...........................................................................................................................................42
Business economics
4
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