11858434
Description
Flashcards by Luke Hansford, updated more than 1 year ago
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Created by Luke Hansford
over 6 years ago
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| Question | Answer |
| Give examples of financial accounts | Balance sheet Cash flow statement Income Statement |
| What do financial accounts usually comprise of? | Historical information - Balance sheet at particular moment in time -Income statement for previous year Lack of detail - Just sufficient to satisfy Companies House Hidden info - Hide from competition |
| Why are financial accounts inconsistent? | Accounting can vary |
| Why are real costs of products difficult to determine from financial accounts? | Competitive advantage |
| What is a cash flow statement used for? | To establish whether there is enough cash to carry out planned activities To check whether the amount of cash coming in can cover the cash going out To determine the need for bank overdrafts or loans To make decisions about investment based on surplus cash |
| What does the profit and loss account comprise of? | Sales Variable Costs Fixed Costs Interests Tax Net Profit |
| What are the 4 costing methods? | Absorption method Marginal/contribution method Standard costing Activity Based Costing |
| How does absorption costing work? | Calculate costs per unit including a fixed cost per unit to find out over costs per unit Then mulitplt by number of units sold and subtract from sales to find profit |
| How does marginal costing work? | Find contribtion per unit = sale price - variable costs Multiplty by number of units sold Then subtract contribution for all units sold and overall fixed costs from sales to find profit |
| How does standard costing work? | Pre-determined values against actual values to find actual costs and variance from pre determined values |
| How does activity based costing work? | Absorbs costs on the basis of the activities that drive them. Costs are incurred by activities Each activity has a cost driver Costs are grouped into pools E.g. Cost pool = Power Driver = No. of hours |
| How do you calculate breakeven unit number? | Contribution per unit = Sales per unit - variable costs per unit Breakeven number of units = Fixed costs / contribution per unit |
| How do you calculate Breakeven revenue? | Breakeven number of units * Sales price |
| What is the equilibrium price? | Supply = Demand |
| What is inelastic demand? | A small change in price = small change in demand |
| What is elastic demand? | Small change in price = large change in demand |
| What is cost based pricing? | Product -> Cost -> Price - > Value -> Customer |
| What is value based pricing? | Customer - > Value - > Price -> Cost -> Product |
| What are some internal pricing factors? | Marketing objectives Marketing strategy Costs Organisation |
| What are some external factors? | Supply and demand Competition Environmental factors |
| What are some pricing and profit strategies? | Take the longer term view Add value more than cost Bundle (product and service) |
| What could add 'layers' to the profit chain? | Using a distributor who takes a share of the profit |
| What is market segmentation? | Dividing a market into distinct groups of buyers with different needs or behaviours who might require separate products or marketing mixes |
| Give examples of market segments? | Geographic Demographic Socio-economic Brand loyalty |
| What are the 5 stages of a products life cycle? | Development Introduction Growth Maturity Decline |
| What are porters 5 market forces | Threat of new entrants Threat of substitutes Power of supplier Power of customer Industry competitor |
| What is a firms ultimate aim? | Improve shareholder value not proift maximisation due to: Uncertainty Timing |
| What must maximising shareholder value align with? | Management values Social responsibility Ethical behaviour |
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