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42 Cards in this Set
- Front
- Back
Contribution Margin |
SP- VC Selling Price- Variance Cost |
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A. Variable Cost: B. What is not included: |
A. Direct Materials + Other Production Variable Cost + Labour and Overhead
B. Variable Selling Cost |
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Business Corporate Act (Federal or Provincial) |
Provides basic corporate governance framework for businesses. |
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Product Life Cycle Introduction Stage |
Expensive Market Size is Small Sales are Low High R&D, Testing, Marketing Intellectual Property Low Price- Build Market Share High Price- to recover from R&D Promos- Aimed to Innovators |
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Product Life Cycle Growth Stage |
Strong Growth in Sales & Profit Possible Economics of Scale Start Investment into promotions Additional features are added Price- Maintained Distribution Channels are added Promo- Aimed at broader audience |
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Product Life Cycle Maturity Stage |
Maintain The Market Share Most Competitive Time Period Invest Wisely in Marketing Competitive Advantage: Product Improvements Additional features are added Pricing- may be lower because of new compet. Promo- emphasizes product differentiation |
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Product Life Cycle Decline Stage |
Market for product will start to shrink Market is Saturated (all customer that will buy the products have already purchased it already) Switch to less expensive production methods Could: Maintain the product- however add new features. Reduce cost Discontinue product, liquidate. |
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Implicit Collusion |
Allowing one company to act as a price leader with the others following suit. |
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Explicit Collusion |
Working with competitors to set prices. This is illegal |
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Boston Consulting Group Matrix Dog Get your money out. |
Low Market Growth Rate (Low Cash Usage) Low Market Share (Low Cash Generation) |
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Boston Consulting Group Matrix Star Second Best |
High Market Growth Rate (High Cash Usage) High Market Share (High Cash Generation) |
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Boston Consulting Group Matrix Cash Cow Best!!! |
Low Market Growth Rate (Low Cash Usage) High Market Share (High Cash Generation) |
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Boston Consulting Group Matrix Question Mark Third Best- Potential |
High Market Growth Rate (High Cash Usage) Low Market Share (Low Cash Generation) |
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Static Budget |
Fixed Budgets created on a planned level of sales and or/production. Not Adjusted to Actual Units or Activity Levels. BPxBU |
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Flexible Budget |
AQ x BP Example: BP= Price Per Case AQ= Total Cases |
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Flexible Budget Variance |
(AP-BP) x AQ Or Actual Total Amount - Budget Flex Total Amount |
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Rate/Price Variance |
(AP-BP) x Actual Hours Example: BP= $4 Per Direct Labour Hour AP= $4.50 Per Direct Labour Hour *Note* Rate/Price Variance dives down in more detail then the Flexible budget Variance. |
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Efficiency Variance |
(Actual Hours- Budget Hours) x BP Actual Hours- (Actual Units x BDL Per Unit) x BP *Note* Once again this dives into more detail using hours or kilograms, instead of case by case. |
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Yield Variance |
Actual Total Hours- Budget Total Hours x (B Total Amount/Units) |
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Mix Variance |
(A % Mix Product 1 - B % Mix Product 1) x ADLH x BR *Note* Always Calculated Product by Product. |
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Fast way to calculate Cost of good manufactured (aka purchasing) COGM |
COGS- BEG Inv + END Inv |
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Fast way to calculate Cost of good sold COGS |
COGM + BEG INV - END Inv |
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The Green Shoe provision in IPOs |
Provision that allows the underwriter to sell investors more shares than originally planned by the issuer. Typically 15% more then the originally allotted amount. |
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The Red Herring Prospectus |
Preliminary document filed to the SEC which contains information about the companies operations, but does not include list price or the number of share being offered. The purpose is to gain interest. Usually the company offering the preliminary docs will get bids. Based on the bids they will collate the data and arrive at the offer price. |
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Calculating WACC |
(Bond Yield % x (LTD$/LTD$+PS$+CS$)) + Cost of PS % x (PS$/LTD$+PS$+CS$) + Cost of CS % x (CS$/LTD$+PS$+CS$) *Note* Current Debt needs to be eliminated |
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Calculating Required Rate of Return CAPM= |
Rf + B(Rm-Rf) Rf= Risk free rate B= Beta Rm= Market Return Average Market Risk Premium= (Rm-Rf) |
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Participating Preferred Stock |
Dividend is paid to PS before CS. In the event of liquidation the PS will be paid out prior to CS. |
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Core Competency |
Are resources and capabilities that serve as a source of competitive advantage. Characteristics: 1. Allow a company to expand into new markets. 2. Provide a significant benefit to customers. 3. Hard for competitors to replicate. |
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Distinctive Competency |
Occurs when a company performs a core competency better than their rivals. Characteristics: 1. Derives value to the organization 2. is rare 3. hard to imitate 4. the organization is able to exploit it |
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Contribution Forgone Two Sub Companies. Example Questions IC W4 11-12 |
1. Calculate Variable cost for Telecommunication, using the cost from both PTL and CI. Do no use CI division selling price of chips. 2. Compute Budget CM Using (Current SP of Telecommunications - VC calculated in 1) x budget volume current. 3. Convert Tele units into MH, then covert back into computer units. 4. Revised CM - Forgone Computers Produced. Revised CM= (New Price- VC) x Revised Sales Forgone Comp= SP Comp- VC Comp x number in 3. |
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Code of Conduct should contain.... |
Breaches of the code Conflicts of Interest Handling Confidential Info Dealing with Suppliers |
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Sunk Cost |
Cost that has already been incurred and cannot be recovered. |
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Discretionary Cost |
Is a cost or capital expenditure that can be curtailed or even eliminated in the short term without having an immediate impact. Examples: Advertising, Building Maintenance, Contributions, Employee Training, Equipment Maintenance, R&D, quality control, Conferences, Management Consulting, Executive Training. |
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Committed Costs |
Obligated cost that a company can typically not get out of. Usually involves some kind of long term agreement. |
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Benchmarking |
Compare compare compare Comparing your companies strategy, product, or process with those of the best-in-class organization. |
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Kaizen Theory Kaizen Budeting |
Japanese philosophy of small continuous improvement. Continuous improvement is built into the budget figures. |
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Hybrid Costing System |
Includes feature of both job costing and process costing |
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Collusive Pricing |
companies work together to keep the price of a product or service at an elevated level with the goal of receiving large profits or cornering the market. |
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Predatory Pricing Aka Dumping |
When a company sells a product in a foreign country at the price below the market value in its home country. |
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Discriminatory Pricing |
Price discrimination occurs when a business charges a different price to different groups of consumers for the same good or service. |
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Margin of Safety Formula |
(Current Total Sales- Breakeven in Sales $) /Breakeven in Sales $ Example Week 3 Question 68 |
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Opportunity Cost |
(New Order Units- Capacity in Units) x 200 |