GB615 - Exam 2 Study Guide

1. Chapters 6, 8, 9, 12 and 13
 Multiple Choice True/False Questions
 Problems

2. Chapter 6 – Absorption (Full) versus Variable Costing

 Explain difference between the two methods
 Apply the two methods

3. Chapter 8 – Profit Planning (Budgeting)

 What is a Budget?
 Advantages of Budgeting
 What is budgeted and how?
→ Sales/Production/COGS/SG&A/Balance Sheet/Cash Flow
 Methods of Budgeting
→ Self-imposed or participative
→ Top Down/Bottom Up Combination
→ Zero Based Budgeting

4. Chapter 9 – Flexible Budgeting

 Volume Rate Variance Analysis
 Performance Report
→ Flexible Budget (Activity Variance)
→ Revenue and Spending Variance (Rate Variance)

5. Chapter 12 – Differential Analysis

 Use in Decision Making – what to focus on
 Irrelevant versus relevant cost
→ Avoidable versus unavoidable
 Total versus differential analysis
 Keep or drop product lines
→ Allocated fixed costs
 Make versus buy

6. Chapter 13 – Capital Budgeting

 Types of Capital Budgeting Decisions
 Capital Budgeting Decisions Methods
→ Recovery of Original Investment
 Required Rate of Return
→ Net Present Value Method
 Discounted Cash Flow Method
→ Internal Rate of Return
→ Payback Method

7. Homework
 Stapled with Name and Problems CLEARLY indicated.