BEC REVIEW 12

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Joens1313
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BEC REVIEW 12
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2015-11-05 23:01:01
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BEC REVIEW 12
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  1. In --------------------------------------, management plans, organizes, leads, and controls the organization's activities in order to minimize risks and cut back on costs.
    In enterprise risk management, management plans, organizes, leads, and controls the organization's activities in order to minimize risks and cut back on costs.
  2. What is enterprise risk management?
    In enterprise risk management, management plans, organizes, leads, and controls the organization's activities in order to minimize risks and cut back on costs.
  3. The ---------------------- sets the tone of an organization, influencing the control consciousness of its people. It is the foundation for all other components of internal control, providing discipline and structure.
    The control environment sets the tone of an organization, influencing the control consciousness of its people. It is the foundation for all other components of internal control, providing discipline and structure.
  4. A firm has just received the proceeds from a $5 million bond issue that is earmarked for plant expansion. Work on the project is not expected to begin for several weeks. The firm will invest the funds in marketable securities. The firm is primarily concerned with ensuring they will receive all the funds they have invested in a timely manner. Thus, they are primarily concerned with the ________ of the securities they purchase.
    marketability and default risk
  5. -------------------- is the probability of receiving principal and interest payments in a timely manner.
    default risk is the probability of receiving principal and interest payments in a timely manner.
  6. what is default risk
    default risk is the probability of receiving principal and interest payments in a timely manner.
  7. Assume that a firm is able to issue 20-year fixed rate bonds at an attractive rate. When looking at their balance sheet and cash flow position, management finds that the key interest rate risk the firm is facing is related to movements in short-term interest rates. Management decides that the rate on the 20-year bond is too attractive to pass up. They issue the bond and then choose to develop ________ to offset their interest rate risk.
    an interest rate swap transaction
  8. A -------------------------- uses a forward exchange contract that is tailor-made for the specific amount of the currency required. These contracts are generally written by commercial banks for their clients.
    A forward hedge uses a forward exchange contract that is tailor-made for the specific amount of the currency required. These contracts are generally written by commercial banks for their clients.
  9. what is a forward hedge?
    A forward hedge uses a forward exchange contract that is tailor-made for the specific amount of the currency required. These contracts are generally written by commercial banks for their clients.
  10. The -------------- risk is the risk of loss that an investor can suffer due to the changes in the price of a bond related to variations in the market interest rate. This is also called maturity risk.
    The interest rate risk is the risk of loss that an investor can suffer due to the changes in the price of a bond related to variations in the market interest rate. This is also called maturity risk.
  11. What is a interest rate risk?
    The interest rate risk is the risk of loss that an investor can suffer due to the changes in the price of a bond related to variations in the market interest rate. This is also called maturity risk.
  12. A ------------------------- is a financial transaction where there is generally a simultaneous exchange of assets by counterparties for other different assets of comparable value.
    A swap transaction is a financial transaction where there is generally a simultaneous exchange of assets (the swap) by counterparties for other different assets of comparable value.
  13. What is a swap transaction?
    A swap transaction is a financial transaction where there is generally a simultaneous exchange of assets (the swap) by counterparties for other different assets of comparable value.
  14. The following information pertains to Lap Co.’s Palo Division for the month of April:                          
                                   Number of Units   Cost of Materials                           

                                  ---------------   -----------------

    Beginning work-in-process       15,000           $ 5,500
    Started in April                      40,000            18,000

    Units completed                 42,500
    Ending work-in-process      12,500

    All materials are added at the beginning of the process. Using the weighted-average method, the cost per equivalent unit for materials is:
    $0.43.


    Weighted average means beginning work-in-process inventory is included with the current period production.


    Therefore, costs from the previous period ($5,500) are added to those incurred this period ($18,000) and the total ($23,500) is divided by equivalent completed units.


    Since material is added at the beginning of the process, all units finished, as well as all those in ending work-in-process inventory, are 100% complete as to material.


    Equivalent completed units for the weighted-average method include equivalent units completed (100% of 42,500) as well as equivalent units in ending inventory (100% of 12,500) for total of 55,000 equivalent completed units.


    Dividing total material costs of $23,500 by equivalent completed units of 55,000 results in $0.43 per equivalent completed unit.
  15. -------------------------- is a system of accounting for production in which costs are assigned to units of finished goods indistinguishable from each other and produced in a continuous process. Examples include the manufacture of product in which each unit is identical, such as boxes of cereal, blenders, or bags of cement.
    Process costing is a system of accounting for production in which costs are assigned to units of finished goods indistinguishable from each other and produced in a continuous process. Examples include the manufacture of product in which each unit is identical, such as boxes of cereal, blenders, or bags of cement.
  16. what is process costing?
    Process costing is a system of accounting for production in which costs are assigned to units of finished goods indistinguishable from each other and produced in a continuous process. Examples include the manufacture of product in which each unit is identical, such as boxes of cereal, blenders, or bags of cement.
  17. A company manufactures a product using one material per unit. The following information for the upcoming budget year is available: 


    Number of units sold14,500

    Budgeted beginning finished goods inventory units1,500

    Budgeted ending finished goods inventory units3,000

    Budgeted beginning direct materials inventory units2,000

    Budgeted ending direct materials inventory units1,500

    Direct manufacturing material cost per unit$5

    What amount is the total direct materials purchasing budget?
    $77,500


    The company would produce 16,000 finished units, 14,500 to sell and 1,500 more to increase the finished goods inventory from 1,500 to 3,000 units. They would have to purchase 16,000 units of material, except that the raw material inventory declines by 500 units, from 2,000 units to 1,500 units therefore they will only purchase 15,500 units. At a cost of $5 per unit the 15,500 units will cost $77,500.

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