You Will Study With Me.

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What are the challenges to informational quality?

Conflicting functional needs
System constraints
Non integrated processes

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Define: Ideal Standards


Ideal standards represent costs that result from perfect efficiency and effectiveness in job performance.

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Define: Currently Attainable Standards

Currently attainable standards represent costs that result from work performed by employees with appropriate training and experience but without extraordinary effort.

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Margin of Safety in Dollars
Total Sales - Breakeven sales





Margin of Safety %
margin of safety in dollars / total sales or revenue

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Breakeven point in dollars

Total fixed costs / contribution margin ratio

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Contribution Margin Ratio

Contribution Margin / Revenue

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Strategic Positioning

During strategic positioning, a firm will determine the best manner to achieve organizational goals and assess the quality practices of the organization.

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Steps and Formula for economic value added:

1. Compare income to the required return

Investment x cost of capital = required return

2. Calculate the required amount of return and income after taxes
Income after taxes - required return = economic value added

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Two Quantitative Methods for Evaluating Risks

Interval Measurement: Numerical scale measurements of events

Ratio Measurement: Proportional scale measurements of events

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List Two Qualitative Methods for Evaluating Risks

Nominal Measurements: Groupings of events into like kinds

Ordinal Measurements: Lists of events in order of importance