A Level Business > Theme 2 > Flashcards

Theme 2 Flashcards

(63 cards)

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1
Q

What is an income budget?

A

A forecast of the amount of cash coming into a business as revenuw

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2
Q

What is an expenditure budget?

A

A forecast of the businesses total costs for the year, including both fixed and variable costs

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3
Q

What is a profit budget?

A

The income budget minus the expenditure budget used to calculate the expected profit or loss for that year

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4
Q

Give a LOA for the benefit of budgets (7)

A
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5
Q

Give a LOA for the drawback of budgets (5)

A
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6
Q

What is a zero based budget?

A

-starts from scratch each year
-if costs cannot be predicted or justified in advance a zero based budget should be used

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7
Q

Give a LOA for the benefit of zero based budgets (8)

A
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8
Q

Give a LOA for the drawback of zero based budgets (7)

A
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9
Q

What is a historical budget?

A

-updated each year
-the budget is usually prepared with past data and past costs are extrapolated
-adjustments will be considered for the future

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10
Q

Give a LOA for the benefit of historical budgets (6)

A
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11
Q

Give a LOA for the drawback of historical budgets (6)

A
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12
Q

What is variance?

A

The difference between actual and budget

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13
Q

What is a favourable variance?

A

More than expected

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14
Q

What is an adverse variance?

A

Less than expected

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15
Q

How do you calculate profit variance?

A

Actual profit- budget profit

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16
Q

What are the 4 main methods of production?

A

Job
Flow
Batch
Cell

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17
Q

What is job production?

A

-one off or small number of items produced
-they are normally made to specific customers specifications
-often used by small, specialist businesses

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18
Q

Give a LOA for the benefit of job production (5)

A
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19
Q

Give a LOA for the drawback of job production (6)

A
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20
Q

What is batch production?

A

-used when demand for the products is more regular than a one off
-items are produced in identical groups or batches
-each batch goes through one stage of the production process before moving onto the next stage

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21
Q
A
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22
Q

Give a LOA for the benefit of batch production (6)

A
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23
Q

Give a LOS for the drawback of batch production (6)

A
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24
Q

What is flow production?

A

-this is when many thousands of identical products are made
-the key feature of this production method is that the production line can be kept running 24/7
-this can maximise production and eliminate extra costs of starting and stopping thr production process
-the process is highly automated and few workers are needed

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25
Give a LOA for the benefit of flow production (6)
26
Give a LOA for the drawback of flow production (6)
27
What LOA can u use for the debark of flow production if you aren’t comparing to batch production?
Lack of flexibility and vulnerable to changes in income/trends
28
What is cell production?
-cell production adopts a different approach to flow manufacturing and involves dividing the workplace into cells rather than one continuous production line -each cell focuses on one sequence of operations, with all machinery and workstations being grouped in close proximity to each other -in each cell the workers see the product from start to finish
29
Give a LOA for the benefit of cell production (6)
30
Give a LOA for the drawback of cell production (6)
31
Give a LOA for production at a minimum average cost (5)
32
What is labour intensive production?
-labour intensive production involved using a large proportion of labour (employees) compared to the amount of capital (machinery) -job production is usually very labour intensive
33
How can labour intensive production affect PED?
More skilled workers, differentiation, price inelastic
34
How may labour intensive production affect unit costs?
FC spread over less units as people produce less than machines
35
Give a LOA for the benefit of labour intensive production (6)
36
Give a LOA for the drawback of labour intensive production (6)
37
What is capital intensive production?
-capital intensive production involved using a large proportion of capital (machinery) compared to the amount of labour (employees) -flow production is usually very capital intensive
38
Give a LOA for the benefit of capital intensive production (5)
39
What is a potential drawback of capital intensive production?
Worsens liquidity in the short term due to high initial cost of machinery
40
Draw a stock control diagram
41
What is stock?
The term used for materials, partially finished goods and components held by a business Stock control is very important for a business as it ensures they are operating as efficiently as possible
42
Give a LOA for the interpretation of a stock control diagram (7)
43
Give a LOA for the importance of good stock management (7)
44
What is lean production?
A method of production that focuses on minimising waste to improve efficiency. It involves using as little resources as possible (time, capital, materials). Businesses that use lean production methods aim to minimise waste while maintaining or improving the rate of output. One method of lean production is just in time management (JIT)
45
What is just in time (JIT) management?
When a business aims to reduce waste of materials by keeping as little stock as possible. When supplies arrive, products are manufactured and distributed just in time for when the customer needs them. This reduces costs associated with storage such as rent, insurance and utilities
46
Give a LOA for the benefit of just in time management (7)
47
What is a potential drawback of just in time management?
Affects their ability to achieve EOS
48
What is quality management?
-when faced with a choice of products/ services, customers are likely to consider their quality when deciding which option to choose -quality refers to a meeting or exceeding customer expectations of what a product should do
49
What are the approaches to quality management?
Quality control Quality assurance Quality circles Kaizen Total quality management
50
What is quality control?
-quality control is the traditional way of managing quality -quality control is concerned with checking and reviewing work that has already been done -finished products are compared against a set of standards at the end of production -for example, quality control includes inspection, testing and sampling -quality control is mainly about detecting faulty output rather than preventing it
51
Give a LOA for the benefit of quality control (6)
52
Give a LOA for the drawback of quality control (6)
53
What is quality assurance?
-quality assurance is about how a business can design the way a product or service is produced or delivered to minimise the chances that output will be substandard. The focus of quality assurance is therefore on the product design/ development stage -quality checks are built in to the production process and workers are responsible for checking the quality at each stage
54
55
Give a LOA for the benefit of quality assurance/ TQM (6)
56
Give a LOA for the drawback of quality assurance/ TQM (6)
57
What are quality circles?
-quality circles are small groups of workers (between 5 and 20) in the same area of production who meet regularly to study and solve production problems -this allows the workers to have direct influence over their day to day working -it can also allow problems to be solved which may not have come to the attention of management and it can be argued workers can provide the best solutions as they are the ones involved on a day to day basis
58
Give a LOA for the benefit of quality circles (6)
59
Give a LOA for the drawback of quality circles (6)
60
What is Kaizen/ continuous improvement production?
-a japanese approach to management or lean production -kaizen/ continuous improvement is a policy of constantly introducing small incremental changes in a business in order to improve quality and/ or efficiency. The western model is to make large one off improvements e.g. a new machine -this approach assumes that employees are the best people to identify room for improvement (quality circles), (democratic leadership), since they see the processes in action all the time -a business that uses this approach therefore has to have a culture that encourages and rewards employees for their contribution to the process
61
Give a LOA for the benefit of continuous improvement Kaizen (6)
62
Give a LOA for the drawback of continuous improvement Kaizen (6)
63
What is total quality management?
-TQM is a management culture that puts quality at the heart of everything in the business -every department within a business is organised so they are constantly focused on quality and quality is investigated at every stage -in essence, it’s getting it right first time -TQM does however require high training costs before it can be implemented
A Level Business
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