MGT

133 Final Review Sheet

The exam covers chapters 9, 10, 11, 12, and 20. The format of the exam will be
similar to the midterm, but this exam will cover new material and will not include
journal entries.

The review slides have been posted on TED by ________. The study material in there is
very important (and the practice questions from the review slides may resurface,
too). Additionally, below is a summary of some key information that I think you
should know for the final (this is NOT a complete list of what you need to know for
the exam):

Chapter 9:

Be able to solve for unknowns in the breakeven formulas (and also in the
same formulas when you have to compute a non-zero N, such as when you
are assuming a certain profit level and want to know the required number of
units to sell to achieve it).
p = unit selling price; Q = unit sales; F = fixed cost; v = unit variable cost, N =
pretax operating profit.
Remember (p*Q) = F + (v * Q) + N (when computing breakeven, N = 0).
For breakeven sales units, solve Q = F/(p v). For breakeven dollars, solve Y
= F/[(p v)/p], where (p v)/p = the contribution margin ratio.
Work through CVP problems in the slides.

Chapter 10:

Know what the components of an operating budget are, including sales
budget, production budget, COGS budget, SG&A budget, and budgeted income
statement. (See exhibit 10-4 in the text for a breakdown of operating budgets
vs. other budgets; this is also in the review slides).
A change in the sales level has a major relative effect on the rest of the
budget.
Be able to compute the budgets that we worked on in the group exercise.

Chapter 11:

Be able to identify relevant costs.
Profitability analysis for finding income when discontinuing a particular
product (e.g. Calm/Windy/Gale case) or determining required sales level for
a product in order to reach a target income.
Sell or process further. Repair or replace.
Optimal product mix calculations.


Chapter 12:

Be able to compute net cash flows.
Payback method - round to whole year after which investment is paid back.
Know NPV and IRR. NPV > 0 means a project is worth investing capital in.
IRR > WACC means a project is worth investing in.


Chapter 20:

Be able to compute the value of stocks and options.
Know the five objectives of management compensation. It should: Motivate,
drive Accountability, be Sustainable, Ethical, and Transparent.


In general, I think the best advice is to work through problems weve done in class
(especially those in the review slides), and also be aware of the basic non-problem-
related information covered in each chapter. If you have time, try to also review
problems in the individual chapter lecture slides (note: the professor mentioned
that you will not need to know anything about using Excels solver on the exam).