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Pcm Mngt Acctg Conclusion



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  • 1. Conclusion Management Accounting Benoit SENAUX [email_address] 1-A-006
  • 2. Different methods for different uses
    • Full-costing
      • Long-term strategic decisions (e.g. products portfolio)
      • Ensuring that all the costs are covered by selling price
    • Variable / direct costing & CVP analysis
      • Short-term decisions (e.g. accepting an exceptional order)
      • Calculating break-even point
      • Simulating the impact of decisions
        • change in volume, change in selling price / variable cost
    • It is usually interesting to use both method
  • 3. Limitations
    • Full-costing
      • Complex and opaque
      • Allocation of indirect costs could be questionable (conventions)
      • Calculating fixed costs per unit is questionable (which volume?)
    • Variable / direct costing
      • Risk of forgetting (indirect) fixed costs
      • Fixed costs may not be so fixed (and increasing the number of products with small contribution may lead to decreasing profit)
      • Break-even point when more than one product is questionable
  • 4. Conclusion
    • Those tools are useful and used
    • … but you need to be aware of their specific limitations..
    • … and keep them in mind when making decision.
    • Change in the economic context make activity based costing all the more interesting:
      • Process perspective (transverse vs. vertical/departmental)
      • More and more complex and personalised ‘products’ (and thus ‘production’ process)
      • Increase weight of indirect fixed costs which cannot be ignored
  • 5. Other way of costing
    • Target costing:
      • Especially during development phase
      • Starts from a market perspective (=> selling price)
      • Considers the whole product life cycle (conception but also recycling etc.)
  • 6.  
  • 7.
    • Common courses:
      • Management accounting (PCM or Bachelor)
      • Pilotage de la performance / Managing Performance (Master)
    • Electives (master) :
      • Contrôle de gestion et mesure de la performance
      • Contrôle de gestion et pilotage de la stratégie
      • Contrôle de gestion et système d’information
    Management control courses at SupdeCo