This document provides an introduction to accounting concepts and techniques. It discusses how accounting helps identify a company's economic position and gain or loss through measuring and communicating financial and non-financial information. The purpose of accounting is to provide useful information to managers, shareholders, and employees. The document then examines several quantitative and qualitative accounting techniques used by organizations, including planning, activity-based costing, just-in-time, and break-even analysis. It defines fixed and variable costs, and how understanding the distinction between them can help managers with decision-making. Finally, it explains that the break-even point is the production level where total revenues equal total costs, and provides the equation for computing the break-even point in units or
The biggest challenge to analyzing and computing costs is the allo.docxmattinsonjanel
The biggest challenge to analyzing and computing costs is the allocation of overhead. Imagine that you are building a new home. When meeting with the contractor, he or she will give you an approximate price to build the home. That price is based on the builder’s cost to build the house as well as the profit expected for the contractor. Based on the home plans and supplier relationships, the builder can easily calculate the cost of materials and labor of subcontractors who would carry out the day-to-day construction.
It gets complicated when it comes to the other costs the builder incurs. These costs, known as overheads, need to be recovered, but they are not directly tied to the cost of your home. Examples of such costs would be advertising, gasoline for trucks used by supervisors to drive between construction sites, salaries for secretaries and support staff in the office, and any other cost of the sort. How can a builder take these costs and allocate them fairly across all projects? In this module, you will explore job-order costing systems—one method commonly used to allocate overheads and estimate costs of a project provided to a customer.
Cost management analysts work very closely with other management colleagues to put together cost management systems that coincide with the overall decision-making strategies of the organization. One important component of the cost management system is the product costing system that accumulates all production costs and assigns them to the appropriate products. The most commonly used product costing systems are job-order costing and process costing.
When job-order costing is implemented, each separate job is treated as a separate unit of output and costs are assigned as the resources are used up. A job is defined as a single product or small group of similar products. Job-order costing is useful for identifying which types of jobs will be most profitable for a company, predicting future costs, managing costs, contract renegotiations, and financial reporting. When process costing is used, all units produced during the time period are considered output. The costs are not separated and broken down for each individual unit as they are with job-order costing.
The first element of managerial accounting is cost behavior within an organization. Management analysis of cost behavior influences cost classifications and decisions made in order to control costs. This module covers two main concepts—cost management and how it is used in strategic decision making. In any strategic decision making, ethics always should be top priority. Not only is making ethical decisions the correct thing to do, but it is also key to running an efficient, long-term business.
For example, assume you are in charge of the pharmacy in a hospital. In your role as manager, you need to help control the cost of medications administered to patients. Many of these drugs are very expensive and are never fully reimbursed by the patients’ insuran ...
BBA 2301, Principles of Accounting II 1 Course LeaCicelyBourqueju
BBA 2301, Principles of Accounting II 1
Course Learning Outcomes for Unit VIII
Upon completion of this unit, students should be able to:
7. Explain how financial information influences both short-term and long-term management decisions.
7.1 Describe the use of standard cost manufacturers and service businesses.
8. Discuss operational and capital budgets.
8.1 Describe capital budgeting methods.
8.2 Identify the use of intangible benefits in capital budgeting.
Course/Unit
Learning Outcomes
Learning Activity
7.1
Unit Lesson
Chapter 26, pp. 26-1 to 26-24
Webpage: Balanced Scorecard Basics
Video: What is a balanced scorecard: A simple explanation for anyone
Unit VIII Case Study
8.1
Unit Lesson
Chapter 27, pp. 27-1 to 27-19
Unit VIII Case Study
8.2
Unit Lesson
Chapter 27, pp. 27-1 to 27-19
Unit VIII Case Study
Required Unit Resources
Chapter 26: Standard Costs and Balanced Scorecard, pp. 26-1 to 26-24
Chapter 27: Planning for Capital Investments, pp. 27-1 to 27-19
In order to access the following resources, click the links below.
Balanced Scorecard Institute. (n.d.). Balanced scorecard basics. https://balancedscorecard.org/bsc-basics-
overview/
For the video resource below, a transcript and closed captioning are available upon accessing the video.
Marr, B. (2019, June 24). What is a balanced scorecard: A simple explanation for anyone [Video]. Cielo24.
https://c24.page/2s4pmxpj2kpwnprckg6p8tcjtu
Unit Lesson
Introduction
This final unit will conclude the study of managerial accounting. This lesson will share important content for
managers in manufacturing, merchandising, and service companies. Content includes estimating future costs,
implementing financial and non-financial performance measures, and incorporating capital budgeting.
Costing requires you to make estimates. As noted in a previous unit, many people are uncomfortable with this
task, as they are used to having objective numbers given to them. However, as much as the future is
UNIT VIII STUDY GUIDE
Management: Costs and Capital Investing
https://balancedscorecard.org/bsc-basics-overview/
https://c24.page/2s4pmxpj2kpwnprckg6p8tcjtu
BBA 2301, Principles of Accounting II 2
UNIT x STUDY GUIDE
Title
unpredictable, we are still required to use our experience and judgment to chart a path forward. In this unit,
you will learn about standard costs. Partially based on prior period actual costs, they provide the basis for
budgeting and subsequent evaluation. Management accountants, no matter the title, are integral to the
development of standard costs, implementation of the balanced scorecard, and the capital budgeting process.
Pay attention as you read, review, and evaluate this unit as it is almost wholly transferable to any company.
Consider the following questions and how you would respond to each as you move through this unit.
As the chief accounting officer (CAO) or chief ...
The biggest challenge to analyzing and computing costs is the allo.docxmattinsonjanel
The biggest challenge to analyzing and computing costs is the allocation of overhead. Imagine that you are building a new home. When meeting with the contractor, he or she will give you an approximate price to build the home. That price is based on the builder’s cost to build the house as well as the profit expected for the contractor. Based on the home plans and supplier relationships, the builder can easily calculate the cost of materials and labor of subcontractors who would carry out the day-to-day construction.
It gets complicated when it comes to the other costs the builder incurs. These costs, known as overheads, need to be recovered, but they are not directly tied to the cost of your home. Examples of such costs would be advertising, gasoline for trucks used by supervisors to drive between construction sites, salaries for secretaries and support staff in the office, and any other cost of the sort. How can a builder take these costs and allocate them fairly across all projects? In this module, you will explore job-order costing systems—one method commonly used to allocate overheads and estimate costs of a project provided to a customer.
Cost management analysts work very closely with other management colleagues to put together cost management systems that coincide with the overall decision-making strategies of the organization. One important component of the cost management system is the product costing system that accumulates all production costs and assigns them to the appropriate products. The most commonly used product costing systems are job-order costing and process costing.
When job-order costing is implemented, each separate job is treated as a separate unit of output and costs are assigned as the resources are used up. A job is defined as a single product or small group of similar products. Job-order costing is useful for identifying which types of jobs will be most profitable for a company, predicting future costs, managing costs, contract renegotiations, and financial reporting. When process costing is used, all units produced during the time period are considered output. The costs are not separated and broken down for each individual unit as they are with job-order costing.
The first element of managerial accounting is cost behavior within an organization. Management analysis of cost behavior influences cost classifications and decisions made in order to control costs. This module covers two main concepts—cost management and how it is used in strategic decision making. In any strategic decision making, ethics always should be top priority. Not only is making ethical decisions the correct thing to do, but it is also key to running an efficient, long-term business.
For example, assume you are in charge of the pharmacy in a hospital. In your role as manager, you need to help control the cost of medications administered to patients. Many of these drugs are very expensive and are never fully reimbursed by the patients’ insuran ...
BBA 2301, Principles of Accounting II 1 Course LeaCicelyBourqueju
BBA 2301, Principles of Accounting II 1
Course Learning Outcomes for Unit VIII
Upon completion of this unit, students should be able to:
7. Explain how financial information influences both short-term and long-term management decisions.
7.1 Describe the use of standard cost manufacturers and service businesses.
8. Discuss operational and capital budgets.
8.1 Describe capital budgeting methods.
8.2 Identify the use of intangible benefits in capital budgeting.
Course/Unit
Learning Outcomes
Learning Activity
7.1
Unit Lesson
Chapter 26, pp. 26-1 to 26-24
Webpage: Balanced Scorecard Basics
Video: What is a balanced scorecard: A simple explanation for anyone
Unit VIII Case Study
8.1
Unit Lesson
Chapter 27, pp. 27-1 to 27-19
Unit VIII Case Study
8.2
Unit Lesson
Chapter 27, pp. 27-1 to 27-19
Unit VIII Case Study
Required Unit Resources
Chapter 26: Standard Costs and Balanced Scorecard, pp. 26-1 to 26-24
Chapter 27: Planning for Capital Investments, pp. 27-1 to 27-19
In order to access the following resources, click the links below.
Balanced Scorecard Institute. (n.d.). Balanced scorecard basics. https://balancedscorecard.org/bsc-basics-
overview/
For the video resource below, a transcript and closed captioning are available upon accessing the video.
Marr, B. (2019, June 24). What is a balanced scorecard: A simple explanation for anyone [Video]. Cielo24.
https://c24.page/2s4pmxpj2kpwnprckg6p8tcjtu
Unit Lesson
Introduction
This final unit will conclude the study of managerial accounting. This lesson will share important content for
managers in manufacturing, merchandising, and service companies. Content includes estimating future costs,
implementing financial and non-financial performance measures, and incorporating capital budgeting.
Costing requires you to make estimates. As noted in a previous unit, many people are uncomfortable with this
task, as they are used to having objective numbers given to them. However, as much as the future is
UNIT VIII STUDY GUIDE
Management: Costs and Capital Investing
https://balancedscorecard.org/bsc-basics-overview/
https://c24.page/2s4pmxpj2kpwnprckg6p8tcjtu
BBA 2301, Principles of Accounting II 2
UNIT x STUDY GUIDE
Title
unpredictable, we are still required to use our experience and judgment to chart a path forward. In this unit,
you will learn about standard costs. Partially based on prior period actual costs, they provide the basis for
budgeting and subsequent evaluation. Management accountants, no matter the title, are integral to the
development of standard costs, implementation of the balanced scorecard, and the capital budgeting process.
Pay attention as you read, review, and evaluate this unit as it is almost wholly transferable to any company.
Consider the following questions and how you would respond to each as you move through this unit.
As the chief accounting officer (CAO) or chief ...
Cost Analysis ModelsUnit 3 Written AssignmentBUS .docxbobbywlane695641
Cost Analysis Models
Unit 3: Written Assignment
BUS 5110
Managerial Accounting
Unit 3
Introduction
Cost management is important for all businesses and is used to plan and control the budget. This is done by analysing business practices, predicting expenditures in advance and reducing the chance of over spending in relation to income. Using the client provided data for a business involved in the catering and events industry we can evaluate how productive and effective her business is.
Provide an accurate solution.
We can see from the data in the attached costing sheet that the company has a break even point of 3158 events. To come to this conclusion, we calculated the revenue per event (Current revenue / number of events) $22,500,000 / 5000 = $4,500. We also require our Contribution margin (Revenue per event - Variable cost per event) $4,500 - $2,600 = $1,900. To calculate the Breakeven point, we simply take the Fixed cost and divide that by the Contribution margin = 6,000,000 / 1,900 = 3157.89
Hypothetically, if the company decided they’d like to improve their revenue and increase their profits from $3,500,000 to $5,000,000 we can use the data to calculate the number of events required to reach that target. Using the Units to Achieve a Target Income formula (Total fixed costs + Target income) / Contribution margin per unit = (6,000,000 + 5,000,000) / 1,900 = 5789.47 = 5789 events (Walther, L. M. & Skousen, C.J., 2009).
Provide a narrative that defines and discusses the purpose of assigning cost categories of fixed and variable costs.
Operating a business incurs a range of costs. These can be defined as either fixed costs which don’t change in relation to activity and variable costs which do. These costing structures will likely differ between businesses and industries. Companies have even been known to use different costing structures between different internal departments. (CFI., n.d.)
Many fixed costs are going to be unavoidable and come from the simple operational side of your business. Costs such as depreciation, taxes and rent will likely remain unchanged however other fixed costs such as advertising budgets are more discretionary. Variable costs are also able to be altered depending on the size and scale of your business. For example, order quantities can be increased to bring unit costs down however before committing to such decisions forecasting your sales based on this should also be carried out to ensure you don’t end up grossly overstocked (Walther, L. M. & Skousen, C.J., 2009).
In order to maximise profits companies are required to minimise or eradicate unnecessary costs any way they can, ideally with no impact on the quality of the final product. A manager must understand both of these categories and the importance they play in the overall running of the business if they’re ever going to effectively improve the business model, reduce costs and remain profitable.
Provide a narrative that defines and discusses.
Based on the literatures answer the following questionNo to e.docxikirkton
Based on the literatures answer the following question:
No to exceed 600 words in total
What tool do you need to control cost in your profit center?
What is the difference between cash and revenue?
This article explains the essential concepts of cost accounting. The overview provides an introduction to the basic cost accounting objectives and techniques, the roles of the controller and cost accountant within the corporate management structure and the ethical considerations that guide cost accountants. This article also explains the basic cost accumulation methods that are used in cost accounting systems. These methods include job order costing, process costing, backflush costing, hybrid costing and joint and by-product costing. Further, explanations of the most common costs that companies must plan for and control are included, such as direct labor, direct material and factory overhead costs. Finally, this overview describes how cost accounting techniques affect business considerations in areas such as budgeting, pricing and inventory costing methods, which include throughput, direct, absorption and activity-based costing systems.
Keywords Activity-Based Costing; Activity-based Management (ABM); Actual Cost System; Backflush Costing; Balance Sheet; By-product; Controller; Cost Accounting; Cost Accumulation; Cost Driver; Direct Labor; Direct Materials; Factory Cost; Factory Overhead; Fixed Cost; Indirect Cost; Job Order Costing; Joint Cost; Labor Productivity; Process Costing; Sunk Cost; Variable Cost
Accounting > Cost Accounting
Overview
Cost accounting is the application of accounting and costing principles to the tracking, recording and analysis of the costs associated with the products or services a business produces and the activities involved in the production process. Broadly speaking, cost accounting objectives include the preparation of statistical data, application of cost accumulation and cost control methods to production processes and analysis of an organization's profitability as compared with previous periods of time and projected budgets. Cost accountants use basic accounting techniques to compile and analyze data to meet these objectives. In performing these tasks, cost accountants work within the controller's office or the accounting department of most companies. And in addition to any internal company policies that govern their duties, cost accountants must consider the ethical principles that guide the accounting and financial reporting industries. The following sections provide a more in-depth explanation of these concepts.
Introduction to Cost Accounting
Cost accounting identifies, defines, measures, reports and analyzes the various elements of direct and indirect costs associated with producing and marketing goods and services. Cost accounting also measures performance, product quality and productivity. Direct costs can be directly traced to producing specific goods or services, such as the cost of raw mater ...
Week 4 OverviewThis week we cover Budgets and Standard Cost Syst.docxjessiehampson
Week 4 Overview
This week we cover Budgets and Standard Cost Systems, of the text.
There are many advantages to budgeting and some of them are listed below:
· Budgets define goals and objectives that can serve as benchmarks for evaluating subsequent performance.
· Budgets coordinate the activities of the entire organization by integrating the plans of its various parts. Budgeting helps to ensure that everyone in the organization is pulling in the same direction.
· The budgeting process can uncover potential bottlenecks before they occur.
· The budgeting process provides a means of allocating resources to those parts of the organization where they can be used most effectively.
· Budgets force managers to think about the plan for the future. In the absence of the necessity to prepare a budget, many managers would spend all of their time dealing with day-to-day emergencies.
· Budgets communicate management’s plans throughout the organization.
When preparing a master budget you will want to prepare other budgets in the following order: sales budget, production budget, direct material budget, direct labor budget, manufacturing overhead budget, selling and administrative expense budget and cash budget.
Flexible budgets which takes into account how changes in activity affect costs. A flexible budget is an estimate of the revenues and costs that are expected given actual levels of activity. A flexible budget approach recognizes that budget can be adjusted to show what cost should be for the actual level activity. Remember, as you move forward, that all costs are not fixed. This is an error that is made in static budgeting.
Success factor training
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LearningObjectives
After studying Chapter 6, you will be able to:
Understand the signi�icance of cost behavior to decision making and control.
Identify the interacting elements of cost-volume-pro�it analysis.
Explain the break-even equation and its underlying assumptions.
Calculate the effect on pro�its of changes in selling prices, variable costs, or �ixed costs.
Calculate operating leverage, determine its effects on changes in pro�it, and understand how
margin of safety relates to operating leverage.
Find break-even points and volumes that attain desired pro�it levels when multiple products are
sold in combination.
Obtain cost functions by account analysis, the engineering approach, the scattergraph approach,
and the high-low method.
6 Cost Estimation and Cost-Volume-Pro�itRelationships
Olga_Anourina/iStock/Thinkstock
8/21/2019 Print
https://content.ashford.edu/print/Schneider.4937.17.1?sections=navpoint-1,navpoint-48,navpoint-49,navpoint- ...
Managerial Accounting before 1950 was focused on the manufacturing product costs. The technology was also simple in evaluating the product-related cost. In 1977 the more complex managerial accounting method was introduced, and the company starts using the costs accounts to evaluate the product-related material and direct labor costs.
Module - BackgroundTRANSFER PRICING AND RESPONSIBILITY CENTERSIlonaThornburg83
Module - Background
TRANSFER PRICING AND RESPONSIBILITY CENTERS
Modular Learning Objectives
Keep the following objectives in mind as you work through the material in this module:
· Define the role of responsibility accounting.
· Differentiate between controllable and uncontrollable costs.
· Analyze structure of a decentralized organization.
· Define profit centers, cost centers, and investment centers.
· Compute transfer prices.
· Identify three main transfer pricing approaches.
Required Reading
This module covers the role of responsibility accounting and responsibility centers. Explore these topics further while keeping the above six objectives in mind. Click on the three arrows to explore each topic in more detail:
The term responsibility accounting refers to an accounting system that collects, summarizes, and reports accounting data relating to the responsibilities of individual managers. A responsibility accounting system provides information to evaluate each manager on the revenue and expense items over which that manager has primary control (authority to influence).
A responsibility accounting report contains those items controllable by the responsible manager. When both controllable and uncontrollable items are included in the report, accountants should clearly separate the categories. The identification of controllable items is a fundamental task in responsibility accounting and reporting.
To implement responsibility accounting in a company, the business entity must be organized so that responsibility is assignable to individual managers. The various company managers and their lines of authority (and the resulting levels of responsibility) should be fully defined. Not all managers have equal authority and responsibility. The degree of a manager’s authority varies from company to company.
The controllability criterion is crucial to the content of performance reports for each manager. For example, at the department supervisor level, perhaps only direct materials and direct labor cost control are appropriate for measuring performance. A plant manager, however, has the authority to make decisions regarding many other costs not controllable at the supervisory level, such as the salaries of department supervisors. These other costs would be included in the performance evaluation of the store manager, not the supervisor.
Watch this short video to further explain the concept of responsibility accounting. https://www.youtube.com/watch?time_continue=1&v=EsS0socI3I4
Decentralization is the dispersion of decision-making authority among individuals at lower levels of the organization. In other words, the extent of decentralization refers to the degree of control that segment managers have over the revenues, expenses, and assets of their segments. When a segment manager has control over these elements, the investment center concept can be applied to the segment. Thus, the more decentralized the decision-making is in an organization the more appli ...
Most sourcing organizations focus on direct procurement, potentially overlooking indirect procurement and missing key opportunities to reduce spend. As indirect purchases increasingly become a larger percentage of overall spend, for many organizations, indirect procurement can be a diamond in the rough. This article makes the arguement that the value of indirect procurement should not be overlooked.
Cost Analysis ModelsUnit 3 Written AssignmentBUS .docxbobbywlane695641
Cost Analysis Models
Unit 3: Written Assignment
BUS 5110
Managerial Accounting
Unit 3
Introduction
Cost management is important for all businesses and is used to plan and control the budget. This is done by analysing business practices, predicting expenditures in advance and reducing the chance of over spending in relation to income. Using the client provided data for a business involved in the catering and events industry we can evaluate how productive and effective her business is.
Provide an accurate solution.
We can see from the data in the attached costing sheet that the company has a break even point of 3158 events. To come to this conclusion, we calculated the revenue per event (Current revenue / number of events) $22,500,000 / 5000 = $4,500. We also require our Contribution margin (Revenue per event - Variable cost per event) $4,500 - $2,600 = $1,900. To calculate the Breakeven point, we simply take the Fixed cost and divide that by the Contribution margin = 6,000,000 / 1,900 = 3157.89
Hypothetically, if the company decided they’d like to improve their revenue and increase their profits from $3,500,000 to $5,000,000 we can use the data to calculate the number of events required to reach that target. Using the Units to Achieve a Target Income formula (Total fixed costs + Target income) / Contribution margin per unit = (6,000,000 + 5,000,000) / 1,900 = 5789.47 = 5789 events (Walther, L. M. & Skousen, C.J., 2009).
Provide a narrative that defines and discusses the purpose of assigning cost categories of fixed and variable costs.
Operating a business incurs a range of costs. These can be defined as either fixed costs which don’t change in relation to activity and variable costs which do. These costing structures will likely differ between businesses and industries. Companies have even been known to use different costing structures between different internal departments. (CFI., n.d.)
Many fixed costs are going to be unavoidable and come from the simple operational side of your business. Costs such as depreciation, taxes and rent will likely remain unchanged however other fixed costs such as advertising budgets are more discretionary. Variable costs are also able to be altered depending on the size and scale of your business. For example, order quantities can be increased to bring unit costs down however before committing to such decisions forecasting your sales based on this should also be carried out to ensure you don’t end up grossly overstocked (Walther, L. M. & Skousen, C.J., 2009).
In order to maximise profits companies are required to minimise or eradicate unnecessary costs any way they can, ideally with no impact on the quality of the final product. A manager must understand both of these categories and the importance they play in the overall running of the business if they’re ever going to effectively improve the business model, reduce costs and remain profitable.
Provide a narrative that defines and discusses.
Based on the literatures answer the following questionNo to e.docxikirkton
Based on the literatures answer the following question:
No to exceed 600 words in total
What tool do you need to control cost in your profit center?
What is the difference between cash and revenue?
This article explains the essential concepts of cost accounting. The overview provides an introduction to the basic cost accounting objectives and techniques, the roles of the controller and cost accountant within the corporate management structure and the ethical considerations that guide cost accountants. This article also explains the basic cost accumulation methods that are used in cost accounting systems. These methods include job order costing, process costing, backflush costing, hybrid costing and joint and by-product costing. Further, explanations of the most common costs that companies must plan for and control are included, such as direct labor, direct material and factory overhead costs. Finally, this overview describes how cost accounting techniques affect business considerations in areas such as budgeting, pricing and inventory costing methods, which include throughput, direct, absorption and activity-based costing systems.
Keywords Activity-Based Costing; Activity-based Management (ABM); Actual Cost System; Backflush Costing; Balance Sheet; By-product; Controller; Cost Accounting; Cost Accumulation; Cost Driver; Direct Labor; Direct Materials; Factory Cost; Factory Overhead; Fixed Cost; Indirect Cost; Job Order Costing; Joint Cost; Labor Productivity; Process Costing; Sunk Cost; Variable Cost
Accounting > Cost Accounting
Overview
Cost accounting is the application of accounting and costing principles to the tracking, recording and analysis of the costs associated with the products or services a business produces and the activities involved in the production process. Broadly speaking, cost accounting objectives include the preparation of statistical data, application of cost accumulation and cost control methods to production processes and analysis of an organization's profitability as compared with previous periods of time and projected budgets. Cost accountants use basic accounting techniques to compile and analyze data to meet these objectives. In performing these tasks, cost accountants work within the controller's office or the accounting department of most companies. And in addition to any internal company policies that govern their duties, cost accountants must consider the ethical principles that guide the accounting and financial reporting industries. The following sections provide a more in-depth explanation of these concepts.
Introduction to Cost Accounting
Cost accounting identifies, defines, measures, reports and analyzes the various elements of direct and indirect costs associated with producing and marketing goods and services. Cost accounting also measures performance, product quality and productivity. Direct costs can be directly traced to producing specific goods or services, such as the cost of raw mater ...
Week 4 OverviewThis week we cover Budgets and Standard Cost Syst.docxjessiehampson
Week 4 Overview
This week we cover Budgets and Standard Cost Systems, of the text.
There are many advantages to budgeting and some of them are listed below:
· Budgets define goals and objectives that can serve as benchmarks for evaluating subsequent performance.
· Budgets coordinate the activities of the entire organization by integrating the plans of its various parts. Budgeting helps to ensure that everyone in the organization is pulling in the same direction.
· The budgeting process can uncover potential bottlenecks before they occur.
· The budgeting process provides a means of allocating resources to those parts of the organization where they can be used most effectively.
· Budgets force managers to think about the plan for the future. In the absence of the necessity to prepare a budget, many managers would spend all of their time dealing with day-to-day emergencies.
· Budgets communicate management’s plans throughout the organization.
When preparing a master budget you will want to prepare other budgets in the following order: sales budget, production budget, direct material budget, direct labor budget, manufacturing overhead budget, selling and administrative expense budget and cash budget.
Flexible budgets which takes into account how changes in activity affect costs. A flexible budget is an estimate of the revenues and costs that are expected given actual levels of activity. A flexible budget approach recognizes that budget can be adjusted to show what cost should be for the actual level activity. Remember, as you move forward, that all costs are not fixed. This is an error that is made in static budgeting.
Success factor training
8/21/2019 Print
https://content.ashford.edu/print/Schneider.4937.17.1?sections=navpoint-1,navpoint-48,navpoint-49,navpoint-50,navpoint-51,navpoint-52,navpoint-5… 1/102
8/21/2019 Print
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LearningObjectives
After studying Chapter 6, you will be able to:
Understand the signi�icance of cost behavior to decision making and control.
Identify the interacting elements of cost-volume-pro�it analysis.
Explain the break-even equation and its underlying assumptions.
Calculate the effect on pro�its of changes in selling prices, variable costs, or �ixed costs.
Calculate operating leverage, determine its effects on changes in pro�it, and understand how
margin of safety relates to operating leverage.
Find break-even points and volumes that attain desired pro�it levels when multiple products are
sold in combination.
Obtain cost functions by account analysis, the engineering approach, the scattergraph approach,
and the high-low method.
6 Cost Estimation and Cost-Volume-Pro�itRelationships
Olga_Anourina/iStock/Thinkstock
8/21/2019 Print
https://content.ashford.edu/print/Schneider.4937.17.1?sections=navpoint-1,navpoint-48,navpoint-49,navpoint- ...
Managerial Accounting before 1950 was focused on the manufacturing product costs. The technology was also simple in evaluating the product-related cost. In 1977 the more complex managerial accounting method was introduced, and the company starts using the costs accounts to evaluate the product-related material and direct labor costs.
Module - BackgroundTRANSFER PRICING AND RESPONSIBILITY CENTERSIlonaThornburg83
Module - Background
TRANSFER PRICING AND RESPONSIBILITY CENTERS
Modular Learning Objectives
Keep the following objectives in mind as you work through the material in this module:
· Define the role of responsibility accounting.
· Differentiate between controllable and uncontrollable costs.
· Analyze structure of a decentralized organization.
· Define profit centers, cost centers, and investment centers.
· Compute transfer prices.
· Identify three main transfer pricing approaches.
Required Reading
This module covers the role of responsibility accounting and responsibility centers. Explore these topics further while keeping the above six objectives in mind. Click on the three arrows to explore each topic in more detail:
The term responsibility accounting refers to an accounting system that collects, summarizes, and reports accounting data relating to the responsibilities of individual managers. A responsibility accounting system provides information to evaluate each manager on the revenue and expense items over which that manager has primary control (authority to influence).
A responsibility accounting report contains those items controllable by the responsible manager. When both controllable and uncontrollable items are included in the report, accountants should clearly separate the categories. The identification of controllable items is a fundamental task in responsibility accounting and reporting.
To implement responsibility accounting in a company, the business entity must be organized so that responsibility is assignable to individual managers. The various company managers and their lines of authority (and the resulting levels of responsibility) should be fully defined. Not all managers have equal authority and responsibility. The degree of a manager’s authority varies from company to company.
The controllability criterion is crucial to the content of performance reports for each manager. For example, at the department supervisor level, perhaps only direct materials and direct labor cost control are appropriate for measuring performance. A plant manager, however, has the authority to make decisions regarding many other costs not controllable at the supervisory level, such as the salaries of department supervisors. These other costs would be included in the performance evaluation of the store manager, not the supervisor.
Watch this short video to further explain the concept of responsibility accounting. https://www.youtube.com/watch?time_continue=1&v=EsS0socI3I4
Decentralization is the dispersion of decision-making authority among individuals at lower levels of the organization. In other words, the extent of decentralization refers to the degree of control that segment managers have over the revenues, expenses, and assets of their segments. When a segment manager has control over these elements, the investment center concept can be applied to the segment. Thus, the more decentralized the decision-making is in an organization the more appli ...
Most sourcing organizations focus on direct procurement, potentially overlooking indirect procurement and missing key opportunities to reduce spend. As indirect purchases increasingly become a larger percentage of overall spend, for many organizations, indirect procurement can be a diamond in the rough. This article makes the arguement that the value of indirect procurement should not be overlooked.
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This person is none other than Oprah Winfrey, a highly influential figure whose impact extends beyond television. This article will delve into the remarkable life and lasting legacy of Oprah. Her story serves as a reminder of the importance of perseverance, compassion, and firm determination.
Modern Database Management 12th Global Edition by Hoffer solution manual.docxssuserf63bd7
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name:Solution manual for Modern Database Management 12th Global Edition by Hoffer
Edition:12th Global Edition
author:by Hoffer
ISBN:ISBN 10: 0133544613 / ISBN 13: 9780133544619
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Focusing on what leading database practitioners say are the most important aspects to database development, Modern Database Management presents sound pedagogy, and topics that are critical for the practical success of database professionals. The 12th Edition further facilitates learning with illustrations that clarify important concepts and new media resources that make some of the more challenging material more engaging. Also included are general updates and expanded material in the areas undergoing rapid change due to improved managerial practices, database design tools and methodologies, and database technology.
Artificial intelligence (AI) offers new opportunities to radically reinvent the way we do business. This study explores how CEOs and top decision makers around the world are responding to the transformative potential of AI.
2. INTRODUCTION
There is a huge barrier and accomplishment that accounting is considered as the language of
business that helps to figure out the economic position of a certain company that is of great
assistance that helps to identify the level of either gain or loss that may result in the use of business
operations, as well as the efficient use of various resources. According to Drury(1997, p.4) the
purpose of accounting is that it is considered as a financial or rather non-financial kind of aspect
of people who is keen about an organization that includes managers, shareholders and all kind of
employees that is collaborated together with the government. In order to understand the concept
of accounting, firstly we must comprehend the use of measurement and communication, as well
as the main features of such information together with the practices of decision making. Due to
the growth of competition and cycle of its new improved products and services, these are quite
fundamental to an organization in order to gain success the board accounting has the going with
limits: framing business system, orchestrating and controlling activities, free course, capable
resource use, Performance improvement and worth update, protecting obvious and slippery assets,
and corporate organization and inside control. Furthermore, the occupation of the chiefs clerks
according to Coates et al. (1996, p. 2) is to look into organization to ensure usefulness and
sufficiency in the itemizing of plans to meet targets and meaning of transient action plans and
recording of genuine trades and evaluating and covering structures and undertakings (for instance
internal survey/the board audit). This paper reviews a part of the organization accounting
methodologies (basically current strategies), these procedures contain three quantitative
organization accounting techniques (arranging, Activity-based costing and just under the wire) and
one thought about quantitative and emotional organization accounting strategies
3. 1. Explain how an understanding of the distinction between fixed cost and variable cost
can be useful to managers for decision-making.
Since we have distinguished the three vital sorts of organizations, how about we recognize cost
practices and apply them to the business climate. In administrative bookkeeping, various
organizations utilize the term cost in various ways relying upon how they will utilize the expense
data. Various choices require various costs grouped in various ways. For example, an administrator
might require cost data to anticipate the approaching year or to settle on choices about growing or
stopping an item or administration. By and by, the characterization of costs changes as the
utilization of the expense information changes. Indeed, a solitary expense, like lease, might be
grouped by one organization as a decent expense, by one more organization as a serious expense,
and by significantly one more organization as a period cost. Understanding different expense
orders and how specific expenses can be utilized in various ways is basic to administrative
bookkeeping. Administrative bookkeepers furnish organizations with clear and direct knowledge
into the financial impacts of a specific functional activity viable. They are relied upon to report
monetary data in a straightforward and moral design. Any administrative bookkeeper, regardless
of whether not an IMA part or guaranteed CMA, should act as per these standards and urge
colleagues to adhere to moral standards for detailing monetary outcomes and money related
impacts of monetary choices connected with their association. Any exchange of accuses begins off
evolved of the information that most extreme charges might be classified in surely thought to be
one among 3 different ways: steady charges, variable charges, or joined charges. The charges that
don't fall into this kind of 3 classes are mixture charges that are tried least difficult in short because
of the reality they're tended to in additional prevalent bookkeeping courses. Since consistent and
variable charges are the dream of all unique worth characterizations, information whether or not a
worth is a set worth or a variable worth could be vital.
Fixed instead of Variable Costs
A steady worth is an unavoidable working value that doesn't extrude overall over the fast term,
despite the fact that a venture reports adaptation in its level of hobby. (Figure) outlines such steady
charges for marketing, administration, and creation associations. Two specific kinds of steady
charges are devoted consistent charges and optional consistent charges. These groupings are
regularly utilized for long-assortment making arrangements works and are covered in upper-degree
4. administrative bookkeeping courses, so they're least difficult in short characterized here. Serious
steady charges are consistent charges that typically cannot be taken out assuming the association
goes to keep up with to work. A case will be the lease of assembling office contraption for an
assembling association.
Optional consistent charges generally are steady charges that might be brought about eventually
of a couple of stretches and deferred sooner or later of various spans anyway which can not
ordinarily be eliminated totally. Models should envelop showcasing and promoting efforts and
specialist preparing. Both of those charges should certainly be delayed briefly, but the association
could probably cause terrible outcomes assuming the charges have been totally eliminated. These
characterizations are ordinarily utilized for long-assortment making arrangements capacities.
Notwithstanding information consistent charges, it's miles fundamental to capture variable
charges, the second one fundamental worth characterization. A variable worth is one which
changes in direct rate to the degree of leisure activity in the endeavor. Run of the mill charges
which may be classified as factor charges are the worth of uncooked substances used to give an
item, efforts completed right away to the assembling of the item, and upward costs that extrude
fundamentally founded absolutely upon leisure activity. For each factor esteem, there might be a
couple of interest that drives the variable worth up or down. A worth main impetus is depicted as
any side interest that reasons the enterprise to cause a variable worth. Instances of significant worth
drivers are immediate efforts hours, device hours, gadgets delivered, and gadgets sold. Gives
instances of variable charges and their connected worth drivers. (Graybeal, Franklin and Cooper, 2022)
2. What is meant by the term “break-even point”? How is the break-even point computed?
The breakeven factor (break-even price) for a vocation then funding is determined by way of
evaluating the need charge of a commodity in imitation of the authentic cost; the breakeven point
is reached so the twins costs are equal. In company accounting, the breakeven factor components
is decided by way of dividing the amount fixed fees associated together with manufacturing by the
income care of single unit except the moving prices by unit. In this case, fixed charges speak after
5. those who slave not change relying upstairs the wide variety regarding devices sold. Put
differently, the breakeven point is the production stage at who total revenues because of a product
equal volume expenses.
KEY TAKEAWAYS
In accounting, the breakeven point is deliberated by apportionment the fixed charges of production
with the aid of the price care of unit without the volatile prices of production. The breakeven factor
is the degree of manufacturing at which the fees concerning production equal the revenues because
a product. In investing, the breakeven point is talked about in imitation of remain achieved when
the want price over an asset is the equal namely its unique cost. (Investopedia, 2022)
2.1 How is the break-even point computed?
To compute the earn back of the original investment point in units, utilize the equation: Break-
Even point (units) = Fixed Costs (Sales cost per unit-Variable expenses per unit) or in deal dollars
utilizing the recipe: Break-Even point (in deal dollars) = Fixed Costs Contribution Margin.
FIXED COSTS ÷ (SALES PRICE PER UNIT - VARIABLE COSTS PER UNIT)
Fixed Costs - Fixed expenses are ones that commonly don't change, or change just
somewhat. Instances of fixed expenses for a business are month to month utility costs and
lease.
Deals Price per Unit-This is how much an organization will charge shoppers for only one
of the items that the computation is being finished.
Variable Costs per Unit-Variable expenses are expenses straightforwardly attached to the
development of an item, similar to work recruited to make that item, or materials utilized.
Variable expenses frequently vary, and are ordinarily an organization's biggest cost.
6. The computation is as per the following:
Absolute factor costs ÷ Total units delivered
Example:
Fixed Costs ÷ (Sales cost per unit - Variable expenses per unit)
$2000/ ($1.50 - $.40)
Or on the other hand $2000/1.10
=1818 units
This implies Sam needs to sell a little more than 1800 jars of the new soft drink in a month, to
arrive at the make back the initial investment point.