Summary: Management Accounting And Control
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Read the summary and the most important questions on Management Accounting and Control
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Lecture 1: Introduction & Recap
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What are examples of decision making related to product management?
* Add new product
* Terminate and existing product line
* Accept or reject special order
Related topics:
- Operations management
- Budgeting - capital and operating
- Just-in-time (JIT) -
What are examples of decision making related to pricing?
* Set selling price to achieve desired profits
* Set selling price to achieve positive cash flow
Related topics:
- Marketing
- Microeconomics - price theory
- Corporate Finance -
What are examples of decision making related to cost control?
* Add new equipment
* Change production process
* Make internally versus buy externally (outsource)
Related topics:
- Process engineering
- Management information systems
- Activity-based costing (ABC) -
Lecture 1: Cost Analysis & Cost Allocation
This is a preview. There are 18 more flashcards available for chapter 07/10/2018
Show more cards here -
When might sunk costs be useful?
Sunk costs might be useful for control purposes and ex-post evaluations (learning, accountability, responsibility) -
What are weaknesses of break-even analysis?
There are three general problems:
- non-linear relationships
- stepped fixed costs
- multi-product businesses -
Firms with high operating leverage have:
- Rapid increases in profits when sales expand
- Rapid increases in losses when sales fall
- Greater variability in cash flow
- Greater risk -
Format of Income Statement - Financial Accounting
Revenue
- Costs of goods sold
= Gross profit
- General, selling, administrative and taxes (period costs)
= Net income -
How can the cost/management accounting system be designed?
The design of the accounting system should be guided by the challenges facing the manager.
Additionally, there are 4 key themes that are important to managers seeking to make effective planning and control decisions (see next flashcard) -
What are the four key themes in management decision making?
1. Customer Focus
2. Value-chain and supply-chain
3. Key succes factors: cost and efficiency, quality, time and innovation
4. Continuous improvement and benchmarking -
How does the value chain of business functions look like?
1. Research and development
2. Product/service/process design
3. Production
4. Marketing
5. Distribution
6. Customer service
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