10 - ACCT3012 Management Accounting B Product Mix Decisions...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
1 ACCT3012: Management Accounting B Product Mix Decisions
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 1. Introduction Resource constraints - can be machine or labour related, or even supply related. The organisation must choose which products to manufacture and in what quantities to maximise profit. Decisions focus on the short-term and the optimal production plan.
Background image of page 2
3 2. Cost World Orientation versus Throughput Orientation Traditionally mgt accountants have lived in a “cost world” Throughput is the rate at which the system generates profit through sales and is often referred to as contribution or contribution margin . Inventory is the money the enterprise has invested in “things” it intends to sell. Operating expense is the money spent to convert inventory into throughput. The aim of management is to increase throughput while decreasing inventory and operating expense.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
4 2.1 Equations Net profit = Throughput ‑ Operating expense Return on inventory = Net profit ‑ Inventory Productivity = Throughput + Operating expense Inventory turnover = Throughput ‑ Inventory
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 17

10 - ACCT3012 Management Accounting B Product Mix Decisions...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online