Accounting Ch12

Accounting Ch12 - Chapter 12 Managerial Accounting and Cost-Volume-Profit Relationships In managerial accounting sometimes called management

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Chapter 12: Managerial Accounting and Cost-Volume-Profit Relationships In managerial accounting, sometimes called management accounting, economic and financial information is used to plan and control many activities of the entity and to support the management decision-making process. Cost-volume-profit (CVP) analysis involves using cost behavior patterns to interpret and forecast the changes in operating income that result from changes in revenues, costs, or volume of activity. Planning is a key part of the management process – reference to the process of planning, organizing, and controlling an entity’s activities so that the organization can achieve its desired outcomes. Production standards are the expected or allowed times and costs to make a product or perform an activity. The relationship of total cost to volume of activity describes the cost behavior pattern. A variable cost is one that changes in total as the volume of activity changes (manufacturing labor wages, supplies used in production, shipping costs, sales commissions, warranty costs). A cost that does not change in total as the volume of activity changes is a fixed cost (supervisor’s
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This note was uploaded on 03/02/2011 for the course ACCT 502 taught by Professor Jaggi during the Fall '10 term at Rutgers.

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Accounting Ch12 - Chapter 12 Managerial Accounting and Cost-Volume-Profit Relationships In managerial accounting sometimes called management

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