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CostingAndTacticaDecisionsl_StudentQuestions_2011

CostingAndTacticaDecisionsl_StudentQuestions_2011 - THE...

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1 THE UNIVERSITY OF NEW SOUTH WALES SCHOOL OF ACCOUNTING ACCT2522 Management Accounting 1 Session 1, 2011 Tutorial 6 – Costing and Tactical Decisions Overall Theme This week we continue to learn how to use management accounting information to manage resources, and also to create value for the firm. In this topic, we introduce two new management accounting techniques, life-cycle costing and target costing. These techniques provide new insights as to how firms can manage and reduce product costs. In addition, we also explore the concept of relevant information for various tactical decisions which are undertaken to create value. The “relevant information principle” is very important in management accounting: managers in contemporary organisations deal with a lot of information everyday, and the ability to recognise relevant information means that we are less likely to experience information overload, or to have our judgements “clouded” by useless and distracting information. This week we consider “relevant information” in the context of four types of tactical decisions – that is, decisions that do not usually involve significant increases or decreases in resources. But bear in mind that the concept of relevant information also applies when we start to explore “bigger” decisions that involve significant resources – that is, capital investment decisions (something to look forward to in week 10)! Essential Reading
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