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TacticalDecisions_6perPage_Wk6_2010

TacticalDecisions_6perPage_Wk6_2010 - Learning objectives...

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1 Week 6: Costing and Tactical Decisions 1 Linda Chang Lecturer [email protected] Learning objectives Part I: Managing costs LO1. Extension of costing to: a. Life-cycle costing b. Target costing Part II: Tactical Decisions LO2. Understand the decision-making process 2 LO2. Understand the decision making process LO3. Recognise what is “relevant information” LO4. Ability to analyse three types of tactical decisions a. Whether to reject/accept a special order b. To make or buy a product/service c. Add or delete a product, service or department LO5. Recognise the pitfalls in using accounting data for tactical decisions Readings LS: Chapter 19 Exclude: Joint product: sell or process further 3 Appendix LS: Chapter 16, p.804-810 (Life-cycle costing and target costing) Lecture Outline Part I: Managing costs Life-cycle costing Target costing Part II: Tactical Decisions Recognise “relevant information” Application to three types of tactical decisions 1. Whether to reject/accept a special order 2. To make or buy a product/service 3. Add or delete a product, service or department Recognise the pitfalls in using accounting data for tactical decisions 4 Life Cycle Costing Accumulate and manage costs over the “life cycle” of the product (from the cradle to the grave). Covers 4 stages LO1a 1. Product planning & initial concept 2. Product design and development 3. Production, and 4. Distribution and customer support 5 Life cycle costing Exhibit 16.7 6 Principle for Cost Management purposes!
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