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mcp-costs - MANAGING COSTS AND PROFITS MANAGEMENT...

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MANAGING COSTS AND PROFITS
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MANAGEMENT ACCOUNTING “is the process of identifying, measuring, analyzing, interpreting, and communicating information in pursuit of an organization’s goals.” (Hilton, 1999)
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MANAGEMENT FUNCTIONS POSDECCoRD P lanning O rganizing S taffing D irecting E xecuting C oordinating Co ntrolling R elating D ecision-making
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MANAGERIAL ACCOUNTING ACTIVITY SPECIFIC OBJECTIVES: Provide information for planning and decision making; Assist managers in directing and controlling operational activities; Motivate managers and other employees toward the organization’s goals; Measure the performance of activities, subunits, managers, and other employees; Assess the organization’s competitive position.
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MANAGEMENT ACCOUNTING Users Reports Focus Managers at various levels May include non- monetary information Not subject to rules Not mandatory Segments of organization as well as whole organization
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MANAGEMENT ACCOUNTING Emphasis More on the future Relevance and flexibility of data Draws from other disciplines
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MANAGEMENT ACCOUNTING REPORT AND ANALYSIS WHY? FOR WHOM? WHAT? WHEN? Focus on the purpose Identify the proper audience Select the relevant information and the best method of presenting it. Balance accuracy and timeliness. Do cost-benefit analysis
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CLASSIFICATION OF COSTS COST - IS GENERALLY DEFINED AS A MEASUREMENT, IN MONETARY TERMS, OF THE AMOUNT OF RESOURCES USED FOR SOME PURPOSES. IN MANAGEMENT ACCOUNTING, “THERE ARE DIFFERENT TYPES OF COSTS USED FOR DIFFERENT PURPOSES.”
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CLASSIFICATION OF COSTS A. Management Function Manufacturing costs Nonmanufacturing costs B. Behavior vs. Changes in Activity Variable costs Fixed costs Semivariable costs C. Traceability Direct costs Indirect costs
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CLASSIFICATION OF COSTS D. Timing of charges vs. Revenues Product costs Period costs E. Control and Decision Making Controllable vs. noncontrollable costs Standard vs. actual costs Incremental vs. average costs Sunk costs Opportunity costs Relevant vs. irrelevant costs
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CLASSIFICATION OF COSTS SYNONYMOUS COST TERMS MANUFACTURING
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