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

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Unformatted text preview: MANAGING COSTS AND PROFITS MANAGEMENT ACCOUNTING “is the process of identifying, measuring, analyzing, interpreting, and communicating information in pursuit of an organization’s goals.” (Hilton, 1999) MANAGEMENT FUNCTIONS POSDECCoRD • P lanning • O rganizing • S taffing • D irecting • E xecuting • C oordinating • Co ntrolling • R elating • D ecision-making 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. 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 MANAGEMENT ACCOUNTING • Emphasis • More on the future • Relevance and flexibility of data • Draws from other disciplines 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 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.” 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 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 CLASSIFICATION OF COSTS • SYNONYMOUS COST...
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This note was uploaded on 01/16/2012 for the course MBA 101 taught by Professor Wormer during the Spring '08 term at Indian Institute Of Management, Ahmedabad.

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

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