Chapter 3 Book Notes - Chapter 3 Book Notes How Management...

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Chapter 3 Book Notes How Management Accounting Supports Internal Decision Making o Pricing- establish pricing based on market o Product Planning- look for good profit potential in line with market requirements o Budgeting- used in order to find optimal production numbers as well as forecast earnings o Performance Evaluation- compare actual results from the budget period with expectations that were reflected in the budget to see how well they did. o Contracting- used for reimbursement costs for contractors Variable and Fixed Costs o Variable Cost- one that increases proportionally with changes in the activity level of some variable. Cost Driver- a variable that causes a cost Variable Cost=Variable cost per unit of the cost driver X Cost driver units o Fixed Costs- a cost that does not vary in the short run with a specified activity (capacity related costs). Cost-Volume Profit Analysis o Cost-Volume-Profit (CVP) Analysis- uses concepts of variable and fixed costs to identify the profit associated with various levels of activity.
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This note was uploaded on 02/07/2012 for the course ACCT I S 211 taught by Professor Ta during the Fall '12 term at University of Wisconsin.

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Chapter 3 Book Notes - Chapter 3 Book Notes How Management...

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