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Summary Management Accounting and Control

- Management Accounting and Control
- Philip Vergauwen
- 2019 - 2020
- Maastricht School of Management (MSM)
190 Flashcards & Notes
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A snapshot of the summary - Management Accounting and Control

  • Lecture 1: Introduction & Recap

  • What are examples of decision making related to product management?

    * Add new product
    * Terminate and existing product line
    * Accept or reject special order

    Related topics:
    - Operations management
    - Budgeting - capital and operating
    - Just-in-time (JIT)
  • What are examples of decision making related to pricing?

    * Set selling price to achieve desired profits
    * Set selling price to achieve positive cash flow

    Related topics:
    - Marketing
    - Microeconomics - price theory
    - Corporate Finance
  • What are examples of decision making related to cost control?

    * Add new equipment
    * Change production process
    * Make internally versus buy externally (outsource)

    Related topics:
    - Process engineering
    - Management information systems
    - Activity-based costing (ABC)
  • Lecture 1: Cost Analysis & Cost Allocation

  • When might sunk costs be useful?
    Sunk costs might be useful for control purposes and ex-post evaluations (learning, accountability, responsibility)
  • What are weaknesses of break-even analysis?

    There are three general problems:
    - non-linear relationships
    - stepped fixed costs
    - multi-product businesses
  • Firms with high operating leverage have:

    - Rapid increases in profits when sales expand
    - Rapid increases in losses when sales fall
    - Greater variability in cash flow
    - Greater risk
  • Format of Income Statement - Financial Accounting

    - Costs of goods sold
    = Gross profit
    - General, selling, administrative and taxes (period costs)
    = Net income
  • How can the cost/management accounting system be designed?

    The design of the accounting system should be guided by the challenges facing the manager.

    Additionally, there are 4 key themes that are important to managers seeking to make effective planning and control decisions (see next flashcard)
  • What are the four key themes in management decision making?

    1. Customer Focus
    2. Value-chain and supply-chain
    3. Key succes factors: cost and efficiency, quality, time and innovation
    4. Continuous improvement and benchmarking
  • How does the value chain of business functions look like?

    1. Research and development
    2. Product/service/process design
    3. Production
    4. Marketing
    5. Distribution
    6. Customer service
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