Read the summary and the most important questions on 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

  This is a preview. There are 18 more flashcards available for chapter 07/10/2018
  Show more cards here

• 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

  
  Revenue
  - 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