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Table Of Contents

1.10Joint products and by-products
1.10.1Joint product costing
1.10.2Apportioning common costs to joint products
1.10.5Using joint product costs for decision-making
1.10.6Joint products and the further processing decision: an example
1.10.7Costing by-products
1.10.8Joint and by-products: an example
Revision Questions
Solutions to Revision Questions 1
The Theory and Practice of Standard Costing
2.2The theory and practice of standard costing
2.3What is a standard cost?
2.4Performance levels
2.4.1A standard
2.4.2Ideal standard
2.4.3Attainable standard
2.4.4Basic standard
2.5Setting standard costs
2.5.1Standard material price
2.5.2Standard material usage
2.5.3Standard labour rate
2.5.4Standard labour times
2.5.5Production overhead costs
2.6Updating standards
2.7Standard costing in the modern industrial environment
2.8What is variance analysis?
2.9Variable cost variances
2.9.1Direct material cost variances
2.9.3Direct labour cost variances
2.9.4Variable overhead cost variances
2.14.1Expected idle time
2.15Calculating actual data from standard cost details and variances
2.16Example: Preparing a reconciliation statement
2.16.1Reconciliation of budgeted and actual profit
2.16.2Calculation of cost variances shown in reconciliation above
2.17Some miscellaneous ideas
Solutions to Revision Questions 2
Standard Costing and Performance Evaluation
3.2Material mix and yield variances
3.3Labour mix and yield variances
3.4Sales variances
3.5Planning and operational variances
3.6Capacity ratios
3.6.1Standard hour
3.6.2Calculating the capacity ratios
3.7Investigation and interpretation of variances
3.7.1Percentage variance charts
3.7.2The reasons for variances
3.7.3Investigation models
3.7.4Interrelationship of variances
3.8Behavioural considerations
3.8.1Organisational goals
3.8.2Target levels for standards and budgets
3.8.3Performance measures and evaluation
3.8.4Participation in setting standards and budgets
3.8.5Budget bias
3.9Standard costing in the modern business environment
3.9.1Criticisms of standard costing
3.9.2Addressing the criticisms
3.9.3Standards and variances: a cautionary note
3.11.1McDonaldization – Another angle on things
3.11.2Diagnostic reference groups
Solutions to Revision Questions 3
Basic Aspects of Management Accounting
4.2Cost behaviour
4.2.1Fixed cost
4.2.2Variable cost
4.2.3Semi-variable cost
4.2.4Analysing semi-variable costs
4.2.5Using historical data
4.3Costs and activity based techniques (ABTs)
4.4Breakeven or cost–volume–profit analysis
4.4.1Calculating the breakeven point
4.5The margin of safety
4.6The contribution to sales (C/S) ratio
4.7Drawing a basic breakeven chart
4.8The contribution breakeven chart
4.9The PV chart
4.9.1The advantage of the PV chart
4.10The limitations of breakeven (or CVP) analysis
4.11The economist’s breakeven chart
4.12Using costs for decision-making
4.12.1Short-term decision-making
4.13Evaluating proposals
4.14Relevant costs
4.14.1Non-relevant costs
4.15Opportunity costs
4.15.1Examples of opportunity costs
4.15.2Notional costs and opportunity costs
4.16Avoidable, differential and incremental costs
4.16.1Avoidable costs
4.16.2Differential/incremental costs
4.16.3Using incremental costs
4.16.4Incremental revenues
4.17Limiting factor decision-making
4.17.1Decisions involving a single limiting factor
Solutions to Revision Questions 4
5.2The purposes of budgeting
5.2.1Budgetary planning and control
5.2.2What is a budget?
5.2.3The budget period
Operational Planning
5.3The preparation of budgets
5.3.1Co-ordination: the budget committee
5.3.2Participative budgeting
5.3.3Information: the budget manual
5.3.5The interrelationship of budgets
5.3.6Using spreadsheets in budget preparation
5.3.7The master budget
5.4Preparation of operational budgets
5.4.1Using stock control formulae in budget preparation
5.4.2Budget interrelationships
5.5The cash budget
5.5.1Preparing cash budgets
5.5.2Interpretation of the cash budget
5.5.3Cash budget: second example
5.6Rolling budgets
5.7Forecasting and planning
5.8Time series
5.8.1The concept
5.8.2Factors that cause variations
5.8.3Time series modelling
5.9Sensitivity analysis
5.10Zero-based budgeting
5.10.1Advantages of ZBB
5.10.2Disadvantages of ZBB
5.10.3ZBB in practice
5.11Programme-planning budgeting systems
5.12Activity-based budgeting
Solutions to Revision Questions 5
Budgetary Control
6.2The Theory of Systems
6.3System design
6.3.1The characteristics and components of a system
6.3.2Control systems
6.4Feedback control loops and system operation
6.5Budgetary control information
6.5.1Budget centres
6.5.2Budgetary control reports
6.6Fixed and flexible budgets
6.6.1Preparing a flexible budget
6.6.2Using flexible budgets for planning
6.6.3Flexible budgets
6.6.4Extrapolating outside the relevant range
6.7Behavioural aspects of budgetary control
6.7.1Motivation and co-operation
6.7.2Failure of goal congruence
6.7.3The budget as a pot of cash
6.7.4Budget negotiation
6.7.5Influence on accounting policies
6.7.6Budget constrained management styles
6.7.7Budgets and motivation
6.8Modern developments in control systems
6.8.1The problem of discretionary costs
6.8.4Beyond budgeting
Solutions to Revision Questions 6
Budgeting and Performance Evaluation
7.2Performance evaluation
7.2.1The profit and loss account
7.2.2Return on capital employed
7.2.3Asset turnover
7.4Understanding the business
7.5Reporting a performance evaluation
7.6Non-financial performance indicators
7.8The balanced scorecard
Solutions to Revision Questions 7
8.2The modern economic environment
8.2.1Traditional production processes
8.2.2The background to change
8.3The new manufacturing
8.3.1Computer-aided design
8.3.2Computer-aided manufacturing
8.3.3Computer-integrated manufacturing
8.3.4Flexible manufacturing systems
8.4The value chain
8.5Production operations systems and management strategies
8.5.1Material requirements planning
8.5.2Manufacturing resources planning
8.5.3Optimised production technology (OPT)
8.5.4ERP, CRM and SCM
8.5.5Just-in-time concept
8.6Total quality management (TQM)
8.7Synchronous manufacturing
8.8The emphasis on continuous improvement
8.9Activity-based costing
8.9.1Traditional versus activity-based cost
8.10Transaction analysis and cost drivers
8.11Favourable conditions for ABC
8.12Establishing an activity-based product cost
8.12.1Comparison with traditional costing
8.12.2Analysis of activities
8.12.3Cost management and ABC
8.12.4A comprehensive example of ABC
8.12.5Variance analysis and ABC
8.13Throughput accounting
8.13.1The theory of constraints
8.13.2Throughput accounting
8.13.3Throughput cost control and effectiveness measures
8.13.4Summary of throughput accounting
8.14Backflush accounting
Solutions to Revision Questions 8
Responsibility Centres and Transfer Pricing
9.2Cost, Revenue, Profit and Investment Centres
9.2.1Cost centres
9.2.2Profit centres
9.2.3Revenue centres and investment centres
9.2.4Reporting responsibility centre results
9.3Transfer pricing
9.3.1Aims and features
9.3.2General rules
9.3.3Cost-based prices
9.3.4Market-based prices
9.3.5Marginal cost
9.3.6Dual pricing
9.3.7Profit-maximising transfer prices
9.3.8Negotiated transfer prices
9.3.9Other behavioural considerations
9.4Taxation and other financial aspects of transfer pricing
9.4.2Repatriation of funds
9.4.3Minority shareholders
9.5Using subsidies to spread risk
9.6Investment centres and performance measures
9.6.1Investment centres/strategic business units
9.6.2Return on investment
9.6.3The problems with ROI
9.6.4Residual income (RI)
9.6.5Current thinking about performance metrics
Solutions to Revision Questions 9
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Management Accounting Performance Evaluation

Management Accounting Performance Evaluation

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