30/05/20 Advanced Manager

Financial Accounting Managerial Accounting Accounting

Concept Historical or Relevance
Cost pricnciple

Purpose External reporting Internal decision making

IAS or US GAAP Need vto follow No need

Scenario Past Future

Differential Costs Diffrence between two costs

Incremental Example A' cost Rs.100 and B's cost Rs. 110 = Rs.10
Decremental Example A' cost Rs.90 and B's cost Rs. 80 = Rs.10
Direct Cost
Indirect Cost
Total Variable Cost TVC increases in direct proportion with the volume of production
Variable Cost / unit The per unit remins constant regardless of any level of production
Total Fixed Cost TFC remains constant regardless of any output
Fixed per unit FC / unit keeps on decreasing as the volume increases
Mixed / semi-variable cost
Volume
TVC
VC/unit
TFC
FC/unit

Home Work
Read out thoroughly the discussed terms
Buy a book which is mentioned
 Advanced Managerial Accounting
nagerial Accounting Accounting
Implementation
Apptroach
Bassic Principles
ernal decision making Transactions based
Reporting
Analysis

IFRS
IAS
US GAAP
Pakistan Co. ACT 2017

Example Budgeting
Fee per course Costs division
Before 15,000 15,000 CVP Analysis
Now 16,000 14000 Absorption
Differential 1,000 Variable
h the volume of production
s of any level of production

me increases

100 200 400

100 200 400 Revenue - total cost = Profit / loss
1 1 1
100 100 100
1 0.5 0.25