Decision Making
Decision Making Across the Organization
The key strategic in every organization is to identify what is the influence of decision making across the organization as a whole. There are benefits and challenges in every organization no matter how large or small it may be. Business owner has to have a plan and a solution for every challenge that may arise in the organization. A manger is not to be in reasonable when he has to make a decision for the organization; he is to be expected to have a solution to all issues. In accounting the manager are to evaluate the individuals who have the financial control for him. The managers are to be able to use accounting in numbers to mandate reassure that performance in the financial are accrual. The manager should understand what numbers are used to calculate cost. In addition, all parties need to understand that accounting numbers are the main principal and source for most business decisions.
“Variable costs are charges that vary in total directly and proportionately with changes in the activity level
1
Distinguish between variable and fixed costs. study objectiv
Cost-Volume-Profit
• Variable costs
• Fixed costs
• Relevant range
• Mixed costs
• Identifying variable and fixed costs
Cost Behavior Analysis
• Basic components
• CVP income statement
• Break-even analysis
• Target net income
• Margin of safety
Cost-Volume-Profit Analysis
Chan Manufacturing Company data for 20X7 follow:
Sales: 12,000 units at $17 each
Actual production 15,000 units
Expected volume of production 18,000 units
Manufacturing costs incurred
Variable $120,000
Fixed 63,000
Nonmanufacturing costs incurred
Variable $ 24,000
Fixed 18,000
c18Cost-Volume-Profit.qxd 10/29/10 11:47 AM Page 940 increase 10%. If the level of activity decreases by 25%, variable costs will decrease
25%. Examples of variable costs include direct materials and direct labor for a
The key strategic in every organization is to identify what is the influence of decision making across the organization as a whole. There are benefits and challenges in every organization no matter how large or small it may be. Business owner has to have a plan and a solution for every challenge that may arise in the organization. A manger is not to be in reasonable when he has to make a decision for the organization; he is to be expected to have a solution to all issues. In accounting the manager are to evaluate the individuals who have the financial control for him. The managers are to be able to use accounting in numbers to mandate reassure that performance in the financial are accrual. The manager should understand what numbers are used to calculate cost. In addition, all parties need to understand that accounting numbers are the main principal and source for most business decisions.
“Variable costs are charges that vary in total directly and proportionately with changes in the activity level
1
Distinguish between variable and fixed costs. study objectiv
Cost-Volume-Profit
• Variable costs
• Fixed costs
• Relevant range
• Mixed costs
• Identifying variable and fixed costs
Cost Behavior Analysis
• Basic components
• CVP income statement
• Break-even analysis
• Target net income
• Margin of safety
Cost-Volume-Profit Analysis
Chan Manufacturing Company data for 20X7 follow:
Sales: 12,000 units at $17 each
Actual production 15,000 units
Expected volume of production 18,000 units
Manufacturing costs incurred
Variable $120,000
Fixed 63,000
Nonmanufacturing costs incurred
Variable $ 24,000
Fixed 18,000
c18Cost-Volume-Profit.qxd 10/29/10 11:47 AM Page 940 increase 10%. If the level of activity decreases by 25%, variable costs will decrease
25%. Examples of variable costs include direct materials and direct labor for a