Management us financial accounting
•
produces useful info for internal users -
produces useful info for external users
BUSINESS DECISIONS
'
"
quantitative into :
qualitative into :
:
•
measuring quantity but also important
•
measuring quality
rather than
quality rather than quantity
- ◦
Establish a market demand
info is then used to achieve their objective of identify target 31 suppliers
•
•
customers
maximising shareholder value
through :
dividends
strategic plan
↳
↳
an increase in share price
↳ Where we are
↳ where we want to be
this is done
•
by :
how are we to there
↳
going get .
product differentiation
'
leadership :
-
Cost 1-
establish a competitive higher price justified by
more premium
advantage by having quality .
the lowest price ↑
↓ price
quality
do extensive research
use when Companys are well industrys that
established ( economies of scale )
$ this is done
using
-
the 4 fundamental business decisions: once the
strategic plan is in place Management needs to decide :
↳
financing 1.) What assets we need
decision
in order to operate 31 funding for those assets
↳ investment
↳
Investing decision
↳
financing
↳ 2.) the
type of good /service we are
going to offer aswell as volumes $ costs
operating
decision
↳ distribution
↳
operating
3.) how we are to distribute profits to
grow operations
going
↳
distribution decision
Function one :
costing
→ assets . liabilities
equity or
(we sacrifice costs in order to
expenditure the achieve certain
goals )
action of spending funds
behaviour
category
cost
objects → Cost objects →
assigning costs based on -
product
-
Service
Division
-
1.) allocating costs
by category
:
manufacturing -
costs incurred in
getting the
inventory to the
condition 31 location for sale
↳ includes $
raw materials used in production delivery costs .
Labour : costs involved $ physical transformation
contributing to
•
non
manufacturing all the other incurred
by
-
costs the
of a product
business .
direct
depending
↳ can either indirect
be or on its
traceability -
includes bank
Charges interest ,
salaries ,
rent etc
- direct =
costs
exclusively tied to the production of specific goods
productivity
icecream used in a milkshake
between i. e.
:
•
ratio output $ input
materials all materials consumed in production
• direct :
↳ incentivized by salarys 31 bonuses etc
direct salaries 13
•
labour involved
Wages of directly those in
:
2.) manufacturing the product
Allocating costs
by cost behaviour :
indirect costs not exclusive production
happens to costs
to
↳ cost behaviour refers to what when there
__
i. e.
level of activity of the business electricity
are changes in the .
• overhead cost allocation :
taking an indirect cost 31 dividing
varible costs cost
changes production levels
when
change
:
it up based product
on
usage
fixed costs : remains the same irrespective of the number
of units produced .
••
manufacturing overheads : costs to
get the products
out
i. e.
if an
employee is paid per unit produced their
wages would i. e.
be uarible
production managers salary depr .
. on
machinery
•• MOM manuf . ouerh .
: Other costs
economies of scale the units
you produce it
•
: more the cheaper i. e. admin staff salary s
gets to produce .
•
produces useful info for internal users -
produces useful info for external users
BUSINESS DECISIONS
'
"
quantitative into :
qualitative into :
:
•
measuring quantity but also important
•
measuring quality
rather than
quality rather than quantity
- ◦
Establish a market demand
info is then used to achieve their objective of identify target 31 suppliers
•
•
customers
maximising shareholder value
through :
dividends
strategic plan
↳
↳
an increase in share price
↳ Where we are
↳ where we want to be
this is done
•
by :
how are we to there
↳
going get .
product differentiation
'
leadership :
-
Cost 1-
establish a competitive higher price justified by
more premium
advantage by having quality .
the lowest price ↑
↓ price
quality
do extensive research
use when Companys are well industrys that
established ( economies of scale )
$ this is done
using
-
the 4 fundamental business decisions: once the
strategic plan is in place Management needs to decide :
↳
financing 1.) What assets we need
decision
in order to operate 31 funding for those assets
↳ investment
↳
Investing decision
↳
financing
↳ 2.) the
type of good /service we are
going to offer aswell as volumes $ costs
operating
decision
↳ distribution
↳
operating
3.) how we are to distribute profits to
grow operations
going
↳
distribution decision
Function one :
costing
→ assets . liabilities
equity or
(we sacrifice costs in order to
expenditure the achieve certain
goals )
action of spending funds
behaviour
category
cost
objects → Cost objects →
assigning costs based on -
product
-
Service
Division
-
1.) allocating costs
by category
:
manufacturing -
costs incurred in
getting the
inventory to the
condition 31 location for sale
↳ includes $
raw materials used in production delivery costs .
Labour : costs involved $ physical transformation
contributing to
•
non
manufacturing all the other incurred
by
-
costs the
of a product
business .
direct
depending
↳ can either indirect
be or on its
traceability -
includes bank
Charges interest ,
salaries ,
rent etc
- direct =
costs
exclusively tied to the production of specific goods
productivity
icecream used in a milkshake
between i. e.
:
•
ratio output $ input
materials all materials consumed in production
• direct :
↳ incentivized by salarys 31 bonuses etc
direct salaries 13
•
labour involved
Wages of directly those in
:
2.) manufacturing the product
Allocating costs
by cost behaviour :
indirect costs not exclusive production
happens to costs
to
↳ cost behaviour refers to what when there
__
i. e.
level of activity of the business electricity
are changes in the .
• overhead cost allocation :
taking an indirect cost 31 dividing
varible costs cost
changes production levels
when
change
:
it up based product
on
usage
fixed costs : remains the same irrespective of the number
of units produced .
••
manufacturing overheads : costs to
get the products
out
i. e.
if an
employee is paid per unit produced their
wages would i. e.
be uarible
production managers salary depr .
. on
machinery
•• MOM manuf . ouerh .
: Other costs
economies of scale the units
you produce it
•
: more the cheaper i. e. admin staff salary s
gets to produce .
