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Management Accounting
Managerial Accounting
Chapter 5
Common cost concepts and basic methods for business decision-making
N section 1
Cost concept to be considered in business decision-making
N section 2 basic methods of business decision-making
2
Section 1
Cost concept to be considered in business decision-making
I. Overview of Decision-Making costs
Decision cost
-
Has a specific economic meaning, used
Evaluate the economics of a feasible solution (or project)
Various forms of cost.
3
Decision-making costs and the cost concepts used in traditional financial accounting include:
As follows:
Differences
:
1. The cost used in traditional financial accounting is the historical cost.
Policy costs are mostly future costs, which describe future possibilities
Expenses incurred.
2. The decision-making cost is the need for decision analysis. for specific purposes,
The cost concept proposed in the condition and environment, which is applicable only to specific
The scope is not as common as the cost data of financial accounting
Applicability.
3. The decision-making cost is only used for Decision Analysis and does not need to be included in accounting
Accounts do not need to comply with the accepted accounting standards and have a large
Flexibility.
4
Ii. Common Decision-Making costs
(1) Opportunity Cost
Opportunity Cost
-In the decision analysis process
In this case, the optimal solution is selected and the sub-optimal solution is abandoned.
The benefits of the solution may be abandoned and become a loss.
Loss is the opportunity cost for selecting the optimal solution.
Opportunity Cost
It is not a realistic cost.
Accounting records, but must be carefully tested in Decision Analysis
Otherwise, an incorrect choice may be made.
5
For example, an enterprise has a device that can be used by itself or
For rent. If you choose to use it for your own use, you will lose the server that obtains the rent.
Yes, the rent is the opportunity cost for the device to use.
Example
5-1) See
P165 (example:
5-1 〕
As shown in the preceding example, the significance of opportunity cost in decision-making lies in its
This helps you fully consider the various possible solutions
Find the most favorable way to use specific resources.
Note:
: If one asset can only be used to complete one job
Yes, that is, it cannot be used in other aspects or be voided.
If the product is sold, there is no opportunity cost for the asset.
6
Opportunity costs also have a special form
--
Estimate costs.
Generally, the opportunity cost is easy to measure, but some
Estimation is called estimation.
Calculate the cost. Interest is an estimate of costs.
7
(2) Cost Difference
The difference cost can be broadly or narrowly defined.
Generalized cost difference
-Expected costs of the two alternatives
The difference between them, also known
"Differentiated costs
".
Narrow difference cost
-
The degree of utilization of production capacity
Cost difference due to differences (increase or decrease)
No. This cost is also known
"Incremental cost
".
8
[Example 5-2] See p165 (example 5-2) and p166 (example 5-3 〕
As shown in [Example 5-3 ],
Less than 10,000 pieces), the difference cost is consistent with the change cost
But it cannot be considered that the difference between the cost and the variable cost
. The variable cost is
Output
The difference is
This is an alternative
Transformation Scheme
Contact occurred. If
The solution is to change the production factor, and within the relevant scope, the cost of difference
It may be the same as the variable cost, but it is out of this range due to the difference
Volume costs may also include fixed costs and increase of semi-variable costs
And the two are not necessarily equal.
9
(3) Marginal Cost
Economics
The marginal cost in refers to the continuous cost.
The first derivative of the business volume in the function. Assume the cost
The function is f (x), X is the business volume, and MC is the marginal cost.
With MC = f' (x), that is, with MC =
That is to say, the marginal cost is
"The cost is infinitely small to the business volume
Dynamic and changing parts
".
△X
F (x)
△X)
F (x
Lim
0
△X
−
+
→
10
In Management Accounting
Medium, marginal cost refers to when the business volume is
The amount of cost changes caused by a minimum economic unit change.
Obviously, the marginal cost in management accounting is not only discrete,
It is also a special form of incremental costs.
In decision analysis, the marginal cost can be used to determine the increase or decrease in output.
Cost effectiveness. When the production capacity of an enterprise is rich
The unit price of any sales increase is slightly higher than the unit price.
Cost (or unit change cost), even if it is lower than the average
The unit cost also increases profits or reduces losses.
11
(4) sunk costs
Sunk Costs
-Caused by past decisions and implemented
The cost of payment. It is comparing different solutions
No matter which solution is adopted, the same cost will occur.
For example, the equipment, plant, and other fixed assets invested in the past belong
At sunk costs.
In decision analysis, we do not consider sunk costs.
Note:
: Sunk costs and fixed costs are not a concept.
It is usually a fixed cost, but sometimes it may include changes
Cost. In addition, not all fixed costs are sunk.
Cost, such as a discount on new fixed assets related to the decision-making scheme
Old fees are the costs that must be taken into account in decision-making.
12
(5) pay-as-you-go costs
Pay-as-you-go costs
-Introduced by current or future decisions
The amount to be paid by using cash or bank deposits in the future.
. The current costs of different solutions are often different.
Example
5-3) See
P168 (example
5-7 〕
(Example 5-4) An enterprise's key processing equipment is damaged for some reason.
Reset, two manufacturers are willing to provide such processing equipment.
In the solution, the device price of plant a is 50,000 yuan, which requires one-time payment.
Clear; the price of plant B's equipment is 65,000 yuan, and the payment can be paid in installments
To pay, you need to pay 5,000 yuan first, and the remaining payment is half a year
Pay off within the period, and pay an average of 10,000 RMB per month. This enterprise
The funds are relatively insufficient, and the bank deposit balance is only 6,000 yuan,
Obviously, the Enterprise is faced with two advantages.
13
(6) Exclusive costs and joint costs
See p169
(7) selectable and binding costs
See p169
(8) related and irrelevant costs
See p169
14
Section 2
Basic Methods for business decision-making
I. Contribution Mao Yi Analysis Method
Contribution Mao Yi Analysis Method
--
Through comparison several feasible
The contribution of the scheme to evaluate the advantages and disadvantages of the Scheme
Degree decision method.
Note:
: The contribution or ticket that each product can create
The contribution of artificial hours (or machine hours)
As the main basis for the selection, but cannot take the product
The contribution of the organization to the gross profit is used as the criterion for selection.
15
Ii. Difference Analysis
Difference Analysis
--
Through pre-approval of several feasible solutions
The measurement and comparison of period income and expected cost are as follows,
Analyze the difference income, difference cost, and difference of each solution
Based on the amount of profit and its nature
A method for analyzing the merits and demerits of a case.
16
The basic program of difference analysis is as follows:
Solution 1 solution 2
Difference
Quantity
S expected revenue
S1
S2
S1-S2
C. Expected cost
C1
C2
C1-C2
P expected profit
P1
P2
P1-P2 = (S1-S2)-(C
1-c2)
The decision-making rules (merit-based principle) are as follows:
When (S
1-s2)> (C
1-C2), that is, P
1> in P2, solution 1 is the most
When (s)
1-s2) <(C
1-C2), that is, P
1 <P2, solution 2 is
Optimal.
Note:
: The order of the schemes for calculating the difference income and the difference cost is required.
Always consistent.
17
Iii. Cost-free Difference Analysis
Cost-free Difference Analysis
--
Based on various alternatives
Dependencies between costs, business volume, and profit
Is used to calculate the zero difference between costs (also known as the cost division ).
Point) to determine the optimal solution under which circumstances
A decision-making method, also known as the cost-benefit analysis method.
Cost demarcation point
: Two Slave nodes are used in decision analysis.
The business volume when the expected cost of the selected scheme is equal. According
The relationship between the business volume and the cost at the cost demarcation point can be
Determine which scheme is better in what business volume range.
18
Cost demarcation point
X0 =
1
2
2
1
B
B
A
A
−
−
Formula:
1, A2 --
They are the fixed costs of the two alternatives;
B1, b2 --
Unit changes for the two alternatives respectively
Cost.
When the business volume <X
0, that is, 0 ~ X
Within the range of 0, fixed
The cost is low. When the business volume is greater than X
0, that is, in X
0 ~ ∞
Within the scope, the solution with high fixed costs is preferred.
19
Iv. Probability Analysis
For more information, see p177.
(Example 5-5) Yongfeng company is preparing to develop new products. There are two types of products: A and B.
The prices and costs of the products are as follows:
Item
Product
Product B
Sales Unit Price (P)
$310
$283
Unit change cost (B)
$280
$250
Total fixed costs ()
$25,000
$25,000
However, sales volume A and B are random variables after market research,
The following table lists the different sales volumes and their subjective probabilities:
20
Sales volume (pieces)
Probability
Product
Product B
700
0.1
900
0.1
0.2
1,000
0.1
0.2
1,100
0.3
0.4
1,300
0.3
0.1
1,500
0.2
Integration
1.0
1.0
Requirement: Which kind of new product is more advantageous for Yongfeng company?
Decision Analysis.
21
Solution: for such problems, you can compare them.
Contribution of products A and B Mao yilai
Make decisions.
CMA = 310-280 = 30 RMB,
CMB = 283-250 = 33 RMB, because
The sales volume of A and B is not a definite value, so we can only use the probability score.
Analysis Method to make decisions.
We can calculate
The expected sales volume of product A and product B.
You can make a decision based on the expected contribution. We
Use
EA and EB
The expected sales volume of products A and B is
Ea = 900 × 0.1 + 1,000 × 0.1 + 1,100 × 0.3 + 1,300 × 0.3 +
1,500x0.2 = 1210 pieces
EB = 700 × 0.1 + 900 × 0.2 + 1000 × 0.2 + 1100 × 0.4 +
1300x0.1 = 1020 pieces
Then Mao Yi is expected to contribute.
TCMA = 1210 × 30 = 36,300 RMB;
Tcmb = 1020 × 33 = 33,600 RMB
∴ Should produce new products
A is more advantageous.
22
(Example 5-6) Changhong Electric Appliance Factory sold 1000 Changhong window air conditioners this year
For the People's mall in Chengdu, after the air-conditioner was sold to the user
It can be repaired for one year. The factory provides the following three Parties for the warranty of air conditioners:
Case options:
Solution 1: entrust a repair shop to contract all services for repair and replacement of parts (Maintenance
Number of repairs is not limited), for the period of one year, a total of one repair fee is required
14,000 yuan.
Solution 2: entrust Repair Shop B to undertake the repair business, but the repair shop B declares
Only 1000 repair repairs can be received within the year, and a total repair fee of 10,000 is required
RMB. If it exceeds 1000 times, an additional 5 RMB repair fee is required each time.
Solution 3: entrust the repair shop C to undertake the repair business, but the repair shop C declares
Within the year, only 1500 repairs can be received. A total of one repair fee is required.
12,000 RMB, if more than 1500 times, an additional maintenance fee of 6 RMB is required each time.
23
According to the statistics of Changhong Electric Appliance Factory over the past five years
The following lists the number of active repairs and their probabilities:
Number of repairs
Less than 1000 times
1300 times
1500 times
2000 times
Probability of occurrence
0.4
0.3
0.2
0.1
1.0
Requirements: make the best warranty plan decision for Changhong Electric Appliance Factory.
Solution: solution 1: The number of repairs is not limited, and the repair cost is 14,000.
RMB;
Solution 2: Estimated repair cost =
10,000 × 0.4 + (10,000 + 300 × 5) × 0. 3 + (10,000 + 500 × 5)
× 0. 2 + (10,000 + 1000 × 5) × 0. 1 = 11450 RMB
Solution 3: Estimated repair cost =
12,000 × 0.9 + (12,000 + 500 × 6) × 0. 1 = 12,300 RMB
Solution 2 should be selected.