Kế toán, kiểm toán - Chapter 30: Cost - Revenue analysis fordecision making

1-*McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.Cost-Revenue Analysis forDecision Making Section 1: The Decision ProcessChapter30Section ObjectivesExplain the basic steps in the decision-making process.Prepare income statements using the absorption costing and direct costing methods.Using the contribution approach, analyze the profits of segments of a business.Determine relevant cost and revenue data for decision-making purposes.Define the problem.Identify workable alternatives.Determine relevant cost and revenue data.Evaluate the cost and revenue data.Consider appropriate nonfinancial factors.Make a decision.The Decision-Making ProcessAll manufacturing costs (variable and fixed) are included in the cost of goods manufactured.The value of ending inventory includes fixed costs.Absorption CostingFixed and variable manufacturing costs are includedIncome Statement Using Absorption CostingOnly variable costs are included in the cost of goods manufactured.Fixed manufacturing costs are charged to expense during the period.Fixed manufacturing costs are not included in:Cost of goods sold, orEnding inventories.Direct costing is not acceptable for GAAP financial reporting purposes.Direct Costing (also called Variable Costing) Manufacturing Margin:Direct Costing Sales minus the variable cost of goods sold.Marginal Income on Sales:Net Income: Manufacturing margin minus variable operatingexpenses. Marginal income on sales minus fixed manufacturing costs and fixed selling and administrative expenses.Only variable manufacturing costs are includedIncome Statement Using Direct CostingContribution margin is the excess of revenues over variable costs of the business segment.Profitability of a business segment is judged by its contribution toward covering common costs.Controllable fixed costs of each segment are deducted to determine the segment’s contribution to the overall profit.Common costs are costs not directly traceable to a specific segment of a business. Common costs are not considered when computing the contribution margin.Contribution MarginRelevant Cost: Future or expected cost that will change as a result of a decision.Sunk Cost: A cost that has already been incurred.Types of CostsWhen making decisions, sunk costs are irrelevant.Differential Cost: The difference in cost between one alternative and another.Opportunity Cost: The potential earnings or benefits that are given up because a certain course of action is taken.Cost-Revenue Analysis forDecision Making Section 2: Cost-Revenue AnalysisChapter30Section ObjectivesApply an appropriate decision process in three situations:Pricing products in special cases.Deciding whether to purchase new equipment.Deciding whether to make or buy a part. Apply An Appropriate Decision Process In Three Situations:Pricing products in special casesDeciding whether to purchase new equipmentDeciding whether to make or to buy a partObjective 5