Cma Notes

Cma Notes

  • Submitted By: noelda1
  • Date Submitted: 05/26/2011 9:10 PM
  • Category: Business
  • Words: 3730
  • Page: 15
  • Views: 658

Lecture 1

Management decision making
• Organisational vision is the core purpose and ideology which guides an entity’s overall direction and approach to its stakeholders
• Organization core competencies are the entity’s strengths relative to competitors.
• Organizational strategies are tactics used to work organizational vision while taking advantage of competencies and are long term in nature
• Operating plans are short term implementations of organizational strategies
• Actual operations are the actions taken and the results achieved over time
• Financial accounting for external reporting
• Management accounting for internal reporting
Key influences on management accounting system structure
• Key influences of management accounting system are the organizational structure, external influences, availability of information technology
Management accounting information and the quality of decision making
• Cost-benefit analysis is evaluation of benefits derived from the information and the cost from collecting it
• Cost object is something for which we measure costs with, eg product, service, or production activity
• Cost drivers are inputs or activities that force a change in the total cost of a cost object
Cost behaviour
• Cost behaviour is the variation in costs relative to the variation in activities
• Relevant range is the span of activity levels for which cost behaviour patterns hold
• Marginal cost is the incremental cost the extra unit of production
• Cost function is algebraic representation of total cost over relevant range
• Cost function ( TC = F + V*Q
• In piecewise linear cost function, the slope of variable cost function changes but remains constant
• Stepwise linear cost function, the slope of fixed cost function changes but remains constant
Cost estimation techniques
• Past costs not directly relevant to decisions but useful in...

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