TAILIEUCHUNG - Lecture Accounting for decision making and control (8/e): Chapter 10 - Jerold L. Zimmerman

Chapter 10 - Criticisms of absorption cost systems: Incentive to over-produce. The main contents of the chapter consist of the following: Incentive to overproduce, variable (direct) costing, problems with variable costing, beware of unit costs. | Criticisms of Absorption Cost Systems: Incentive to Over-produce Chapter Ten Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Outline of Chapter 10 Criticisms of Absorption Cost Systems: Incentive to Overproduce Incentive to Overproduce Variable (Direct) Costing Problems with Variable Costing Beware of Unit Costs 10- Connection to Other Chapters Chapter 10’s theme: Traditional absorption costing can result in poor operational decision making in a manufacturing firm. Chapter 1: No single accounting system can satisfy decision making, decision control, and external reporting. Chapter 2: Accounting costs include fixed and variable costs. Chapter 9: Described mechanics of absorption costing 10- Incentive to Overproduce Under absorption costing, manufacturing managers can defer recognition of fixed manufacturing costs by building ending inventory rather than deducting those fixed costs in the year incurred. Ending Inventory Asset Unexpired cost Expense deducted when items are sold next year Period cost Expired cost Expense deducted in year incurred 10- Increasing Production Reduces Average Costs Absorption costing treats fixed manufacturing costs as product costs. When more units are produced than sold and absorption costing is used, some of the fixed costs are allocated to ending inventory (asset account) and become recognized in a future period’s cost of goods sold (expense account). Reconciling case 1 and 2: Net Income Ending Inventory Case 1: 2000 produced, 2000 sold $ 4,000 $ 0 Variable cost in ending inventory 1,000 Fixed cost in ending inventory 909 909 Case 2: 2200 produced, 2000 sold $ 4,909 $ 1,909 Also see Self Study Problems. 10- Reducing Overproduction: Performance Evaluation To reduce overproduction, modify the performance evaluation system. Inventory holding charge against divisional profits Residual income technique from Chapter 5 Variable instead of absorption costing Variable .

• Kế toán - Kiểm toán
• Accounting for decision making
• Decision making
• Decision control
• Absorption cost systems
• Criticisms of absorption cost systems
• Variable costing
• Organizational architecture
• Generic budgeting systems
• Cost allocation
• Pervasiveness of cost allocations
• External financial reports
• Death spiral
• Internal services
• Job order costing
• Allocating overhead to jobs
• Inaccurate product costs
• Standard costs
• Direct labor
• Target costing
• Marketing variances
• Budget volume estimates
• Flexible overhead budget
• Self interested behavior
• Team production
• Decision rights
• Management accounting
• Business strategy
• Competitive forces
• Responsibility accounting
• Transfer pricing
• Profit center
• Investment centers
• Financial accounting
• Lecture Financial accounting
• Accounting information
• Accounting systems
• External financial reporting
• Ethical obligations
• Decision making in accounting
• Ethical reasoning
• Cognitive processes
• Ethical decision making
• Organizational ethics
• Corporate governance
• Professional judgment in accounting
• Incremental analysis
• Decision making process
• Financial statements
• Making business decision
• Business decision tool
• Lecture Accounting
• The impact of accounting disclosures on individual investors’ decision making
• Vietnam Stock Market
• The Vietnam stock market
• Vietnam Stock Exchange
• Accounting information groups
• The investors' decision making
• Product management
• Cost control
• Performance evaluation
• External reports
• Nature of costs
• Opportunity costs
• Cost variation
• Operating leverage
• Opportunity cost
• Opportunity cost of capital
• Capital budgeting
• Interest rate fundamentals
• Accounting for partnerships
• Partnership agreement
• Analyzing receivables
• Managerial accounting
• Costs for decision making
• Payroll accounting
• Pay period
• Payroll taxes