TAILIEUCHUNG - Lecture Survey of Accounting (First edition): Chapter 12 – Kimmel, Weygandt

Chapter 12 - Incremental analysis. Upon completion of this lesson, the successful participant will be able to: Describe management’s decision-making process and incremental analysis, analyze the relevant costs in accepting an order at a special price, analyze the relevant costs in a make-or-buy decision,. | WILEY Incremental Analysis 12 Kimmel ● Weygandt ● Kieso Survey of Accounting, First Edition CHAPTER OUTLINE Describe management’s decision-making process and incremental analysis. 1 LEARNING OBJECTIVES Analyze the relevant costs in accepting an order at a special price. 2 Analyze the relevant costs in a make-or-buy decision. 3 Analyze the relevant costs in determining whether to sell or process materials further. 4 Analyze the relevant costs to be considered in repairing, retaining, or replacing equipment. 5 Analyze the relevant costs in deciding whether to eliminate an unprofitable segment or product. 6 Making decisions is an important management function. Does not always follow a set pattern. Decisions vary in scope, urgency, and importance. Steps usually involved in process include: ILLUSTRATION 12-1 Management’s decision-making process LO 1 LEARNING OBJECTIVE Describe management’s decision-making process and incremental analysis. 1 In making business decisions, Considers both financial and non-financial information. Financial information Revenues and costs, and Effect on overall profitability. Nonfinancial information Effect on employee turnover The environment Overall company image. Decision-Making Process LO 1 Decisions involve a choice among alternative actions. Process used to identify the financial data that change under alternative courses of action. Both costs and revenues may vary or Only revenues may vary or Only costs may vary INCREMENTAL ANALYSIS APPROACH LO 1 Incremental revenue is $15,000 less under Alternative B. Incremental cost savings of $20,000 is realized. Alternative B produces $5,000 more net income. HOW INCREMENTAL ANALYSIS WORKS ILLUSTRATION 12-2 Basic approach in incremental analysis LO 1 Important concepts used in incremental analysis: Relevant cost. Opportunity cost. Sunk cost. LO 1 HOW INCREMENTAL ANALYSIS WORKS Sometimes involves changes that seem contrary to intuition. Variable costs sometimes do not change under alternatives. Fixed

• Kế toán - Kiểm toán
• Survey of Accounting
• Lecture Survey of Accounting
• Financial statements
• Incremental analysis
• Decision making process
• Opportunity cost
• Accounting for cash
• Accounting cycle
• Financial resources
• Accounting provides information
• Internal controls
• Accounting profession
• Accounting for receivables
• Inventory cost flow
• Accounting for liabilities
• Bonds issued
• Managerial accounting
• Product costing
• Ledger accounts
• Merchandising businesses
• Transportation costs
• Long term operational assets
• Depreciation method