Relevant Costs – Managerial Accounting Decisions & Scenarios


Common managerial accounting decisions analyzed using relevant cost methods that can apply to all large decisions

What you will learn

Managerial accounting concepts

How to use relevant costs to make decisions

How to apply relevant costs to make a “make or buy” decision

How to apply relevant costs to make a “sales mix” decision

How to apply relevant costs to make a decision to eliminate a division or not

How to apply relevant costs to make a to purchase new equipment or not

How to apply relevant costs to make a to accept a special offer or not

How to set a unit sales price using cost data

Description

Apply relevant cost methods to common managerial decisions.

Managers often need to make decisions that are not routine, not part of the normal day to day process, and that can have a long-term effect on the organization. Individuals often need to make similar decisions and can apply similar tools when making decisions of a large dollar amount that can affect multiple years.

Although the specifics of each decision differ, the concept of relevant costs helps us put together a process for gathering and analyzing data, picking up the information that matters, and removing all the excess data that does not matter to our decision. Understanding relevant costs will reduce the likelihood of making incorrect decisions based on a sunk cost effect or not taking into account opportunity costs.

We will analyze the decision-making process of buying a new piece of equipment or keeping an older piece of equipment, a question often relevant to individuals as well as businesses. The decision of whether to buy new equipment is subject to the sunk fallacy effect, and we will discuss why this is.

This course will investigate the managerial accounting question of a “special offer.” The “special offer” question often takes the form of a one time offer to purchase from us at a reduced price. It is often the case that a business will benefit from accepting a special offer and the concept of relevant costs will help us to see why. For example, a hotel may have an incentive to take a “special offer” to sleep in a room for a night at a price far below the standard rate and even below cost as it is generally calculated. We will discuss why, and how this concept applies to business in general.

We will apply the concepts of relevant costs to a “make or buy” type decision. Should we make a component internally or purchases it from an outside vendor?

The course will discuss the managerial accounting question of whether we should process a product further. In other words, should we sell a product at one point of production or should we process the product further and sell it for a higher price? We will also discuss a similar question related to defective inventory and whether we should scrap the inventory now or rework it.

We will discuss the question of what sales mix to use. In other words, if we have multiple products which ones should we produce and how much should we produce?

The course will discuss the question of eliminating a segment or department of a company. For example, if a departmental income statement shows a loss, should the department be eliminated and how can we apply relevant costs to make the best decision?

We will discuss how to use cost data to set a sales price using a cost method and variable cost method.

English

Language

Content

Introduction

Introduction

PDF 110 Decision Making Process

110 Decision Making Process

Multiple Choice Question 1

Accounting Comic Break

Managerial Accounting Overview

2 Managerial Accounting Overview

PDF – 10 Managerial Accounting Introduction

10 Managerial Accounting Introduction

PDF – 20 Cost Classifications

20 Cost Classifications

PDF – 30 Product Costs & Period Costs

30 Product Costs & Period Costs

PDF – 40 Prime Costs & Conversion Costs

40 Prime Costs & Conversion Costs

PDF – 50 Manufacturer’s Balance Sheet

50 Manufacturer’s Balance Sheet

PDF – 60 Manufacturer’s Income Statement

60 Manufacturer’s Income Statement

PDF – 70 Manufacturing Activities Flow

70 Manufacturing Activities Flow

PDF – 80 Just In Time (JIT) Manufacturing

80 Just In Time (JIT) Manufacturing

Make or Buy Decision

3 Make or Buy Decision

PDF – 252 Make or Buy Decision

252 Make or Buy Decision

Excel Worksheet Download

Worksheet – 252 Make or Buy

Multiple Choice Question 2

Accounting Comic Break

Scrap or Rework & Sell or Process Further Decisions


4 Scrap or Rework & Sell or Process Further Decisions

PDF – 262 Scrap or Rework

262 Scrap or Rework

Excel Worksheet Download

Worksheet – 262 Scrap or Rework

Excel Worksheet Download

Worksheet – 264 Scrap or Rework

PDF – 272 Sell or Process Further

272 Sell or Process Further


Excel Worksheet Download

Worksheet – 272 Sell or Process Further

Multiple Choice Question 3

Accounting Comic Break

Sales Mix Decision

5 Sales Mix Decision

PDF – 280 Product Mix Decision

280 Product Mix Decision

Excel Worksheet Download

Worksheet – 282 Sales Mix

Excel Worksheet Download

Worksheet – 284 Sales Mix

Multiple Choice Question 4

Accounting Comic Break

Accounting Comic Break

Segment Elimination or Not Decision

6 Segment Elimination or Not Decision

PDF – 300 Department Operating at a loss Close or Not

300 Department Operating at a loss Close or Not

Excel Worksheet Download

Worksheet – 302 Segment Elimination

Multiple Choice Question 5

Accounting Comic Break

Equipment – Keep Old or Buy New Decision

7 Equipment Keep Old or Buy New Decision

PDF – 410 Equipment Keep Old or Purchase New

410 Equipment Keep Old or Purchase New

Excel Worksheet Download

Worksheet – 410 Keep Old Equipment or Purchase New

Multiple Choice Question 6

Accounting Comic Break

Special Offer – Accept or Deny Decision

8 Special Offer – Accept or Deny Decision

PDF – 450 Special Project or Offer – Accept or Reject Decision

450 Special Project or Offer – Accept or Reject Decision

Excel Worksheet Download

Worksheet – 452 Special Offer

Excel Worksheet Download

Worksheet – 454 Special Offer

Excel Worksheet Download

Worksheet – 455 Special Offer

Excel Worksheet Download

Worksheet – 472 Service Selling Price

Multiple Choice Question 7

Multiple Choice Question 8

Accounting Comic Break

Set Sales Price Using Cost Data

9 Set Sales Price Using Cost Data

PDF – 432 Set Sales Price

432 Set Sales Price

Excel Worksheet Download

Worksheet – 432 Sales Price Total Cost Method

Excel Worksheet Download

Worksheet – 433 Sales Price Variable Cost Method

Excel Worksheet Download

Worksheet – 436 Target Costing Using Excel Feature Goal Seek

Multiple Choice Question 9

Multiple Choice Question 10

Accounting Comic Break

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