Acca f2 Passcard 1 21

8/7/2019 Acca f2 Passcard 1 21

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1 : In fo rm a tio n fo r m a n ag em e n t

P la n n in g , c o n t r o l a n d d e c is io n m a k in gF in a n c ia l a n d m a n a g em e n t a c c o u n t i n g

D a t a i s t h ~ 1 fa w m a t ~ r f i a l to r d a t a Pf o c ~ l s s i n ! J . 1 ( ] ' , b ' m a N o n isd a t a th 'a t h 'a s b ~ :e l] lPf o c ~ l s s : e d in s u c h a w a y a s to m a k : e ' itm :e 'S n i n g fu l , to i r s Us~( U a m g :e m e n t I l ' / o rm a t i o n i s r h e 'i n / o r m a t i o n u s e d b y m a n a g e m e n t ,t o f U n a n o rg sn is a# o n .S o m : e l ( '/ ,u a l j~ e lso l g o o d i ri '. fo r m a ti o n a fe ' a s to J !o w s .[. R e le v a n c e[I I C i a r U y[I I C o m p i e : f e n e s s

[. A c c u ra c y[I I T i m e ~ n e s s[I I M a n a g'e a bie in v o lu m e


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l~ fo rm a t ~ o T l is m O IS t I m lk e ,l lyt o b e u s ed f o r p ll , 8 J ll n ii r lg , oo n tr o ll o r d e c i is ii o n m a ~ in g i in m a n ,a ,g :e m a 3 !~ ta c cm m t iin gM a x iim i i s e p ro m sM a x i mse s h a r e h o l l d e fv a l l u e

P l l e l i l' ln i l l 1 l g i i n l 1 0 l v e s. . . . . . . .E s t :a lb l iis h i in g l o b j ; e ct ii w s5 e l l e c t i i n g l 8 I P P l r o ; p r i i a ; t es t 1 r a l t e g l i e s

I F i i ~ a n c i i a J l a m ]

M ~ n im ~S ! C06 tiSM a x i m i is e , r ev e fi lU I- In c r e l 8 i S l market s h a r e

III A .n 's :t a b lm s lh d o rg a n iis a t i io n s lh o u lld h a v e a ,s y s t e m o~ m a ,n a g em 8 f~ t r e po rt in g t h i, 8 1 tproducesccmrol [ n ib rm a , t i io ~ in a s p e d i i i c format a tr , g u l la r i in E e N a l ls .

III B fe c t i iv e o cm tm l l is m o t p ra c [~ c a l l w i t h o u tp lla ~ n ~ n g . P ll a n n ii n g w i t h o u t c cm i r o l ~ s p o : in tl 6 5 .M a na ge men t is d ecisio n tald n g . M anagemen t at a llle vels w ith in an o rg an is ation take decisio ns. D ecisio n

makin 9 involves a ch oce b e tw e e n a lter n at iv e s.

III G o m p a . r ~ n gIII E v a l l u a , t i i n gIII G o n e c ti iv e a c t io n

III P~ , am~ im gIII R . e c o r d i n gIII C a n y O Q J t p l l , 8 1 ! 1 ils a s y s t e m whit ih m e a s u l m s en d c o rr ec ts ~ h e p e ,r fo ln m a ln c e ofs u lb o :r d iin a lt es t o e n s u r e m ' g a J n iis a J lt i: on 's o b i le c ti i ve s flp l la J n s a m , l b e i i n ' g m et


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F in an cia l a ndmanagEl l119ntaccount ingI P I I 8 J ~ l n i n g , c o : n l ~ J r o l l

[ 'mO l d ~ c i \ s i i( ) : n l m a ' ll k ii n g

T he d ata use d to pre pa re ff~~ an ciia llacc oun ts a mi m aJ llag em e~t a ccou nt.s are ~h e s am e.T h e d i i1 f fl lrencesbe twee~ th iese accoun t s an ise b ecau se th e d a.ta .is a~.allysed d~ffW re~tlly .

.. P repaJ ed fo r e :dern la l l i indv~du a i sII D e tai ll p e l~ ,or ma n ce ( If f a c ie ff iin ed p erio d.. L eg all req u~re men ts for ll~m i~e dcom pa~iies toprepare F AII F o rm a t o ff p u b( li is ~e d F A determii~ed b y

- La.wlASsIF R S s

II F A cover busi~!SS as a w holleII F A i in for ma ti io ~ m o n etaJ Y ( m oi S tl ly )II Hstor ic p ~c [m e o f p as t o pe re fio ns

.. P re pa Jed fo r iin te m all m a~a !g elrs off a n org an isa tionII A ~ d m a~ a, ge me ~t ii n r eo or din g , p (l a. n~ iin gan d

controli ll ing 0rga~ iisa.t~o~'s .ad lv~t lesII Heilip dedsiiol1-makii ~Ig processII N o l is ig a ll r eq u iirement s to p repare M AII F ormat o[ M A a. t disc ret ion o t management.. M A ca.n focu is : on spec ifc a reas o [ a n

orga n i isat iion 's act irv~t~es.. M A ~n corp m.a .te rw n -m o~e t8 iry m easu resII H s to rie re c ord a n d future p~armiirllgtool

IP a g:e 3


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2: Co s t c la s s if ic a tion

T h ' e ' d a s s it i c a t i o { ] o t c o e s is a n e ' s s e n t i a i m a n a g e ' m e n ta c c o $ J n h : n g t e c h ' n i q , u e ' . i t s m a i n , u s e ' s a r e i a s f o l l o w s .III D e:fe rm io o# o:n o f ,th e c os t o f a u n it o f p ro du ct or s e r v i c eIII , o o s : t o o n a v i o , u rIII A bs orp :f io n a nd m arg in ai c os #n g'III , o o s : t ~ v o i u m e ~ p r o n tI( C t i P ) ' a n a l y s i s

D i r e c t c o s t s a n d in d ir e c t c o s t sF ix e d c o s t s a n d v a ri a b le c o s t sO t h e r c o s t c la s s if ic a t i o n sR e s p o n s ib i l i t y c e n t r e s a n d c o s t u n it s


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is a cost th at can b e traced in ful l to th ep rod uct, se rv ic e or d ep artm en t th at is b ein gcosted

III D i rec t m s .te ri ia ll sIII D i re ct ~ ab o urIII Direct ezpenseaIII lo ts ll d ir ec t C O !8 ts :: prime C O ! 8 t

is a cost th at is in curred w hilst makin g aproduct b ut w hich can not b e traceddirectly to th e product, serv ice or

department.+III I n d ire ct m a [e, ri ia isIII In d ir ed la b cu rIII I n di re c t e x pe n se sIII Ad m ~n is t ra Ho n o ve rh ea d

iotall p ro d uc t c os t III Sel l l~n lg.and dstr~bu[~o~ over~e.ad


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i s a c o s t w h ic h i s u n a f f e c te d b y c h an g e s int h e I e v e l o f a c tiv i t y .

III B en t o f ,8 . b u i i I ~ d~Il9III B I L l s ! ness r a t e sIII 8 8 1 i ary o f f a d i r e c ~ o f

i s a c o s t w h i c h t e n d s t o v a r y w it h t h e l e v e lo f a c t iv i ty .

C o s t s m 8 lY a ls o b ese m i i -f f ii x e d o r semi-\ I ' . 8 I r i i a i : J l l eO f m i1 x e dc o s t s . F o r e X 8 I m p l l e j an l l i e c t r i i c i ty b i i l il l~ a s 8.f fi iX l ds t a n d i i n l g c h a r g ea n d a v 8 l. r ~ a b ll ec o s tp e f u n i i t o f 811 1 e c t w i i c i i t yused.

III D i lr ed m a . E er~ a ~ sIII D i lr ed I la b o u rIII S a lle s o o m m i is s ii o n ( \fa r~ s w i th

v o h m e o f f s a J e s )

P a g e 7


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a re c la ss ifie d a s: product ion orm an u fa ctu rl n g c os ts ;a d m in i st ra ti on c o sts; market ing orsel l ing an d d is trib u tio n c os ts .

are costs iden tified w ith a fin ish edproduct an d are part of th e stock val ueun til th ey are sold w hen th ey b ecomeexpen ses (cost of g oods sol d ) .

are costs th at are deductedas expen ses dun n g a periodw ithout ever b ein g part of th es toc k v al u e.

are costs w h i ch are likely toarise from decision s maded u ri ng th e b udg eti n g p ro ces s.

are costs specific to an activ ity orb usin ess w hich w ould b e avoided ifth e activ ity or b u sin ess di d n ot ex ist.

in cu rr ed w h eth er 0r n ot th ea ctiv ity o r b u s in es s e xis te d.

is any cost th at can n ot b e affected b yman ag emen t w ith in a g iven time span .

is a cost w hich can b e in fluen ced b ym an ag em en t de cis io ns a nd ac tio ns.


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A r es pa n siib illi ~y c en tr e ~ s 8 . d e pa rt me n t o r o rg a n ~s a[ ~o n all [ !L I~ ct iio n w h o se p eri l, or m. aa 1 ce~8~he di irec t respans ibml ii tyo f . a s p ed ff ii c m a n ag e r.

is a c o l le c t i n g p la c e f o r c o s ts b e f o re t h e ya re a n a l y s e d f u r t h e r.C O S I C E IN lf lR IE IM iA rN lA GE R S A R ER IE S fO r N lS ll lB IL E I F O R C O S T S O N IL Y

III S i m i i~ .a rto 8 . co st c en treIII H es po nsi b ie fo r c osts and revenues

i s a c o ll e c t in g p la c e f o r r e v e n u e s b e f o ret h e y a re a n a ly s e d f u r t h e r .I R .E V I E r N J U E C I E rN J T R I E M A I ~ A .G , IE I R .S A I R .EI R .E S I P O I~ S I I1 8 L IE F O I R . R I E V E I ~ U I E S O r N J l L Y

III prom cent re wi i th add i[ i( l~ .al l respoT l isb l li it ii esIII R . es po n sib lle f or o as is and rehlenue'sIII R.espons ib l le . for c8 Ip ii t8 .11in ve stm en t 8 .n d

[~n8ndng


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Ga s ! ~ n i i t :is a ny a ctiv ity fo r w h ic h a . separatem ea su rem en t o f co st is d esire d

is a un it o f prod uct or serv ice to w hichco sts ca n b e re lated .

I . P a tie nt e pis od e ( in a h os pita l)I . B arrel ( in th e b rew i n g in du stry )I . R oom (in a . hotel )I . T h e cost of a . productI . T h e cost of a . serviceI . T he co st of op eratin g a d ep artm en t


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3: C o s t b e h a v io u r

L e v e ls o f a c t i v it yC o s t b e h a v io u r p a t t e r n sH i g h - l o w m e t h o d

C o s t b e W l 'a v io , u fisrhe' w a y iJ 1 w h ' ic h ' c o s t s a r e a f f e c .t e lc tJb yc h ' s n g e ' s in t h e , v o l u m e ' o f O $ . J t p u t J W a n s g e m e ~ t ]. t d e c i s i o n sa r e i o / f e l t ] ' b a s e d 00' t h e w a y s i J 1 w h ' l e ] ] ' c o s ts b e W l 'a v e ~K n o w le d g e l o f c o s t b eW l ' f jV i O , U f is e l s s e ~ ' t i a I fO fIII B l J d g e : f i n g III D e cis io n m a kin g III C o n t r o l a c co u n : f i n g


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l~iigl~!I( jw

III V a l l u e o ff i i t e m s s o li dIII N L im b e r o f i i t e m s s o~ dIII N L im b e r o f i ir lr V O i ic e s i is e u e dIII N L im b e r o f u r i t s o f e ll e c t r i i d lt y c o n s u m e d

B a s i i l c p r i i n c i i p ~ l l e : s ,o f I C O S ! : b e , h a v i i o u rA s t h e I le v e l l o f a c t~ v ~ lt y r is e s , c o s t s w i l l II u s t l a li l l yr i i s e , . I t w ~I I I g e n e r a .l l y c o s t m o re t o prod l i c e , 2 00u n i t s o f o u lp u t t h a n i i t w ~ 1 1 1t o p ro d u c e 1 0 0 u n i i t so ff o u t p u tI ~ 'g e n e ra . I I , l l e v e l o ff a d i v it y ' " \ f o ll u m e o ff o u tp u t


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is a . c os t w h ic h te n dsto b e u n affe cte d b yincreases o r decreasesin th e l eve l o f ac ti v it y

is a . co st w h ich is fix ed inn a tu re b u t o n ly w i th in c erta inleve ls o f ac ti v it y

$ ICost

I . R en t of a . s in g le f ac to ry b u il di n gI . S t ra .ig h t I i n e d e pr ec ia ti on o f amachine

P ag e 1 1 3

V olu m e o f o llJ trn J !t{ le v el o ~


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l~iigl~!I( jw

sCost

is a cost w h ichv a ri es d ir ec tl y w i thth e le v el o f a ctiv ity .I . C o st o f ra w m a te ria lsI . D i re e t l ab o u r c o st sI . Sa les commiss ion

I M i i x e d l , c o s t sO O $ !a ls o k n o w n a s s e mi -v a ri ab l e/ se m i-

fix ed co st w h ich c on ta in s b oth fix ed a ndv a ria b le e le m en ts a n d is p artly a ffe cte db y c ha ng es in th e Ie ve ls o f a ctiv ityI . T e le p h o n e b i ll sI . Sa lesman 's sa la r y

A


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is a c o s t w h ic h v a r i e sd ~ s p r o p o r . f i o n a i e l yw i t hin c re a s i n g o u tp u t.

$C o s . t

sGO$t

P ag e 1 1 5


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E " 8 iW '~ a b l l eF b : e dS l m i i . ; v a r ~ a b l l eT h e [ b re d a n d v a l1 ia b llS re le m e n t s o f s lm i i - v a J i i a b l l ec o s ts c a n b e d e t lr m i i~ e d b y t h e ~ i i g lh - Il o w ' m e t h o d .

Step .2 . A d ju s t f o r i i~ f l l a t~ o n b e fo re c om p a ri ~ g c o s t s ( ~ [ n e e d e d )T b t a l l O O S [a t ~ i i9 h a c t ~ v ~ t yI Ie v e rI I(T O H )T b t a ll O O S [a t I lo lw a c iv ii t y I l e v e ll ( T O L )T b t a ll tm i i t s a t h ~ g ~ a c ~ i i v i i 1 t yI l e v e l l ( T U H )T b t a l l t m i it s a t I lo w a c t ii v i i t y I le v e r il( T U L )

Step t. R e v i ie w P 8 iS [ re c o rd s o f f c o s t s

Step ; 9 ' . D e t e W 'm i i~ e---r--

r--- & 1 1 e c t p s r io d w i it h h i i g l h e s t a c t i i v i l t y I le v e ll----I . . . . . . .- & l l e c t p s rio d w i i t h I I ~ w e s t a c ti iv ii l t y Ile v e l l


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S t e p 4. C allc ~lla [ev a . ri ia b l is l C O E i t p e r ~ n ii [ ~ TCH-TelTUH-TUl

P ag e 1 1 7

H ig hest activ ity lev elL ow est activ ity lev el

= 1 0,000 un its at a . c os t o f $ 4,0 00= 2,000 un its at a cost o f $1 ,6 00

Variab le cost per u n it = $ (4 ,0 00 - 1, 60 0) = $2,400 = $0.301 0 ,000 - 2 ,000 8 ,000

F ixed cost = $4,00 0 - $ (1 0 ,000 x 0 .3 ) = $1 ,000


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4: Co rre la tio n a nd re gre ss io n ;e xp ec te d v alu es

C a r e ~ a t io n s n : c i re ' g J e ' s s io n is s v e r y im p o r .t a n . t t o p i cw h ' ic h f a m s p a d o ft h e , c o s t b e h 'a v i o u r s e c t i o n ' o f th e ,s y ! J a b , u s , .U a k e s $ .J r e lt h ' [ ~ ty o u c an r e p r o o iu c $ 1 t h ' e l f o r m u / a e 'required fO f l i n 'e a r r e g r e 's s io n a n a ly s is s in c e ' t h e y a re ' n o . tp ro v id e d in y o u r e :x a m a m i } i t i s v i t a l t h 'a t y o ,u a r e a b Je l . t oe S . f a b J i s h 'l in e s r e l C l u a ti o n s u s i n :g t h ' js m9lt h o o J .C o r re la t io nC o eH ic ie n t o f d e te rm i n a t io nE s t im a tin g t h e l in e o f b e s t f i tE x p e c t e d v a lu e s


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is th e exten t to w hich th e val u e of a .depen den t v ariab le is related to th ev alu e o f th e in de pe nd en t v aria ble .

E X A M F O R M U I . . ACorreia t i onco efficie nt, r =

T HIS FO R M UL A W IL L BE P R O VID E D IN Y O U R . E X A M

Es1 i ima~ i i n g I 1 1 h , E1I l ii ~~, o j ' i b e s 1 m

III Periect lly corn-ellatedIII Par t ll y cou l~a[edIII U ~oorrel l ,ated

III r ~ + 1 ~ pSlr i lect po!S~t i ivelIII r ~ - '1 ~ p e rf ec t ~ e g 8 i, ti iv eII r = = 0 = = u~oorre~8i,ted


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Com~ila~i ion

r2 m e a s u r e s t h e p r o p o rt io n o f th e t o ta l v a J ia ti o n in t h e v a lu e o f o n e v a r i a b le t h a . tc a n b e e x p la in e d b y v a r i a tio n s in t h e v a lu e o f t h e o th e r v a r ia b le .

I f t h e c o r re la t io n c o e f f ic ie n t o f tw o v a r ia b le s = 0.9, w e k n ow t h e v a r ia b le s a rep o s it i v e ly c o r r e l a te d . T h e c o e ff ic ie n t o f d e te r r n in a .t io n , r 2 = 0 .8 1 a n d th is g iv es am o r e m e a n in g f u l a n a ly s is . W e k n o w t h a t 8 1 % o f t h e v a r ia ti o n s in t h e v a lu e o f ye e u I d be e x p la in e d b y v a r ia ti o n s in t h e v a lu e o f x

N o t e : w e do n o t conclude t n . a . t 8 1% o f v a n ia .t io ~ s i in ly a re c a lU s ed by v a ri i . a ti i o n ls i n x , W e sa y t i h a . t 8 1% o f f v a r i i a ti io n sii n y c an b e e X p 'l l a ~ n e d b~v .a n la ti o n s i in x ,


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Com~ila~i ion

&~"~:rg~pl'i $\hOwill!9' rin~fJ/ o~st lit\ " I 1 ; ' l . aI ~ : ' I

sOo s1III U s e ju d g e ,m e n t t od ra ,w I Ii n e o f b e s t m it

III F i ix e d c o s t s ; ; ; ;i in i e r s e c f io n o f f I Ii in e , o ny a x ~ s ( , a )

III V a n ia ,b l l e c o s t p e r u n i i t; ; ; ; g r a d i i e n t 0 * l i i n e ( b )

L i n ea r reg ression a naly sis(m a th e m at i ca I ca l c ui a t i on )

Ilia, - Y -bXIII n ; ; ; ;n u m b e r O t Tp a i rs o f f d a , t a ,I. X ; ; ; ; a ve ra g e X v ,a llu eIII Y ;; ; ; a v e ra g e Y v . a 1 1 1 l 8

III nEXY -LXEYnEX2 - (EX)2


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Com~ila~ii( ln

I E x l P e c l e d v a l l ~ , e s l

A n ew product is b ein g man ufactured. T he prob ab ilities of diffe ren t lev els of deman d h av e b een estimated asfol lows:P r o b a b i l i . f y

0.30.60.1

E xp e cfe d v a lu e o f d e m a n d3,0007,2001600,

D e m a n d (units)10,00012,00016,000 11.800

P a g e 2 .3

Acca f2 Passcard 1 21

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