Test 1 Notes
Ethical perspective
Strategic management perspective
Enterprise risk management perspective
Corporate social responsibility perspective
Process management perspective
Leadership perspective
Management accounting refers to the processes and techniques that focus on the effective and
efficient use of organisational resources, to support managers in their tasks of enhancing both
customer value and shareholder value
The environment includes phenomena that are external to the organisation, but which have an
influence on the organisation.
Provide information for planning, directing and motivating, controlling, evaluating and continuous
improvement.
Provide information for costing products and services.
Provide information for various decision making in businesses.
Establish Goals…………..Specify how goals will be achieved…………….develop budgets
Feedback in the form of performance reports, which compare actual results with the budget, are an
essential part of the control function.
Planning, controlling, decision making.
Ethical
Competence, Confidentiality, Integrity, Credibility
A strategy is a “game plan” that enables a company to attract customers by distinguishing itself from
competitors
Customer Intimacy Strategy, Operational Excellence Strategy, Product Leadership Strategy
Enterprise Risk Management
A process used by a company to proactively identify and manage risk
Corporate social responsibility (CSR) is a concept whereby organizations consider the needs of all
stakeholders when making decisions
A value chain consists of the major business functions that add value to a company’s products and
services
Lean Production = JIT
Organizational leaders unite the behaviour of employees around two common themes - pursuing
strategic goals, and making optimal decisions
Activity Base (Cost Driver)
Relevant Range where cost increase due to increase in units is a uniform straight upwards line, to the
right
Scattergraph
TVC = TC -TFC
High – Low
VC/hr = TVC/THrs
The variable cost per hour of maintenance is equal to the change in cost divided by the change in
hours
Highest Cost – Lowest Cost/Highest Hrs – Lowest Hrs = VC/hr
TVC = TC – VC/hr * THrs
Cost Equation For Maintenance
Y(TC) = A(TFC) + B(VC/unit) * X(unit(s))
Least Squares Regression
The goal of this method is to fit a straight line to the data that minimizes the sum of the squared
errors
Least-squares regression also provides a statistic, called the R2, which is a measure of the goodness
of fit of the regression line to the data points
Differential revenue and cost are the differences in cost and revenue between two options
Opportunity cost is the potential benefit forgone to do something else.
Sunk costs are costs already paid before an option is chosen and so are not relevant to the decision
because they cannot be changed.
Costs incurred to prevent defects, or that result from defects in products, are known as quality costs.
Many companies are working hard to reduce their quality costs.