Managerial Accounting ACCT 2521
Popular in Course
verified elite notetaker
Popular in Accounting
This 1 page Class Notes was uploaded by Christa Glover on Sunday October 11, 2015. The Class Notes belongs to ACCT 2521 at East Carolina University taught by Staff in Fall. Since its upload, it has received 49 views. For similar materials see /class/221357/acct-2521-east-carolina-university in Accounting at East Carolina University.
Reviews for Managerial Accounting
Report this Material
What is Karma?
Karma is the currency of StudySoup.
Date Created: 10/11/15
ACCT 2521 Chapter 8 Handout Relevant Cost costs that differ between two alternativesyou will need to identify relevant costs a lot in this chapter Segment Margin Revenue minus Traceable Costs 0 This is helpful in determining whether the costs only associatedtraced to that department product store etc is causing that segment to be truly unprofitable or if it is the allocated fixed costs making the segment seem unprofitable AddingDropping Segment Contribution Margin Lost XXX Fixed Costs Savings XXX IncreaseDecrease NI XXXXXX NOTE Losing CM negatively impacts NI therefore I made it negative Avoiding Fixed Costs and thus saving money positively impacts NI so I leave it positive Make or Buy Decision Construct a Buy column and a buy column Under each column put ONLY those costs that will be incurred under each column If you cannot avoid a cost by buying the product then DO NOT include it in the column because essentially you could include it under both Since we only want the costs that fall under one OR the other it wouldn t be relevant Special Orders Increase in Revenue just for this special order Minus Increase in Costs iust for this special order Negative Decrease to NI Positive Increase to NI NOTE Fixed costs that the company is ALREADY incurring are never factored into special order decisions because they will have to be incurred regardless of whether you accept this special order or not Constrained Resources Rank your products in order of the CM based on the constrained resource First find CM for each product then divide it by the quantity of constrained resource Whichever provides the higher CM per constrained resource is what should be emphasized first