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PowerPoint Presentation by
Gail B. Wright
Professor Emeritus of Accounting
Bryant University
MANAGEMENT
ACCOUNTING
8th EDITION
BY
LEARNING OBJECTIVES
1. Describe the tactical decision-making
model.
2. Explain how the activity resource usage
model is used in assessing relevancy.
3. Apply tactical decision-making concepts in
a variety of business situations.
Continued
2
LEARNING OBJECTIVES
4. Choose the optimal product mix when faced
with one constrained resource.
5. Explain the impact of cost on pricing
decisions.
6. Use linear programming to find the optimal
solution to a problem of multiple
constrained resources. (Appendix)
3
LO 1
LO 1
LO 1
TACTICAL MODEL
A general approach to tactical decision making
includes:
1. Recognize, define the problem
2. Identify alternatives, eliminating those that are
unfeasible
3. Identify costs & benefits
4. Total relevant costs, benefits of each
alternative
Assess qualitative
qualitativefactors
factors
5. Assess
6. Select alternative with greatest overall benefit
6
LO 1
LO 1
1.
2.
3.
4.
5.
Continued
8
LO 1
1.
2.
3.
4.
LO 1
10
LO 1
Allocated lease
Cost to Make
$ 150,000
Cost Not to
Make
---
Differential
Cost
$ 150,000
125,000
$ 125,000
---
12,000
12,000
---
$ 287,000
$ 137,000
$150,000
LO 2
MANUFACTURING FIRM:
Background
LO 2
LO 3
SWASEY MANUFACTURING :
Make-or-Buy Background
14
LO 3
SWASEY MANUFACTURING:
Relevant Information
Alternatives
Differential
Cost to Make
Make
Buy
Equipment Rent
$ 12,000
---
$ 12,000
Direct materials
5,000
---
5,000
20,000
---
20,000
8,000
---
8,000
Direct labor
Variable overhead
Purchased cost
---
$ 47,500
(47,500)
---
8,500
(8,500)
$ 56,000
$ (11,000)
Total
$ 45,000
15
LO 3
Continued
16
LO 3
Sales
Bricks
Tiles
Total
$ 500
$ 800
$ 150
$ 1,450
250
480
140
870
$ 250
$ 320
$ 10
$ 580
$ 10
$ 10
$ 10
$ 30
Salaries
37
40
35
112
Depreciation
53
40
10
103
$ 100
$ 90
$ 55
$ 245
$ 150
$ 230
$ (45)
$ 335
Advertising
Total
Segment margin
Less Common fixed exp
125
Operating income
$ 210
Continued
17
LO 3
18
LO 3
Continued
19
LO 3
20
LO 3
21
LO 3
APPLETIME JOINT
PRODUCTION
EXHIBIT 12-3
22
LO 3
23
LO 4
CONSTRAINTS: Definition
24
LO 5
Price discrimination
Charging different prices to different customers
Price gouging
Using market power to set prices too high
25
LO 6
GRAPHING SOLUTION
Linear programming
demonstrates the feasible
production region &
optimal solution for
complex problems.
EXHIBIT 12-4
26
CHAPTER 12
THE END
27