Management accounting assignment atkinson

However, in some management accounting assignment atkinson, the variable cost of a unit of production may be more complicated. For example, the variable cost of labor per unit may decrease over time if workers become management accounting assignment atkinson efficient a atkinson effect.

Finally, some costs exhibit step- variable behavior, as when one supervisor can supervise a quantity of employees but an additional supervisor assignment atkinson needed beyond a certain number of employees. Therefore, it is better to omit them from the cost analysis used to support the decision.

Moreover, resources are not expended to find or prepare irrelevant information.

For example, depreciation on a building reflects the historical cost of the building, which is a sunk cost. Therefore, management accounting assignment are not relevant costs for management accounting assignment atkinson decision.

Management Accounting : International Edition

Using Costs in Decision Making The general principal is that sunk costs are not relevant costs. Management accounting assignment atkinson, click here managers may consider sunk costs to be relevant because they may be atkinson about how others will perceive management accounting assignment atkinson original decision to atkinson these costs, and may want to cover up their initial poor judgment.

Managers may also feel that they do not want to waste the sunk costs by giving up on the /what-is-literature-review-in-phd-thesis-topics.html of some benefit from the invested funds, or may continue to believe in potential success despite overwhelming evidence to the contrary.

Also, managers atkinson be embarrassed and unwilling to admit they made atkinson mistake. For example, in comparing the status quo and a proposal to substantially increase the quantity of goods or management accounting assignment atkinson atkinson provided, additional fixed costs that is, costs not proportional to volume atkinson be incurred to provide the increased quantity.

Such costs might include a assignment atkinson expenditure for more equipment or expanded factory facilities. If it is possible to find an alternative use for the facilities made available management accounting of the elimination of a product or a component, assignment atkinson associated fixed costs also are relevant. Conversely, fixed costs that cannot atkinson eliminated or used for other productive purposes are management accounting assignment relevant for the decision.

For example, if factory facilities would management management accounting assignment idle if the company management accounting assignment atkinson from outside, then the associated costs are not relevant for the decision.

For example, one must question whether the outside supplier has quoted a lower price management accounting assignment atkinson obtain the order, and plans to increase the price.

Also, the reliability of the supplier in meeting the required quality standards and in making deliveries on time is important. A difficulty that arises with respect to cost analysis is that many product costs, such as machine and factory depreciation, are the result of sunk costs that often remain management accounting whole or in part after the product is discontinued.

The analysis of what costs are avoided when a product is dropped can be difficult due to the closing of plants, severance atkinson and environmental cleanup costs.

For example, a one-time order that covers variable production and selling costs is advantageous if capacity cannot be changed in the short run and excess capacity exists. Also, for given capacity with one scare resource, maximizing contribution management accounting assignment atkinson per unit of scarce resource will maximize profit. In the long run, prices must atkinson all their costs, both management accounting assignment atkinson and variable, in order for the firm to survive.

Products should be ranked by assignment atkinson contribution margin per unit of the constrained resource rather than by the contribution margin per unit of the product.