Relevant Costs – Managerial Accounting Decisions & Scenarios

Relevant Costs - Managerial Accounting Decisions & Scenarios

Relevant Costs – Managerial Accounting Decisions & Scenarios

Common managerial accounting decisions analyzed using relevant cost methods that can apply to all large decisions

Language: english

Note: 4.2/5 (168 notes) 48,396 students

Instructor(s): Robert (Bob) Steele

Last update: 2019-05-13

What you’ll learn

  • Managerial accounting concepts
  • How to use relevant costs to make decisions
  • How to apply relevant costs to make a “make or buy” decision
  • How to apply relevant costs to make a “sales mix” decision
  • How to apply relevant costs to make a decision to eliminate a division or not
  • How to apply relevant costs to make a to purchase new equipment or not
  • How to apply relevant costs to make a to accept a special offer or not
  • How to set a unit sales price using cost data

 

Requirements

  • Understanding of basic accounting terms

 

Description

Apply relevant cost methods to common managerial decisions.

Managers often need to make decisions that are not routine, not part of the normal day to day process, and that can have a long-term effect on the organization. Individuals often need to make similar decisions and can apply similar tools when making decisions of a large dollar amount that can affect multiple years.

Although the specifics of each decision differ, the concept of relevant costs helps us put together a process for gathering and analyzing data, picking up the information that matters, and removing all the excess data that does not matter to our decision. Understanding relevant costs will reduce the likelihood of making incorrect decisions based on a sunk cost effect or not taking into account opportunity costs.

We will analyze the decision-making process of buying a new piece of equipment or keeping an older piece of equipment, a question often relevant to individuals as well as businesses. The decision of whether to buy new equipment is subject to the sunk fallacy effect, and we will discuss why this is.

This course will investigate the managerial accounting question of a “special offer.” The “special offer” question often takes the form of a one time offer to purchase from us at a reduced price. It is often the case that a business will benefit from accepting a special offer and the concept of relevant costs will help us to see why. For example, a hotel may have an incentive to take a “special offer” to sleep in a room for a night at a price far below the standard rate and even below cost as it is generally calculated. We will discuss why, and how this concept applies to business in general.

We will apply the concepts of relevant costs to a “make or buy” type decision. Should we make a component internally or purchases it from an outside vendor?

The course will discuss the managerial accounting question of whether we should process a product further. In other words, should we sell a product at one point of production or should we process the product further and sell it for a higher price? We will also discuss a similar question related to defective inventory and whether we should scrap the inventory now or rework it.

We will discuss the question of what sales mix to use. In other words, if we have multiple products which ones should we produce and how much should we produce?

The course will discuss the question of eliminating a segment or department of a company. For example, if a departmental income statement shows a loss, should the department be eliminated and how can we apply relevant costs to make the best decision?

We will discuss how to use cost data to set a sales price using a cost method and variable cost method.

 

Who this course is for

  • Accounting students
  • Business owners & professionals
  • Anyone who whats to learn accounting

 

Course content

  • Introduction
    • Introduction
    • PDF 110 Decision Making Process
    • 110 Decision Making Process
    • Multiple Choice Question 1
    • Accounting Comic Break
  • Managerial Accounting Overview
    • 2 Managerial Accounting Overview
    • PDF – 10 Managerial Accounting Introduction
    • 10 Managerial Accounting Introduction
    • PDF – 20 Cost Classifications
    • 20 Cost Classifications
    • PDF – 30 Product Costs & Period Costs
    • 30 Product Costs & Period Costs
    • PDF – 40 Prime Costs & Conversion Costs
    • 40 Prime Costs & Conversion Costs
    • PDF – 50 Manufacturer’s Balance Sheet
    • 50 Manufacturer’s Balance Sheet
    • PDF – 60 Manufacturer’s Income Statement
    • 60 Manufacturer’s Income Statement
    • PDF – 70 Manufacturing Activities Flow
    • 70 Manufacturing Activities Flow
    • PDF – 80 Just In Time (JIT) Manufacturing
    • 80 Just In Time (JIT) Manufacturing
  • Make or Buy Decision
    • 3 Make or Buy Decision
    • PDF – 252 Make or Buy Decision
    • 252 Make or Buy Decision
    • Excel Worksheet Download
    • Worksheet – 252 Make or Buy
    • Multiple Choice Question 2
    • Accounting Comic Break
  • Scrap or Rework & Sell or Process Further Decisions
    • 4 Scrap or Rework & Sell or Process Further Decisions
    • PDF – 262 Scrap or Rework
    • 262 Scrap or Rework
    • Excel Worksheet Download
    • Worksheet – 262 Scrap or Rework
    • Excel Worksheet Download
    • Worksheet – 264 Scrap or Rework
    • PDF – 272 Sell or Process Further
    • 272 Sell or Process Further
    • Excel Worksheet Download
    • Worksheet – 272 Sell or Process Further
    • Multiple Choice Question 3
    • Accounting Comic Break
  • Sales Mix Decision
    • 5 Sales Mix Decision
    • PDF – 280 Product Mix Decision
    • 280 Product Mix Decision
    • Excel Worksheet Download
    • Worksheet – 282 Sales Mix
    • Excel Worksheet Download
    • Worksheet – 284 Sales Mix
    • Multiple Choice Question 4
    • Accounting Comic Break
    • Accounting Comic Break
  • Segment Elimination or Not Decision
    • 6 Segment Elimination or Not Decision
    • PDF – 300 Department Operating at a loss Close or Not
    • 300 Department Operating at a loss Close or Not
    • Excel Worksheet Download
    • Worksheet – 302 Segment Elimination
    • Multiple Choice Question 5
    • Accounting Comic Break
  • Equipment – Keep Old or Buy New Decision
    • 7 Equipment Keep Old or Buy New Decision
    • PDF – 410 Equipment Keep Old or Purchase New
    • 410 Equipment Keep Old or Purchase New
    • Excel Worksheet Download
    • Worksheet – 410 Keep Old Equipment or Purchase New
    • Multiple Choice Question 6
    • Accounting Comic Break
  • Special Offer – Accept or Deny Decision
    • 8 Special Offer – Accept or Deny Decision
    • PDF – 450 Special Project or Offer – Accept or Reject Decision
    • 450 Special Project or Offer – Accept or Reject Decision
    • Excel Worksheet Download
    • Worksheet – 452 Special Offer
    • Excel Worksheet Download
    • Worksheet – 454 Special Offer
    • Excel Worksheet Download
    • Worksheet – 455 Special Offer
    • Excel Worksheet Download
    • Worksheet – 472 Service Selling Price
    • Multiple Choice Question 7
    • Multiple Choice Question 8
    • Accounting Comic Break
  • Set Sales Price Using Cost Data
    • 9 Set Sales Price Using Cost Data
    • PDF – 432 Set Sales Price
    • 432 Set Sales Price
    • Excel Worksheet Download
    • Worksheet – 432 Sales Price Total Cost Method
    • Excel Worksheet Download
    • Worksheet – 433 Sales Price Variable Cost Method
    • Excel Worksheet Download
    • Worksheet – 436 Target Costing Using Excel Feature Goal Seek
    • Multiple Choice Question 9
    • Multiple Choice Question 10
    • Accounting Comic Break

 

Relevant Costs - Managerial Accounting Decisions & ScenariosRelevant Costs - Managerial Accounting Decisions & Scenarios

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