INCREMENTAL ANALYSIS
TRUE-FALSE STATEMENTS
1. An important step in management 's decision-making process is to determine and evaluate possible courses of action.
2. In making decisions, management ordinarily considers both financial and nonfinancial information. 3. In incremental analysis, total variable costs will always change under alternative courses of action, and total fixed costs will always remain constant.
4. Accountants are mainly involved in developing nonfinancial information for management 's consideration in choosing among alternatives.
5. Decision-making involves choosing among alternative courses of action.
6. Financial data are developed for a course of action under an incremental basis and then it is compared
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c. determine the amount of money that should be spent on a project.
d. decide which actions that management should consider.
27. Which of the following stages of the management decision-making process is improperly sequenced? a. Evaluate possible courses of action Make decision.
b. Assign responsibility for decision Identify the problem.
c. Identify the problem Determine possible courses of action.
d. Assign responsibility for decision Determine possible courses of action.
28. Internal reports that review the actual impact of decisions are prepared by
a. department heads.
b. the controller.
c. management accountants.
d. factory workers.
29. Which of the following steps in the management decision-making process does not generally involve the managerial accountant?
a. Determine possible courses of action.
b. Make the appropriate decision based on relevant data.
c. Prepare internal reports that review results of decisions.
d. None of these
30. The process of evaluating financial data that change under alternative courses of action is called a. double entry analysis.
b. contribution margin analysis.
c. incremental analysis.
d. cost-benefit analysis.
31. Nonfinancial information that management might evaluate in making a decision would not include a. employee turnover.
b. contribution margin.
c. the environment.
d. the corporate profile in the community.
32. Incremental analysis is synonymous with
a.
Putting the data into related groups that will either confirm, enhance or disagree with each group of data. The process of synthesizing the information, using the current data, past history of the subject(s), and additional relevant information, begins toward a final conclusion.
Bateman, Scott A. Snell, 2009). Step one gathers and summarizes information that is in question. It examines current conditions with an attempt at forecasting future conditions. Step two generates alternative goals that may be used as an alternate if the first desired plan does not work. Step three evaluates the potential of the alternative goals and prioritizes/eliminates ones that might or might not work.
1. How does PPLS create value for its customers? What are the critical risks that it has to manage well?
in a business. For example if another organisation sold 1000 sandwiches in a week they would decide to order more sandwiches for the next week. However this data needs to be accurate and reliable, for example if the data they received told them they sold 0 sandwiches they wouldn’t order any more
Learning Objective: 04-02 Explain the purpose of adjustments and analyze the adjustments necessary at the end of the period to update balance sheet and income statement accounts.
While the method of this surveillance may use the BRFSS, there can be many more other methods that can be used. In evaluating a financial project, majority of the times the methods used during the evaluations will be quantitative, in order to prove financial gain (Makarova & Sokolva, 2014). The same quantitative method can also be used in two different ways within this project.
While the traditional management accounting techniques may have contributed to planning, controlling and decision making processes at the nation state level, the requirements of globalisation in which nation states now compete for survival in the global market rather than state market, has rendered traditional techniques obsolete and therefore calls for the mobilisation of modern techniques of management accounting. It also calls for the service of accountants with modern management accounting techniques for a successful implementation.
e. Adoption of a simple rule of thumb when analyzing, recording, and reporting on business transactions
This memo highlights segmented reporting and the variable approach to preparing income statements. Segmental reporting is necessary since there is a need to understand the cost data for each section. Proper cost allocation is critical to preparing the income statements, while it is also easier to identify the costs that are common and not attributable to any specific segment. Typically, the management analyzes the cost behavior by making the assumption that the total costs change occur because of change in level of a single activity (Slideshare, n.d.). The variable costing
| Some relevant discipline knowledge and theory used to analyse a financial issue, though inconsistently applied; Analysis addresses some key elements of the issue, though minor lapses in understanding are evident; Some relevant financial data integrated into analysis of key concepts, though integration is inconsistent
Would factory security and assembly activities be best classified at an appliance manufacturing plant as unit-level, batch-level, product-level, or organization-sustaining?
For instance, the concept of cost estimation which assists in estimating future expenditure as the expenditure depends on the cost of the respective activities can be applied in the setting of a budget which is simply an estimate and schedule of all costs required to be assigned to an activity. One can make an estimation of the resources required for an activity by applying the cost estimation techniques. Since there are limiting factors to each activity such as scarcity of resources for activities, the concept of constraints can be applied together with the concept of cost volume profit analysis to ensure that maximum benefits are driven from the scarce resources and the number of activities that are available. This facilitates the allocation of resources that most equitable and profitable. The theory of constraints is also applicable in the process of setting up budgets. In setting up budget one considers the amount of resources that are available and cannot therefore set a budget plan that exceeds the amount of resources that are available. This implies that the budget is constrained by the amount of
Assets, liabilities, equity, revenue, and expenses has their own balance. A company will produce a trial balance which will give the balance of all these in a certain amount of time such as monthly, quarterly, or annually. The trial balance ensures that account balance is accurate. If the accounting equation isn’t balanced out then there is an error in the accounting records.
The Burns and Scapens framework for analyzing managerial accounting change was built on the study of old institutional economics, which sees "economics as a process of social provision, subject to multiple and cumulative causation." This view culminates in a model that argues that the managerial accounting practices at institutions are subject to a process of constant change, influenced by routines and rules. The institutions contribute to these routines and rules, but so do actions on the part of managers within the institutions. By combining multiple influences over time, we arrive at modern managerial accounting practice. In other words, Burns and Scapens tells us that managerial accounting practice changes over time, influenced by a number of factors including rules, routines and actions.
The Transformation is facing financial management as a growing industry that provides a well-rounded wealth of information that is rapidly evolving along with the economic growth. As you well know our finance and accounting departments are under fire to perform dynamically. More exceptional than before is the weight to drive real-time intelligence and the constraints to develop a forward-looking analysis to support a business decision. In retrospect, this coincides with dramatic shifts in business simulations, and regulatory environments, the risk assessment with doing nothing are ever-growing, and companies who are adapting to the new modern way of finance are at an economic advantage. In this report, we will discuss these critical shifts