About This Chapter
Concepts in Managerial Accounting - Chapter Summary
In this chapter, you'll review important concepts in managerial accounting. Topics covered include managerial accounting and decision-making, responsibility accounting, cost-volume-profit analysis and activity-based costing. After completing this chapter, you should be able to:
- Outline managerial accounting functions
- Use the formula for activity-based costing
- Differentiate between absorption and variable costing in managerial decision making
- Detail irrelevant and relevant costs for decision-making
- Give an example of cost-volume-profit analysis
- Discuss the computation used for market-based transfer pricing
- Identify the limitations of responsibility accounting
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1. Managerial Accounting Functions
Managerial accounting is used to improve the efficiency of the management process by focusing on management planning, cost controls and financial monitoring to ensure the financial success of departments and the overall company.
2. Activity-Based Costing: Definition, Formula & Examples
Manufacturing companies rely on product cost data to set product sales prices and determine if products are producing profits. This lesson covers activity-based costing and describes how to assign overhead costs to products using this method.
3. Managerial Decision Making: Absorption vs. Variable Costing
Companies often have many decisions to make regarding setting prices. In this lesson, we look at two ways to set prices, one using absorption costing and the other using variable costing.
4. Relevant & Irrelevant Costs for Decision-Making
In accounting, there are relevant and irrelevant costs. Relevant costs include differential, avoidable, and opportunity costs. Irrelevant costs include sunk and fixed overhead costs. In this lesson, we will learn about these and calculate them.
5. Cost-Volume-Profit Analysis: Definition & Examples
In this lesson, we'll explore cost-volume profit analysis, which companies use to help them figure out how many products to make, and at how much to sell them for in order to make their desired profit. We'll also discuss contribution margins.
6. Market-Based Transfer Pricing: Definition & Computation
Market-based transfer pricing is, generally speaking, the best form of transfer pricing available to companies. In this lesson, we'll discuss how it works and why it is the preferred choice.
7. Responsibility Accounting: Benefits & Limitations
Unlike other accounting systems which focus on departments or divisions, responsibility accounting tracks the performance of each individual. As you might imagine, this has unique advantages and disadvantages.
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Other chapters within the Certified Internal Auditor (CIA): Exam Prep & Study Guide course
- Internal Auditing Overview
- Internal Auditor Skills & Responsibilities
- Internal Auditing Controls & Risk Management
- Planning the Audit Process & Gathering Data
- Data Analysis & Reporting Tools for Auditors
- Strategic Role of the Internal Auditor
- Operational Role of the Internal Auditor
- Establishing an Internal Audit Plan
- Individual Auditing Engagements
- Fraud Risk Assessment & Management for Auditors
- Corporate Governance & Business Ethics
- Organizational Structure & Business Processes
- Modern Organizational Communication
- Strategic Management, Competitor Analysis & Decision Making
- Organizational Structure, Behavior & Performance
- Leadership & Project Management Styles & Methodologies
- Information Technology Security & Development
- IT System Infrastructure
- Concepts in Financial Accounting
- Global Business Environment Basics