About This Chapter
Cost Accounting for Decision Making - Chapter Summary
There are a wide range of formulas that accounting and financial professionals can use to determine how much it will cost to complete or forgo certain tasks. This type of forecasting is used to help organizations make financially sound decisions, and in this chapter you'll discover how cost accounting influences the decision making process.
Our instructors have designed this chapter for both beginners and more skilled learners. Beginners may need to go through every lesson in the chapter to truly get a grasp on cost accounting. Individuals who have more accounting experience may use the lessons to brush up on particular topics. Those who master all of the information in this chapter will be able to:
- Describe how an organization's mission can be influenced by cost accounting
- Identify techniques for making business decisions by using accounting concepts
- Define the steps for calculating costs and making decisions
- Examine cost accounting practices and how they impact pricing decisions
- Explain variable costing vs. absorption
- Point out examples of differential costs
- Appraise the impact of uncertainty, risk, and certainty on decision-making
- Summarize how Southwest Airlines used cost accounting for making decisions
1. The Impact of Cost Accounting on an Organization's Mission
Cost accounting helps companies determine product pricing and reach long-term goals. Discover the impact of cost accounting on an organization's mission with an example from EasyCall, a phone company aiming to enter a new market.
2. Using Accounting Concepts to Make Business Decisions
Businesses sometimes use generally accepted accounting concepts to make business decisions. In this lesson, explore the details of the generally accepted accounting principles, or GAAP.
3. How to Determine Costs & Make Decisions
Determining the costs in a business and making a decision based on the information that has been collected is how managers look after the financial well-being of their businesses. Learn about making decisions, determining the costs of product lines, special orders, and more.
4. Cost Accounting Practices for Pricing Decisions
Cost accounting directly influences pricing decisions by including various types of costs. See how inventory, fixed, and variable costs are considered when implementing a pricing strategy and adjusting to changes in sales volume.
5. Managerial Decision Making: Absorption vs. Variable Costing
Managers make decisions about setting prices using absorption and variable costing. Learn more about the different types of costing and explore a comparison of variable costing versus absorption costing.
6. Differential Cost in Managerial Decision Making
Differential cost compares two procedures or plans to identify their difference in cost. See how differential cost occurs and is used to guide managerial decisions through an example.
7. Decision Making for Managers: Certainty, Risk & Uncertainty
For each situation, managers research all possible variables and weigh the certainty and uncertainty of all possible risks to make the best decisions. Explore the strategies of decision-making for managers and learn how managers weigh risk.
8. Cost Accounting Case Study: Decision Making at Southwest Airlines
Cost accounting assesses various types of costs and informs business strategy. Using a real-world case study, examine the significance of cost accounting on the overall business decisions of a well-known company.
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Other chapters within the Accounting 303: Cost Accounting course
- Cost Classifications in Accounting
- Costing Methods & Techniques
- Formulas for Cost Accounting
- Standard Costs in Accounting
- Job Order Cost System in Accounting
- Process Cost System in Accounting
- Activity-Based Costing Overview
- Product & Service Costing
- Budgetary Process
- Cost Behavior Analysis
- Cost-Volume-Profit Analysis Overview
- Cost Estimation
- Service Department & Joint Cost Allocation
- Ethics in Cost Accounting
- Modern Trends in Accounting
- Required Assignments for Accounting 303
- Studying for Accounting 303