Management Accounting Flashcards
(12 cards)
Residual income(RI)
RI= Profit-(cost of capital x nice investment)
Economic value added
(Conventional divisional profit-accounting adjustments) - cost of capital charge on adjusted divisional assets
Minimum transfer price
M t p+ marginal cost + opportunity cost
Maximum transfer price
Market price -cost savings from internal transfer
Transfer price for division with spare capacity
Marginal cost = transfer price
Transfer price for no spare capacity
Market price = transfer proce
Pros and cons of performance management(one on one talks with manager
Pros
Employees feel valued
Positive environment
Communication
Good culture
Cons
Slow change of culture
Enhances incompetence of incompetent managers
Less productive and efficient
Definition of strategic management accounting
Management accounting with emphasis on external factors, non financial info and internally generated info
4 key strands of info in SMA
Product & market info
Competitor activities
Gaining competitive advantage
Matching MA with strategic position
Format of divisional profit management
4 different divisional financial stats
Qualities of non relevant costs/revenue
Sunk/Hisotric
Committed
Notional