College of Administration and Finance Sciences
Assignment (3)
Deadline: Saturday 13/08/2022 @ 23:59
Course Name: Cost Accounting
Student’s Name:
Course Code: ACCT301
Student’s ID Number:
Semester: Summer
CRN:
Academic Year: 1443 H
For Instructor’s Use only
Instructor’s Name: Rabab Farrash
Students’ Grade:
/10
Level of Marks: High/Middle/Low
Instructions – PLEASE READ THEM CAREFULLY
• The Assignment must be submitted on Blackboard (WORD format only) via
allocated folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be
reduced for poor presentation. This includes filling your information on the
cover page.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from students
or other resources without proper referencing will result in ZERO marks. No
exceptions.
• All answers must be typed using Times New Roman (size 12, double-spaced)
font. No pictures containing text will be accepted and will be considered plagiarism.
• Submissions without this cover page will NOT be accepted.
College of Administration and Finance Sciences
Assignment Question(s):
(Marks 10)
Q1. Abdelaziz Co. produces 3 types of products. (3 marks)
During the year the joint costs of processing the 3 products were $350,000.
Production and sales value information were as follows:
Sales Value
Product
Units produced
at Split-Off
Separable Costs
Selling Price
Product A
400,000
$10 per unit
$6.00 per unit
$40 per unit
Product B
300,000
$9 per unit
$4.00 per unit
$28per unit
Product C
500,000
$6 per unit
$3.00 per unit
$18 per unit
a.
Allocate the joint costs using the physical output method.
b.
Allocate the joint costs using the net realizable value method.
c.
Allocate the joint costs using sales value at split-off point method.
Answer:
Q2. Fadel, Inc. allocates engineering costs on the basis of the supervisor’s time and
administration costs on the basis of the number of employees.
The following data have been collected:
Support Departments Operating Departments
Engineering
Administration
Operating 1
Operating 2
Department costs
$25,000
$15,000
$200,000
$350,000
Number of employees
15
10
300
450
15 hours
35 hours
20 hours
Engineering supervisor’s time 30 hours
College of Administration and Finance Sciences
Use the direct method to allocate support department costs to the different departments. (3
marks)
Answer:
Q3. Rafique Inc. makes product A and sells at selling price of SAR 45 per unit. Badr Inc. wants
to buy 5,000 units at SAR 27 per unit. Rafique Inc. has a normal capacity of 101,000 units and
projected sales to regular customers this year is 92,000 units. Per unit costs traceable to the
product (based on normal capacity of 92,000 units) are listed below?
Direct Materials
8.1
Direct Labor `
6.0
Variable Mfg. Overhead
6.2
Fixed mfg. overhead
4.8
Fixed administrative costs
0.8
Fixed Selling Costs
0.4
Does the quantitative analysis suggest that the company should accept the special order? (2
marks)
Answer:
Q4. XYZ Co. is preparing a budget for 2018. The budgeted selling price per unit is 60 SR, and
total fixed costs for 2018 are estimated to be 1,500,000 SR. Variable costs are budgeted at 20
SR/unit.
You are working in accounting department of XYZ, prepare a flexible budget for the volume
levels 120,000, 130,000, and 140,000 units.
One internship student having his training in XYZ Co requested you to explain to him the
difference between static and flexible budgets and arguments of using each one of them? (2
marks)
Answer:
Cost Management
Measuring, Monitoring, and Motivating Performance
Chapter 1
The Role of Accounting Information in Management
Decision Making
???? ????????? ????????? ?? ??? ?????? ????????
© John Wiley & Sons, 2011
Alawi Alshakhouri
140069328
Slide # 1
Chapter 1: The Role of Accounting Information in Management Decision Making
???? ????????? ????????? ?? ??? ?????? ????????
Learning objectives
?Q1 – What is the process of strategic management and decision making? ????
??? ????? ??????? ???????????? ???? ????????
?Q2 – What types of control systems do managers use? ??? ?? ????? ????? ???????
????? ???????? ??????????
?Q3 – What is the role of accounting information in strategic management? ????
??? ??? ????????? ????????? ?? ??????? ??????????????
?Q4 – What information is relevant for decision making? ??? ?? ????????? ??? ??????
????? ????????
?Q5 – How does business risk affect management decision making? ???? ?????
?????? ??????? ??? ????? ???????? ??????????
?Q6 – How do biases affect management decision making? ???? ???? ?????????
???? ????? ???????? ??????????
?Q7 – How can managers make higher-quality decisions? ???? ???? ??????? ??????
??????? ????? ????????
?Q8 – What is ethical decision making, and why is it important? ??? ?? ???????
? ?????? ?? ????????????????
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 2
Q1: Organizational Vision and Core Competencies
??????? ????????? ????????? ?????????
• The organizational vision is the core purpose and
ideology of the organization. ??????? ????????? ?? ??????
.???????? ????????????? ????????
• Determining the organizational vision precedes all
other management decision making. ?????? ???????
.?????????? ???? ???? ???????? ???????? ???????
• Management must also isolate the organization’s
core competencies – its strengths relative to
competitors. ???? ??? ??????? ???? ??? ???????? ?????????
.? ???? ????? ??????? ??????????- ?????????
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 3
Q1: Organizational Vision and Core Competencies
??????? ????????? ????????? ?????????
Organizational
Vision
The organizational vision and the core
competencies are closely related. ????????
.??????? ????????? ????????? ???????? ??????? ??????
The organization’s strengths should help
shape the vision. ??????? ?? ????? ???? ????? ???
.???????? ??? ????? ???????
Core
Competencies
The vision should help locate the
organization’s strengths. ??????? ?? ??????
.??????? ??? ????? ???? ????? ?? ????????
If you were starting an accounting practice, what would be your
organizational vision? ? ??? ?? ?????? ???????????????? ??? ?? ???? ?????? ????????
What do you think would be your core competencies? ??? ?? ???? ?? ????????
???????????
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 4
Q1: Organizational Strategies ?????????????? ??????????
Organizational
Vision & Core
Competencies
Organizational
Strategies
?????????????? ??????????
Organizational strategies are the tactics that
managers use to work toward the
organizational vision while taking advantage
of the core competencies. ?????????????? ??????????
??? ????????? ???? ???????? ???????? ????? ??? ???????
.?????????? ?? ????????? ?? ???????? ?????????
These strategies are long-term in nature. ??????
.?????????????? ????? ????? ?????????
Examples include organization structure, financial
structure, and long-term resource allocation
strategies. ?? ??????? ???????????? ??????? ??? ??? ?????? ?????????
.????????????? ????? ??????? ??? ????? ???????
If you were starting an accounting practice, what would be some of your organizational
strategies? ? ??? ?? ??? ????????????? ????????? ?????? ????????? ??? ?? ???? ?????? ????????
How do these work toward your organizational vision? ???? ???? ??? ?? ??? ????? ???????????
How do they take advantage of your core competencies? ???? ?????? ?? ???????? ???????? ?????? ????
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 5
Q1: Operating Plans ???? ????????
Operating plans are the short-term
implementations of the organizational
strategies. ????? ??????? ?? ??????? ?????? ??????
Organizational
.?????????????? ??????????
Strategies
Operating plans usually include budgeted
goals for revenues and expenses. ?????? ???
?????? ??? ??????? ??????? ??????? ?? ??????????
.?????????? ?????????
Examples
include
schedules
for
employees and procedures for daily
Operating
relationship management decisions with
Plans
suppliers. ?????? ??????? ??????? ??????? ?????????
????????? ????? ???????? ??????? ?????? ??????? ???
.??????????
If you were starting an accounting practice, what would be some of your
operating plans?
How do these relate to your organizational strategies?
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 6
Q1: Actual Operations
Operating Plans
???? ????????
Actual Operations
????????? ????????
Actual operations are the actions taken
and the results achieved. ????????? ??????? ???
.?????????? ??????? ???????? ????????
The organization’s information system
measures the results of actual
operations. ?????? ???? ??????? ??????? ??????
.????????? ????????
Examples include number of units sold,
advertising expense, and the wage
expense for the period. ???? ??????? ??? ????
?? ???????? ??????????????? ??????? ????????
.????????? ?????? ???????
If you had an accounting practice, what would information would you
want to collect about the results of your actual operations? ???? ??? ?????
? ??? ?? ????????? ???? ???? ????? ?? ????? ??????? ????????????????? ????????
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 7
Q1: Monitoring and Motivating Performance
Actual Operations
????????? ????????
Organizational
Vision & Core
Competencies
??????? ????????? ??????????
??????????
Managers use the results of actual operations to
monitor performance and ensure that it is in line
with the organizational vision. ??????? ???????? ??????
.????????? ??????? ??????? ?????? ??????? ?? ??? ?????? ?? ?????? ??????????
Managers may find that the results of actual
operations make them re-think the organizational
vision or their view of the organization’s core
competencies. ???? ??? ???????? ?? ????? ???????? ??????? ???????
??????? ??????? ?? ?????? ????????? ?? ?????? ???????? ?????????
.?????????
If you had an accounting practice, can you think of an example of a measure of
actual operations and how you would use it to motivate performance? ???? ??? ?????
? ??? ????? ??????? ?? ???? ????? ???????? ??????? ???? ????????? ?????? ???????????????? ????????
Can you think of an example of a measure of actual operations that might make you
redefine your organizational vision or your view of your core competencies? ??? ??????
???????? ?? ???? ????? ???????? ??????? ???? ?? ????? ???? ????? ????? ????????? ?? ????? ???????? ??????????
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 8
Q2: Management Control Systems ?????? ?????? ?????????
• Belief Systems ?????? ??????????
– Vision, Mission, Core Values Statements ? ???? ????? ??????????? ?????????????????
• Boundary Systems ?????? ???????
– Code of Conduct, Procedure Manuals, Compliance Actions ???????
? ??????? ??????????? ???? ???????????????????
• Diagnostic Control Systems ?????? ?????? ??????????
– Measure, monitor, and motivate employees against preset goals ??????
????? ?????? ???????? ?? ????? ????? ??????
• Interactive Control Systems ?????? ?????? ??????????
– Recurring information and reports to evaluate performance and
direct actions ?????????? ????????? ???????? ?????? ?????? ?????????? ?????????
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 9
Q3: Financial, Managerial, and Cost Accounting
? ??????? ??????????? ???????????????????
Financial accounting prepares
reports most frequently used by
decision makers external to the
organization. ???? ???????? ??????? ?????????
??????? ???????? ?? ??? ????? ?????? ?????
.?????????
Managerial accounting prepares
reports most frequently used by
decision makers internal to the
organization. ????????? ???????? ????
????????? ?????? ???????? ?? ??? ???? ???????
.????????? ????????
Cost accounting includes both financial and nonfinancial
information and is used for both financial and managerial
accounting. ?????? ?????? ???????? ????????? ??????? ???? ??????? ????????
.????????? ??????? ??????????
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 10
Q3: Strategic Cost Management and the Balanced
Scorecard ?????? ??????? ????????????? ? ????? ?????? ?????????
• Strategic cost management is an approach to reducing
costs while strengthening the organization’s strategic
position. ?????? ??????? ???????????? ?? ??? ???? ???????? ?? ????? ???????
.???????????? ????????
• The balanced scorecard can be used to formalize strategic cost
management efforts by detailing financial and nonfinancial
benchmarks for all segments of the organization. ?????? ??????? ????? ???????
????????? ?????? ?????? ?????? ??? ?????? ???????????? ?????? ???????? ?? ???? ??????
.????????? ??????? ???? ??????? ????? ?????? ????????
• Examples of such benchmarks include: :???? ????? ??? ???????? ?? ????
• Personnel can reduce costs by completing all hiring within 20 days of
initial interview. 20 ????? ???????? ??? ???????? ?? ???? ??????? ???? ??????? ?? ?????
.????? ?? ???????? ????????
• Production can reduce costs and improve quality if Engineering can
reduce the number of processes in the production process. ???????? ???? ???
.????? ?? ???????? ?????? ?????? ??? ??????? ????? ?? ?? ???? ??? ???????? ?? ????? ????????
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 11
Q4: What Information is Relevant for Decision
Making? ??? ?? ????????? ??? ????? ???? ????????
• Information is relevant if: :?????????? ??? ??? ????
• Differs across the alternatives, and ? ????????? ??? ????????
• Is about the future. .??? ??? ?????????
• Relevant information can be quantitative or qualitative ???????
??? ???? ????????? ??? ????? ???? ?? ??????
• Information is irrelevant if: :?????????? ??? ??? ??? ????
• Does not vary with the option chosen or action taken ??? ????? ?? ???????
????? ?? ??????? ?? ??? ????? ??????
Irrelevant information is NOT useful in decision
making! !???????? ??? ????? ?? ??? ???????
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 12
Q4: Relevant Cash Flows ????????? ??????? ??? ??????
• Relevant cash flows are future cash flows that
differ across the alternatives. ????????? ??????? ??? ??????
• also ?????
called
incremental
cash flows
??????????
????????? ????????
.?????????
???????
??????????? ?????
?????????
??????????
?????? ???? ???
• also called avoidable cash flows ?????? ???? ???????? ??????? ???? ???? ???????
• Irrelevant cash flows are: :????????? ??????? ??? ???????? ???
• non-incremental and unavoidable cash flows ?????????? ??????? ????
?????????? ????? ?? ???? ???????
• do not vary among alternatives ??? ????? ??? ????????
• Must look at the cash flow relevance to the decision being
made ???? ?? ???? ??? ?????? ?????? ??? ????? ??????? ???? ??? ???????
• Electricity costs are relevant to the decision to open a business or
not ??????? ???????? ?? ??? ????? ????? ??? ??????? ???????? ?? ???
• Electricity costs are not relevant in the decision to lease or buy a
building for your business ??????? ???????? ???? ??? ??? ?? ???? ????? ???
????? ???? ??????
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 13
Q4: What Information is Relevant for Decision Making? ????
??? ????????? ??? ????? ???? ????????
You have a small computer repair company and are deciding whether to replace
your old copy machine or repair it. In the list of information below, identify which
data are relevant to this decision and which are irrelevant. ????? ???? ????? ??????????
? ??? ???????? ?????? ?? ????? ????????? ??????.???????? ????? ?? ??? ??? ???????? ??? ????? ??????? ?? ???????
.?????? ???? ?????? ????? ?? ??? ??? ?????????
• The purchase price of the copy machine was $1200.
• The repair costs are $320.
• The copy machine can make 20 copies per minute.
• If you repair it, the machine will use less toner than it does now.
• You make approximately 1000 copies per month.
• The repair won’t fix the broken stapler. .???????? ?? ???? ??????? ?????????
• The repair carries a one-year warranty.
• The copy machine was a gift from your spouse. ????? ??? ????? ???? ???
.??????
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 14
Q4: Relevance of Income Statement Information
• Income Statements include: :?????? ????? ??????
– Period costs ??????? ???????
– Product costs (recorded as cost of goods sold) ??????? ?????? (??????? ???????
)???????? ????????
• Many business decisions require the incremental cost to
produce a unit ?????? ?????? ?? ?????? ??????? ??????? ???????? ?????? ?????
• Cost per unit on the income statement includes both fixed
and variable costs ?????? ????? ?????? ?? ???? ????? ???????? ????????
???????????
• Including fixed costs does not represent the true incremental
cost of a unit ???? ???? ???????? ??????? ??????? ???????? ???????? ????? ???
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 15
Q5: Impact of Business Risk on Decision Making
• Business Risk is the possibility an event will occur and
interfere with the organization’s strategic goals ?????? ????????
??? ?????? ???? ??? ??????? ?? ??????? ???????????? ????????
Economic &
Financial
??????????? ?????????
Reputation
??????
People, Legal
& Health ????????
?????????? ???????
Political and
Social ??????????
?????????????
Weather ?????
Criminal and
Terrorist
????????? ???????????
Informational &
Operational
???????????? ???????????
Environment &
Man Made
??????? ? ??? ????????
• The existence of business risk can cloud management’s
decision making process ????? ????? ??????? ???? ?? ???? ??????
?????? ????? ???????
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 16
Q6: Uncertainties, Biases, and Decision Quality
? ????? ????????? ?????????????? ???????
• Uncertainties are issues and information about which
there is doubt. .???? ???? ??? ?????? ??? ????? ???????? ?? ?? ?????
• Biases are preconceived notions adopted without careful
thought. .????????? ?? ?????? ????? ?????? ??? ????? ?????
• Decision quality refers to the characteristics of a decision
that affect the likelihood of achieving a positive outcome.
????? ???? ?????? ??? ????? ?????? ???? ???? ??? ?????? ????? ??????
.?????????
• Both uncertainty and bias reduce decision quality.
.??? ?? ??? ?????? ??????? ???? ?? ???? ???????
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 17
Q6: Uncertainties and Biases in Information
???? ?????? ??????? ?? ??????????
• Uncertainties come from many sources and can be
exogenous or endogenous. ?????? ???? ??? ?????? ?? ????? ??????
.?????? ?? ???? ?????? ?? ?????? ???????
• The future is always uncertain. .????????? ?? ????? ??? ?????
• Managers may be uncertain that the right information was captured
in a report. ???? ???? ???????? ??? ??????? ?? ?? ????????? ??????? ?? ?? ???????? ???
.?????????
• Biases can come from many sources. .?????? ?? ???? ???????? ?? ????? ??????
• The decision maker may be biased towards or against a particular
alternative (predisposition bias) ???? ???? ???? ?????? ?????? ?? ???? ???? ?? ????
)?(???? ??????????
• The methods used to collect information could have introduced bias
(information bias) ???? ???? ???????? ????????? ???? ????????? ?? ????? ????? (?????
)???????????
• The decision maker may exercise an error in judgment or processing
information (cognitive bias) ??? ????? ???? ?????? ??? ?? ????? ?? ?????? ??????????
)? (?????? ????????Chapter 1: The Role of Accounting Information in Management Decision Making
© John Wiley & Sons, 2011
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 18
Q6: Motorola’s Iridium Project
• How did uncertainties and bias effect Motorola’s
decision making process? ???? ???? ????? ??? ???????
???????? ??? ????? ??? ?????? ?? ??????????
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 19
Q6: Uncertainties, Biases, and Decision Quality
Lori loves to sew and has always made her own clothes. People often tell her
that she is the best-dressed person they’ve ever met. She can design and sew a
lovely outfit in under 2 days. She is considering opening a store that could sell
her home-made fashions. Then she could combine her work with her hobby.
Can you identify some of the uncertainties Lori faces? Can you think of any way
she can reduce some of these uncertainties?
.? ????? ?? ?????? ????? ????? ???? ??? ?????? ????????.????? ??? ?????? ?????? ???? ??????? ???????
? ??? ???? ?? ??? ???? ???? ?? ???? ????????.? ?????2 ?????? ???? ???? ????? ?????? ???? ????? ?? ??? ???
.? ?? ???? ???? ?? ???? ??? ????? ?? ????????.????????? ??????
?????? ????? ??? ???? ??? ?????? ????? ?? ????? ??????? ??? ????? ?????? ?? ???? ?? ??? ??? ????????
Can you identify any possible personal biases that Lori may have? How
could these affect her decision making process? ??? ????? ????? ?? ???????
?????? ?????? ?? ???? ????? ??? ???? ?? ???? ??? ??? ????? ??? ????????
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 20
Q7: Characteristics of Higher-Quality Decisions
?????? ?????? ?????? ????????
Higher quality decisions come from a higher quality decision
making process. Such a process is thorough, unbiased, focused,
strategic, creative, and visionary. ????? ?????? ?????? ??????? ?? ????? ????
?? ????????????? ???????? ??? ????????? ??? ??? ??????? ??????.??????? ??? ?????? ????????
.? ?????????????????????
This process requires reports that are relevant,
understandable, and available. ?????? ??? ????????
.??????? ??? ??? ??????? ????????
These reports must contain information that is more
certain, complete, relevant, timely and valuable. ??????
??? ????? ??? ???????? ??? ??????? ???? ????? ???????? ??????? ????
.?????? ??????? ??????
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 21
Q8: Components of Ethical Decision Making
??????? ??? ?????? ?????????
Identify ethical
problems as
they arise
?????? ????????
?????????? ??? ???????
© John Wiley & Sons, 2011
Consider the
well being of
others and
society
?????? ?? ???????
???????? ?????????
Clarify and
apply ethical
values
?????? ?????? ??????
???????????
Continuously
improve your
personal ethics
?????? ?????????
???????? ?????????
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 22
Q8: The IMA’s Code of Ethics ?????? ????? ?????? ???????
• The Institute of Management Accountants (IMA) has a Code of Ethics that
states that IMA members have a responsibility to: ????? ???? ????????? ??????????
:?????? ?????????? ??? ??? ?? ??????? ??????? ????????
• maintain an appropriate level of professional competence and
perform their professional duties in accordance with laws,
regulations, and standards; ???????? ??? ????? ????? ?? ??????? ??????? ??????
????????? ??????? ???? ???????? ???????? ???????????
• refrain from disclosing confidential information (unless legally
obligated), or using (or even appearing to use) confidential
information to illegal advantage; ????????? ?? ??????? ?? ????????? ???????
? ?? ??????? (?? ??? ??????) ????????? ?????? ??? ???? ?????)?(?? ?? ??? ????? ????????
??????????
• avoid actual and apparent conflicts of interest; and ?????? ??????
???????? ?????? ???????? ??
• communicate information fairly and objectively, and disclose all
relevant information to decision makers. ??????? ????????? ???? ?????
.? ?????? ?? ???? ????????? ??? ????? ?????? ?????????????????
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 23
Q8: Ethical Decision Making ?????? ???????? ??????????
Suppose you work for the Lee K. Fawcett Plumbing Company as Mr. Fawcett’s
administrative assistant. Recently Mr. Fawcett asked you to type some financial
statements from his hand-written notes so that he can take them to the bank as part
of a loan application.
This exercise seems odd to you because the company’s CPA recently delivered the
monthly financial statements that she prepares.
While typing the financial statements you notice that the building the company rents is
listed as an asset. Also, you write checks each month for the monthly payments on
two car loans, and these are not listed as liabilities.
Do you have an ethical dilemma? Discuss your approach to handling this situation.
? ??? ??? ??? ????? ????? ????? ??????.? ???? ????? ??????? ?????? ????? ????? ??????.??????? ??? ???? ???
.???? ???????? ??????? ?? ??????? ???????? ??? ???? ??? ????? ?? ????? ??? ????? ???? ?? ??? ??????
.????? ??? ??????? ????? ??????? ?? ??? ?????? ?? ???? ????? ???????? ??????? ??????? ???? ??????
? ???? ??????? ?? ?????? ?????.? ????? ?? ?????? ???? ??? ?????? ?? ??? ?????? ???? ???????????? ????? ???????? ????????
.? ???? ???? ????? ??? ???? ????????????? ????????? ??????? ??? ????? ??????
.??? ???? ????? ???????? ???? ???? ??????? ?? ??? ??????
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 24
Appendix: Steps for Better Thinking ?????? ??????? ???????
Steps for Better
Thinking is a process
to help address
open-ended
questions.
?????? ??????? ?????? ???
?????? ???????? ?? ???????
.???????? ?????????
Open-ended questions
have no single correct
solution; managers
must seek the best
solution.
???????? ???????? ??? ????? ???
????? ????? ??? ??? ?????????
.?????? ?? ???? ???????
Source: (c) 2002. C. L. Lynch, S. K. Wolcott, and G. E. Huber, “Steps for Better Thinking:
A Developmental
Problem-Solving
Process”Decision
)August 5,
2002).
Chapter 1: The Role of Accounting
Information
in Management
Making
© John Wiley & Sons, 2011
Eldenburg & Wolcott’s Cost Management, 1e
Slide # 25
Appendix: Steps for Better Thinking – Foundation (Knowing)
)? ????? (??????- ?????? ????? ?????
• Foundation level skills include a knowledge of the
terminology and basic concepts that are relevant to the
decision at hand. ?????? ???????? ??? ????? ??????? ????? ??????????
.?????????? ???????? ??? ????? ??????? ?? ?????? ?????
• An individual with Foundation level skills can: ????? ????? ?? ???????? ????
:?????? ????????
• perform calculations to arrive at correct answer ?????? ???????? ?????????
??????? ??? ??????? ????????
• define terms in his/her own words / ?????? ????????? ?? ???
???? ??????? ???????
• describe a concept ???? ??????
• list the elements contained in a concept or process ???????
???????? ??????? ?? ????? ?? ??????
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 26
Appendix: Steps for Better Thinking – Identifying
? ??????- ?????? ??????? ???????
• Step 1 skills include the ability to identify relevant
information and uncertainties. ? ?????? ????1 ?????? ?????? ???????
.?????? ????????? ??????? ??? ??????
• An individual with Step 1 skills can:
• create a list of issues related to the decision ?????? ????? ???
???????? ???????? ????????
• sort information that is relevant ???? ????????? ??? ??????
• identify the reasons for the underlying uncertainties
?????? ????? ?????? ????????
• perform research to obtain input into the decision ???????
??????? ?????? ??? ?????? ?? ???????
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 27
Appendix: Steps for Better Thinking – Exploring
? ????????- ?????? ??????? ???????
• Step 2 skills include the ability to explore interpretations of the
information and connections between alternative solutions
approaches. ?????? ???????? ?????? ??? ??????? ??????? ????????? ???????? ??? ????
.??????? ????????
• An individual with Step 2 skills can:
• recognize and control for his/her own biases ??????????
???????? ?? ???????? ?????? ???
• articulate assumptions and reasoning associated with
alternative points of view ???????????? ??????? ??????? ????????
?????? ??? ??????
• organize information in meaningful ways to encompass
problem complexities ??????? ????????? ???? ????? ????? ????????
?????????
• compare and contrast different approaches to a
problem’s solutions ??????? ?????? ????? ???????? ????? ????????
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 28
Appendix: Steps for Better Thinking – Prioritizing
? ????? ??????????- ?????? ??????? ???????
• Step 3 skills include the ability to prioritize alternatives, come to a
decision, and implement the decision. ?????? ???????? ?????? ??? ????? ?????????
.? ?????? ????????? ?????? ???????????????
• An individual with Step 3 skills can:
• develop guidelines for prioritizing alternatives ???? ??????
???????? ?????? ??????? ????????
• prioritize alternatives after objective analysis ???????
????????? ??????? ??? ??????? ?????????
• communicate findings in a manner appropriate to the
audience ??????? ??????? ?????? ?????? ????????
• describe how the solution or decision might change if
priorities change ???? ??? ???? ?? ????? ???? ?? ?????? ??? ??????
???????????
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 29
Appendix: Steps for Better Thinking – Envisioning
? ?????- ?????? ??????? ???????
• Step 4 skills include the ability to monitor the decision and
innovate new strategies to modify the decision when
circumstances change. ?????? ???????? ?????? ??? ??? ?????? ????????
.???????????? ????? ?????? ?????? ????? ????? ???????
• An individual with Step 4 skills can:
• explain the limitations of the decision made ???? ???????
????????? ??? ?????? ???????
• establish a plan for monitoring the performance of the
decision ???? ??? ???? ???? ???????
• explain how conditions may change in the future and
how this may change the decision ????? ??? ???? ?? ??????
??????? ?? ???????? ???? ???? ???? ????? ???????
© John Wiley & Sons, 2011
Chapter 1: The Role of Accounting Information in Management Decision Making
Eldenburg & Wolcott’s Cost Management, 2e
Slide # 30
Cost Management
Measuring, Monitoring, and Motivating Performance
Chapter 2
The Cost Function
?????? ????????
Alawi Alshakhouri
140069238
© John Wiley & Sons, 2011
Slide # 1
Chapter 2: The Cost Function ?????? ????????
Learning objectives
•
•
•
•
•
•
Q1: What are the different ways to describe cost behavior? ??? ?? ??????
????????? ???? ???? ?????????
Q2: What process is used to estimate future costs? ??? ?? ??????? ??????????
??????? ???????? ????????????
Q3: How are engineered estimates, account analysis, and two-point
methods used to estimate cost functions? ???? ??? ????? ????????? ???????
????????? ???? ?????? ????????? ?????? ????? ?????????
Q4: How does a scatter plot assist with categorizing a cost? ???? ????? ?????
????????? ?? ????? ?????????
Q5: How is regression analysis used to estimate a cost function? ?????
??????? ????? ???????? ?????? ????? ?????????
Q6: How are cost estimates used in decision making? ???? ??? ????????
???????? ??????? ?? ??? ????????
©