Day: February 19, 2021

ANALYSING FIXED AND VARIABLE COSTS Two important quantitative methods the management accountant can use to analyse fixed and variable cost elements from total cost data are the high-low and regression methods.               The high-low method You will have encountered the Read More …

TRADITIONAL BUDGETARY SYSTEMS A budget is a quantified plan of action for a forthcoming accounting period. A budget can be set from the top down (imposed budget) or from the bottom up (participatory budget). Budget preparation You will have covered Read More …

OBJECTIVES Corporate objectives concern the firm as a whole. Unit objectives are specific to individual units, divisions or functions of an organisation. Corporate objectives are set as part of the corporate planning process which is concerned with the selection of Read More …

RISK AND UNCERTAINTY An example of a risky situation is one in which we can say that there is a 70% probability that returns from a project will be in excess of RWF100 million but a 30% probability that returns Read More …

THE PRINCIPLES OF THE SIMPLEX METHOD The simplex method is a method of solving linear programming problems with two or more decision variables. The formulation of the problem using the simplex method is similar to that required when the graphical Read More …

THE GRAPHICAL METHOD The graphical method of linear programming is used for problems involving two products. Formulating the problem Let us suppose that WX manufactures two products, A and B. Both products pass through two production departments, mixing and shaping. Read More …

LIMITING FACTORS A scarce resource is a resource of which there is a limited supply. Once a scarce resource affects the ability of an organisation to earn profits, a scarce resource becomes known as a limiting factor. A limiting factor Read More …

THEORY OF CONSTRAINTS Throughput accounting is a product management system which aims to maximise throughput, and therefore cash generation from sales, rather than profit. A just in time (JIT) environment is operated, with buffer inventory kept only when there is Read More …

COSTING SYSTEMS AND MANUFACTURING PHILOSOPHY Costing systems have evolved to reflect a manufacturing philosophy that is based on the need to achieve competitive advantage. Flexibility and the ability to respond quickly to customer demands are vital. Product life cycles are Read More …

WHAT ARE LIFE CYCLE COSTS?   Life cycle costing tracks and accumulates costs and revenues attributable to each product over the entire product life cycle. A product’s life cycle costs are incurred from its design stage through development to market Read More …