decision making
what is decision making based on?
contribution
decision making
which is better - a lower or higher contribution?
HIGHER
(more money to contribute to paying fixed expenses)
decision making
what must you consider when choosing to buy in?
- cost of product from supplier
- cost of shipping
decision making
what are some non-financial factors for buying in?
- quality of product
- is supplier reliable
- will employees be made redundant?
decision making
what is a scarce resource?
may not be enough resources needed to produce everything that it wants or needs to
decision making
why might raw materials be limited?
- mining in short supply
- weather affecting crop growth
- transport problems
decision making
why might labour be limited?
- sickness
- holidays
- lack of trained staff
decision making
why might machine hours be limited?
- limited number of machines
- building or buying a new factory
decision making
what is the formula for contribution per unit, of scarce resources?
contribution per unit / number of units of scarce resource per unit
decision making
what is the formula for number of units to achieve a target profit?
(fixed costs + target profits) / contribution per unit
decision making
what does C and S stand for, in the C/S ratio?
C = contribution
S = sales
decision making
what is the formula for the C/S ratio?
total contribution / total sales revenue
decision making
what is the formula for the breakeven point, using the C/S ratio?
total fixed costs / C/S ratio
decision making
what is the formula to calculate the number of units needed to achieve a target profit, using the C/S ratio?
(total fixed costs + target profit) / C/S ratio
decision making
what are non-financial factors to consider when closing a department?
- what will happen to the space where the department used to be?
- does sales in one department result in sales in another?
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financial ratios, accouning concepts, and inventory valuation29
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general accounting54
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incomplete records23
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accounting for limited companies37
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partnership accounting36
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trial balance and errors27
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cash book & bank reconciliation statements12
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books of prime entry & control accounts29
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business organisations & sources of finance30
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limited companies24
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budgeting and variance17
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marginal costing19
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standard costing & variance analysis36
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capital investment appraisal13
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formal 414
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costing methods27
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ethics35
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statement of cashflows17
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decision making15
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interpretation of accounting information23
