tailieunhanh - Ebook Managerial accounting for dummies: Part 2

(BQ) Part 2 book "Managerial accounting for dummies" has contents: Responsibility accounting, variance analysis - to tell the truth; the balanced scorecard - reviewing your business’s report card; spreading the wealth with transfer prices; spreading the wealth with transfer prices;.and other contents. | Part III Using Costing Techniques for Decision-Making T In this part . . . he costing techniques from Part II come into play in this part, where you see how to use them in order to make management decisions. You first need to understand contribution margin because it provides key insights into how specific transactions affect sales. Contribution margin helps you compute how much you need in sales to break even or achieve a target level of profit. I also explain how to decide whether to invest in longterm assets, using time value of money techniques. I discuss using contribution margin techniques when you make more than one product; this analysis helps you to decide how much of each product you should make. Next, I explore setting prices and describe transfer pricing techniques that encourage different divisions of a company to work together. Chapter 9 Straight to the Bottom Line: Examining Contribution Margin In This Chapter ▶ Figuring contribution margin ▶ Meeting income goals with cost-volume-profit analysis ▶ Analyzing your break-even point and target profit ▶ Finding the margin of safety ▶ Exploring operating leverage C onsider the following exchange: “I’ve got a million-dollar idea. Everybody wants a Rolls Royce, but no one wants to pay for a Rolls Royce, right?” “Yeah. They’re way too expensive.” “Okay, here’s my idea: I’m going to sell Rolls Royces but at a price that people can afford: just $.” “But making a Rolls Royce costs a lot of money. How will you ever earn a profit?” “Who cares? At these prices, I can sell so many cars, I’ll make it up in volume.” As this discussion shows, when you have to make a business decision about what to sell, how much of it to sell, or how much to charge, you first need to understand how your decision will affect net income, which is your profit. Suppose you sell one Rolls Royce for $. How does that sale affect your net income? Now .