A continuation of Managerial Accounting I, this course covers additional managerial accounting topics for decision-making including relevant costs, balanced scorecard, value added and non-value added costs, allocations of indirect costs using direct, step, and reciprocal methods, allocating joint cost, main and by-product costing, determination of Economic Order Quantity (EOQ), accounting for spoilage, transfer pricing, performance measurement, and capital budgeting techniques.
- Differentiate between relevant and irrelevant costs/revenues in choosing among alternatives such ‘make or buy’, rent or lease, etc., and understand the importance of including not only quantitative but also qualitative factors in the decision-making process.
- Distinguish short-run from long-run pricing decisions including target-costing approach.
- Evaluate business performance using the four perspective of balanced scorecard.
- Apply the concept of ‘cost pools’ and bases for allocation using the direct allocation, step-down allocation, and reciprocal methods, as well as accounting for joint costs, by-product costs, spoilage, rework, and scrap.
- Apply economic order quantity theory as a tool for the management and inventory control of materials.
- Use capital budgeting techniques such as discounted cash flows, net present value, internal rate of return, payback method, accrual accounting rate-of-return return, and sensitivity analysis to evaluate long-term investment alternatives.
- Apply transfer pricing concepts in setting appropriate domestic and international transfer prices.
- Analyze return on investment using the DuPont method, residual income, and economic value methods to evaluate performance as an integral part of management control system.
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