Join Jim Stice for an in-depth discussion in this video Making decisions, part of Accounting Foundations: Managerial Accounting.
- Now we need to make some decisions,…and to do that, we need to calculate the overhead cost…associated with each flavor of ice cream.…Let's illustrate this procedure by doing the calculations…for Gingerbread Cheesecake Supreme, as shown here.…You can see that a little arithmetic…allows up to compute the overhead cost…assigned to Gingerbread Cheesecake Supreme.…We can do a similar computation…for each of the ice cream flavors, as shown.…These data reveal a key insight…that can arise from an ABC analysis.…
The amount of overhead cost associated with production…is not necessarily proportional to the level…of some simple measure of activity,…such as direct labor hours or, in this case,…the number of gallons of ice cream produced.…For example, more gallons of Vanilla, 500,000,…are produced than any other flavor.…And yet the amount of manufacturing overhead cost…created by the production of Vanilla is just $285,500.…That's substantially less than the $374,300 in overhead…associated with Gingerbread Cheesecake Supreme.…
Released
9/8/2015Want to hear more from Jim and Kay? Learn about all three types of accounting—financial, managerial, and income tax—in their Accounting Fundamentals course.
- Planning, controlling, and evaluating costs
- Controlling product flow costs
- Performing CVP analysis
- Understanding cost flows in different industries
- Understanding standard product costing and variances
- Understanding activity-based costing
- Budgeting
- Capital budgeting
Skill Level Intermediate
Duration
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with Jim Stice1h 27m Intermediate
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Introduction
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Welcome1m 56s
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1. Purpose of Managerial Accounting
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Planning3m 37s
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Controlling and evaluating2m 46s
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2. Costs and Cost Behaviors
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Stuck in the Beijing airport2m 49s
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Types of product costs4m 19s
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3. CVP Analysis
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Opening a Thai restaurant2m 36s
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Contribution margin3m 56s
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The CVP equation2m 5s
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The break-even point3m 37s
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Sensitivity analysis4m 56s
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Sales mix3m 54s
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4. Cost Flows
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Los Hermanos1m 53s
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Overview1m 27s
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Cost flows in service firms3m 32s
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5. Standard Costing
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The house remodel1m 43s
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6. Activity-Based Costing
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Ice cream2m 57s
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Analyzing overhead3m 6s
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Identifying cost drivers2m 54s
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Assigning overhead2m 43s
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Making decisions3m 7s
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7. Budgeting
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Startup and an old company1m 59s
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The purpose of budgeting3m 9s
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Having a cash budget2m 52s
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8. Capital Budgeting
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The billion dollar machine1m 42s
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Discounting cash flows5m 54s
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The payback method3m 58s
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Conclusion
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Wrap up1m 43s
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Video: Making decisions