Controlling 2
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Flashcards
Manager
Decision-making Authority
Controller responsible for Transparency
- Planning, Auditing and controlling
- Preparation of controller´s instruments
Effectiveness
- Choice of company site
- Choice of technology used
- Make-or-Buy decision
Efficiency
- Guarantee quality
- Ensuring appointments and dates
- Searching for continuous improvement
Information Instrument
- Cost type accounting: reasons for the costs
- Cost center accounting: in which sector costs
- Unit costing: will we be competitive
- Operating profit statement: produced profit or losses
Cost accounting system
- Correct allocation of costs to cost types
- Appropriate and orderly publication of cost
- Mainly oriented to the past and seldom future-oriented
System...
...has to be?
...should avoid?
...has to be:
- updated
- future-orientated
- certain
- flexible
...should avoid:
- Lack of approaches for activity-based costing
- Lack of market references
- Insufficient future-orientation
Management has to look into the amount of costs for...
- Technical administration
- Business administration
- Logistical processes
Cost Centers are...
- Purchasing
- Manufacturing
- Production-logistics
- Marketing
- Sales
Differences between history and today?
Traditional
Bottom-up-approach: how high are the costs, calculation on well known principles?
Modern
Top-down-approach: how high are the allowed costs, calculation by new and innovative principles?
→ Modern cost accounting is very long-term oriented
Crucial costs?
Crucial costs are decision-relevant costs which can be changed or influenced by a management decision.
Example:
If you want to produce a new product and you have enough capacity, only variable (“additional”) costs have to be considered; fixed costs caused by the production line won’t change by the decision to produce a new product. In this situation you are not forced to invest in new capacity!
Cost pools...
- Direct and variable costs
- Fixed costs of the company´s products
- Fixed costs of the company´s divisions
- Fixed costs of the whole company
Cost accounting?
A decline in the sales volume → rise of the costs per unit due to constant fix costs
Costs...
- Direct costs: material and labor
- Variable overhead costs: costs of maintenance
- Product fixed costs: product-specific machines
- Fixed costs of product family: assembly line for a product
- Fixed costs of division: building costs
- Fixed costs of company: head quarter of the company
Multi-step Contribution Accounting
The costs are allocated to costs pools; there is never a proportionalization of fixed costs
