#7 Relevant Costs - Managerial Accounting Decisions & Scenarios
Make better business decisions by learning relevant costs from a practicing CPA, CGMA, CPI, with B.S.Tax.
2 Managerial Accounting Overview
FREE PREVIEWPDF - 10 Managerial Accounting Introduction
FREE PREVIEW10 Managerial Accounting Introduction
FREE PREVIEWPDF - 20 Cost Classifications
FREE PREVIEW20 Cost Classifications
FREE PREVIEWPDF - 30 Product Costs & Period Costs
FREE PREVIEW30 Product Costs & Period Costs
PDF - 40 Prime Costs & Conversion Costs
40 Prime Costs & Conversion Costs
PDF - 50 Manufacturer's Balance Sheet
50 Manufacturer's Balance Sheet
PDF - 60 Manufacturer's Income Statement
60 Manufacturer's Income Statement
PDF - 70 Manufacturing Activities Flow
70 Manufacturing Activities Flow
PDF - 80 Just In Time (JIT) Manufacturing
80 Just In Time (JIT) Manufacturing
Multiple Choice Question 1
Accounting Comic Break
Discussion Question 1
3 Make or Buy Decision
FREE PREVIEWPDF - 252 Make or Buy Decision
252 Make or Buy Decision
Excel Worksheet Download
Worksheet - 252 Make or Buy
Multiple Choice Question 2
Discussion Question 2
Accounting Comic Break
4 Scrap or Rework & Sell or Process Further Decisions
FREE PREVIEWPDF - 262 Scrap or Rework
262 Scrap or Rework
Download Excel Worksheet
Worksheet - 262 Scrap or Rework
Download Excel Worksheet
Worksheet - 264 Scrap or Rework
PDF - 272 Sell or Process Further
272 Sell or Process Further
Download Excel Worksheet
Worksheet - 272 Sell or Process Further
Multiple Choice Question 3
Discussion Question 3
Accounting Comic Break
5 Sales Mix Decision
FREE PREVIEWPDF - 280 Product Mix Decision
280 Product Mix Decision
Download Excel Worksheet
Worksheet - 282 Sales Mix
Download Excel Worksheet
Worksheet - 284 Sales Mix
Multiple Choice Question 4
Discussion Question 4
Accounting Comic Break
6 Segment Elimination or Not Decision
FREE PREVIEWPDF - 300 Department Operating at a loss Close or Not
300 Department Operating at a loss Close or Not
Download Excel Worksheet
Worksheet - 302 Segment Elimination
Multiple Choice Question 5
Discussion Question 5
Accounting Comic Break
Apply relevant cost methods to common managerial decisions.
Managers often need to make decisions that are not routine, not part of the normal day to day process, and that can have a long-term effect on the organization. Individuals often need to make similar decisions and can apply similar tools when making decisions of a large dollar amount that can affect multiple years.
Although the specifics of each decision differ, the concept of relevant costs helps us put together a process for gathering and analyzing data, picking up the information that matters, and removing all the excess data that does not matter to our decision. Understanding relevant costs will reduce the likelihood of making incorrect decisions based on a sunk cost effect or not taking into account opportunity costs.
We will analyze the decision-making process of buying a new piece of equipment or keeping an older piece of equipment, a question often relevant to individuals as well as businesses. The decision of whether to buy new equipment is subject to the sunk fallacy effect, and we will discuss why this is.
This course will investigate the managerial accounting question of a “special offer.” The “special offer” question often takes the form of a one time offer to purchase from us at a reduced price. It is often the case that a business will benefit from accepting a special offer and the concept of relevant costs will help us to see why. For example, a hotel may have an incentive to take a “special offer” to sleep in a room for a night at a price far below the standard rate and even below cost as it is generally calculated. We will discuss why, and how this concept applies to business in general.
We will apply the concepts of relevant costs to a “make or buy” type decision. Should we make a component internally or purchases it from an outside vendor?
The course will discuss the managerial accounting question of whether we should process a product further. In other words, should we sell a product at one point of production or should we process the product further and sell it for a higher price? We will also discuss a similar question related to defective inventory and whether we should scrap the inventory now or rework it.
We will discuss the question of what sales mix to use. In other words, if we have multiple products which ones should we produce and how much should we produce?
The course will discuss the question of eliminating a segment or department of a company. For example, if a departmental income statement shows a loss, should the department be eliminated and how can we apply relevant costs to make the best decision?
We will discuss how to use cost data to set a sales price using a cost method and variable cost method.
Instructor
Through working with students from many different schools, Mr. Steele has learned best practices for helping people understand accounting fast. Learning new skills and finding the best way to share knowledge with people who can benefit from it is a passion of his.
Mr. Steele has experience working as a practicing Certified Public Accountant (CPA), an accounting and business instructor, and curriculum developer. He has enjoyed putting together quality tools to improve learning and has been teaching, making instructional resources, and building curriculum since 2009. He has been a practicing CPA since 2005. Mr. Steele is a practicing CPA, has a Certified Post-Secondary Instructor (CPI) credential, a Master of Science in taxation from Golden Gate University, a Bachelor’s Degree in Business Economics with an emphasis in accounting from The University of California Santa Barbara, and a Global Management Accounting Designation (CGMA) from The American Institute of CPA (AICPA).
Mr. Steele has also authored five books that can be found on Amazon or in audiobook format on Audible. He has developed bestselling courses in accounting topics including financial accounting and QuickBooks accounting software.
In addition to working as an accountant, teaching, and developing courses Mr. Steele has helped create an accounting website at accountinginstruction, a YouTube channel called Accounting Instruction, Help, and How Too, and has developed supplemental resources including a Facebook Page, Twitter Page, and Podcasts that can be found on I-tunes, Stitcher, or Soundcloud. Mr. Steele’s teaching philosophy is to make content applicable, understandable, and accessible.
Adult learners are looking for application when they learn new skills. In other words, learners want to be able to apply skills in the real world to help their lives. Mr. Steele’s formal accounting education, practical work experience, and substantial teaching experience allow him to create a curriculum that combines traditional accounting education with practical knowledge and application. He accomplishes the goals of making accounting useful and applicable by combining theory with real-world software like Excel and QuickBooks.
Many courses teach QuickBooks data entry or Excel functions but are not providing the real value learners want. Real value is a result of learning technical skills like applications, in conjunction with specific goals, like accounting goals, including being able to interpret the performance of a business.
Mr. Steele makes knowledge understandable by breaking down complex concepts into smaller units with specific objectives and using step by step learning processes to understand each unit. Many accounting textbooks cram way too much information into a course, making it impossible to understand any unit fully. By breaking the content down into digestible chunks, we can move forward much faster.
Mr. Steele also makes use of color association in both presentations and Excel worksheets, a learning tool often overlooked in the accounting field, but one that can vastly improve the speed and comprehension of learning accounting concepts.
The material is also made understandable through the application of concepts learned. Courses will typically demonstrate the accounting concepts and then provide an Excel worksheet or practice problems to work through the concepts covered. The practice problems will be accompanied by an instructional video to work through the problem in step by step format. Excel worksheets will be preformatted, usually including an answer tab that shows the completed problem, and a practice tab where learners can complete the problem along with a step by step presentation video.
Mr. Steele makes learning accounting accessible by making use of technology and partnering with teaching platforms that have a vision of spreading knowledge.