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12 Cards in this Set
- Front
- Back
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Management Information Systems Provide...
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1. Accurate and timely production
--Cost information --All phases of business 2. Data in proper form needed 3. Accounting information that allow accurate and quick development of business financial documents 4. Efficiently and effectively monitoring and controlling business production costs |
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Cost
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Acquire goods and services
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opportunity cost
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Return that is given up by not selecting highest valued alternative.
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Implicit Cost
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Do not include cash payments
Included in calculation of total cost of product |
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Cost Concepts
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-Controllable and Uncontrollable Costs
-Incremental -Avoidable -Sunk Costs |
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Cost concept formula
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Total Cost = Total Fixed Cost + Total Variable Cost
Total Fixed Cost (TFC) Total Variable Cost (TVC) Total Cost (TC) |
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Contribution concept;
Selling Price/Unit |
Selling Price/Unit = Total Cost/Unit + Profit/Unit
Selling Price/Unit – Variable Cost/Unit = Fixed Cost/Unit + Profit/Unit |
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Contribution concept
Total Cost / Unit |
Total Cost/Unit = Variable Cost/Unit + Fixed Cost/Unit
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Contribution
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Contribution = Selling Price/Unit minus Variable Cost/Unit
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Shut Down point Long Run
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All Costs Covered
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Shut down point short term
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Firm with idle capacity can take job where price does not cover all total cost
Contribution is positive (P- AVC > 0). Contribution is negative (P-AVC < 0) firm is better off to shut down. |
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Break Even analysis
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helps managers find combination of costs, output, and selling price that permits firm to break-even, no profits and losses
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