Cost Control to Improve Profit
EMLV S5 Jill Tynan Wantz 2009/2010
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Cost Control to Improve Profit • Presentation of the course
An intermediate course about the best use of resources in the firm. The focus is on how cost accounting and control helps managers make better decisions to increase performance and profits. Figures that you will be working with nomatter what businessyour in.
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Cost Control to Improve Profit
• Objectives
Understand costs, how they evolve and their impact on the economic performance. Show how cost control enables managers to make knowledgeable decisions and judgments in their pursuit of maximum profit. Be able to produce reliable figures and information that will contribute to decision making.
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Cost Control toImprove Profit
• Method: Instruction on the various themes will be followed by review questions and problems in class. Exercices may be given to do for the following class as well as a chapter or document to be read.
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Cost Control to Improve Profit
• BIBLIOGRAPHY :
Cost Accounting, A managerial emphasis.
C. Horngren, S. Datar, G. Foster, M. Rajan, C. Ittner. 13th edition, PearsonInternational Edition
Management and Cost accounting, Colin Drury,
Editions Thomson
Introduction to Management Accounting
Werner, K.H. Jones, Publisher: Prentice Hall
M.L.
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Cost Control to Improve Profit
• Assessements Mid-term test : 40 % (30 Nov. 2009)
there will not be a second chance to repeat the mid-term test ! mid-
Final examination : 60 % (writtenexamination)
Type of questions:
» theory and » calculations
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Cost Control to Improve Profit
• Contents
Introduction Cost terms and purposes Cost-volume-profit Analysis Break-even point Job costing / process costing Absorption costing Mid-term test – 30 nov 2009 Pricing decisions Cost management Inventory management Decision making and relevant information
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Cost Control toImprove Profit
Introduction
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Cost Control to Improve Profit
Introduction Performance
Profit Economic growth Gain market shares and reputation Sustainable development Ecological respect Quality of employees, qualifications, motivation Fairness to clients, suppliers, Social responsibility – employees
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Cost Control to Improve Profit
Introduction
• COST •CONTROL • PROFIT
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Cost Control to Improve Profit
PROFIT
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Cost Control to Improve Profit
Introduction
• PROFIT Measure of Performance
What happens to profit ? What financial document shows the amount of Profit or loss at the end of the year ? Other words for PROFIT ? How is it calculated ?
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Cost Control to Improve Profit
Introduction• PROFIT :
How is it calculated ?
Sales – Cost or Revenue – expenses or
(Unit Selling price x number of goods) – cost
€
Visualise : Profit
Sales
COST
Loss
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Volume
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Cost Control to Improve Profit
• PROFIT
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Cost Control to Improve Profit
• PROFIT
Income statement
(multiple step presentation)
Sales (C.A.) – Cost of goods = Grossprofit (or gross margin) – Operating expenses = Operating profit (or operating margin) – Interest & Tax = Net profit (or Net Income, Net earnings)
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Cost Control to Improve Profit
Introduction
• COST
+ expenses + expenses + expenses = COST
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Cost Control to Improve Profit
Introduction
• COST
A company records expenses and investments Expenses –figures in the …. Investment – figures in the …. Tangible assets
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The Balance sheet
ASSETS N I – CURRENT ASSETS Il – FIXED ASSETS: N-1 I – CURRENT LIABILITIES II – LONG TERM LIABILITIES III – STOCKHOLDERS’ EQUITY TOTAL TOTAL LIABILITIES & Stockholder’s Equity N N-1
Investments
Income Statement (single step)
Caldera Corporation (thousands of dollars)
REVENUES (Produits) Net…