MGMT 640 Financial Decisions Making for Managers (2162)
Please answer a minimum of 100 words per question!
Proper citations , APA format 6th edition, at least 2 References per question:
MGMT 640: Session IX
Jiambalvo: Chapter 4
COST-VOLUME-PROFIT ANALYSIS
Discussion # 9
Have you ever walked into a restaurant during lunch in downtown and found it almost empty? Or Flown on a flight with so many empty seats you could sleep horizontally on the two seats next to you without anyone waking you up? Or visited a miniature golf course in the summer resort community during some time of the season and you were the only one there?
1. Why does the restaurant even bother to stay open, because it might seem that the revenue from the few customers could not possibly cover the cost of running the restaurant? Why do you think the restaurant still open even though it's not covering all its costs?
2. In making the decision whether to open for lunch, what kind of costs must the restaurant consider in the decision making and why?
MGMT 640: Session III
Jiambalvo: Chapter 6
COST ALLOCATION AND ACTIVITY-BASED COSTING
LEARNING OBJECTIVES
1. Explain why indirect costs are allocated.
2. Describe the cost allocation process.
3. Discuss allocation of service department costs.
4. Identify potential problems with cost allocation.
5. Discuss activity-based costing (ABC) and cost drivers.
6. Distinguish activity-based costing (ABC) from activity-based management (ABM).
A1. Understand the four-steps involved in an ABM study
DISCUSSION # 10
This week's question focuses on cost allocation. A major manufacturer decided to put one of its divisions up for sale because managerial information showed the components produced by this division is losing money. A group of employees in the division purchased it. Under the new ownership, the division immediately became profitable.
A. Why do you think the division was profitable immediately under the new ownership?
B. What kind of cost allocation method may have caused the sale of a profitable division, and can you suggest a better
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