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PowerPointPowerPoint Presentation byPresentation by
Gail B. WrightGail B. WrightProfessor Emeritus of AccountingProfessor Emeritus of Accounting
Bryant UniversityBryant University
© Copyright !!" #homson $outh%Western& a part of #he
#homson Corporation. #homson& the $tar 'ogo& an(
$outh%Western are tra(emar)s use( herein un(er license.
MANAGEMENT
ACCOUNTING
8th EDITION
BY
HANSEN & MOWEN
* #AC#+CA' ,EC+$+- /A0+G
STUDENT EDITION
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1. Describe the tactical decision-making
model.
2. Explain how the activity resource usagemodel is used in assessing relevancy.
3. Apply tactical decision-making concepts in
a variety o business situations.
LEARNING OBJECTIVES
!ontinued
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". !hoose the optimal product mix when
aced with one constrained resource.
#. Explain the impact o cost on pricingdecisions.
$. %se linear programming to ind the optimal
solution to a problem o multipleconstrained resources. & Appendix)
LEARNING OBJECTIVES
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#AC#+CA' ,EC+$+- /A0+G1,efinition
!onsists o choosing among
alternatives with an immediate
or limited end in view.
'( 1
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$#2A#EG+C ,EC+$+- /A0+G1,efinition
)s selecting among alternativestrategies so that long term
competitive advantage is
established.
'( 1
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#AC#+CA' /-,E'
A general approach to tactical decision makingincludes*
1. +ecogni,e deine the problem
2. )dentiy alternatives eliminating those that areuneasible
3. )dentiy costs beneits
". /otal relevant costs beneits o eachalternative
#. Assess 0ualitative actors
$. elect alternative with greatest overall beneit
'( 1
Ae !"alitati#e $a%tor
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#+,WE'' P2-,UC#$1 Bac)groun(
/idwell roducts )nc. is acing expanded
production that is straining the capacity in
acilities with # years remaining on theirlease. /wo easible alternatives under
consideration are a to rent an additional
building or warehousing and ' outsource
production. /he !( will prepare a report o
detailed costs or these alternatives.
'( 1
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APP'3+G #AC#+CA' /-,E'
'( 1
Ste( )* Deine the problem )ncrease capacity or warehousing production
Ste( +* )dentiy alternatives 1. 4uild new acility
2. 'ease larger acility5 sublease
current acility3. 'ease additional acility
". 'ease warehouse space
#. 4uy shats bushings5 reeup space
!ontinued
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APP'3+G #AC#+CA' /-,E'
'( 1
Ste( ,* )dentiy costs beneits Alt -* 6!osts7 8 4eneits
Alt .* 6!osts7 8 4eneits
Ste( -* /otal rele#ant costs beneits
Alt -* +elevant 6!osts7 8 4eneits
Alt .* +elevant 6!osts7 8 4eneits
Di$$erential %ot
Ste( .* Assess 0ualitative actors 1. 9uality o external supplier
2. +eliability o externalsupplier
3. rice stability". 'abor relations community
image
Ste( /* :ake decision !ontinue producing leasewarehouse
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2E'E4A# C-$#$1 ,efinition
Are uture costs that dier
across alternatives.
'( 1
di$$er a%ro alternati#e0
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2E'E4A# 4$. +22E'E4A#
C-$#$
'( 1
Cot to Ma1e
Cot Not toMa1e
Di$$erentialCot
Dire%t la'or ; 1#
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/AU5AC#U2+G 5+2/1 Bac)groun(
A manuacturing irm employs ive ?
engineers with a capacity o 1
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hould the irm consider
accepting a special order thatuses #
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$WA$E3 /AU5AC#U2+G 1 /a)e%or%Buy Bac)groun(
wasey :anuacturing a printer
manuacturer will switch to a printer that
does not use an electronic component itcurrently produces. hould wasey
produce 1
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$WA$E3 /AU5AC#U2+G1 2elevant +nformation
'( 3
Ma1e B"4 Cot to Ma1e
E0uipment +ent ; 12
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-2#- /A#E2+A'$1 0eep%or%,ropBac)groun(
Corton :aterials produces 3 products*
blocks bricks and tile. /he tile segment
has a negative segment margin and doesnot contribute to common ixed
expenses. hould Corton drop the tile
division
'( 3
!ontinued
'( 3
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-2#- /A#E2+A'$1 0eep%or%,rop
'( 3
Blo%1 Bri%1 Tile Total
ales ; #
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-2#- /A#E2+A'$ 1 0eep or ,ropAnalysis
'( 3
4ecause Corton will lose sales in both
blocks and brick i ceiling tiles aredropped and replacing ceiling tiles with
loor tiles is less proitable the irm is
better o to keep the ceiling tile
division.
'( 3
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+CE C2EA/1 $pecial -r(er Bac)groun(
An ice cream company is operating at =
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+CE C2EA/ 1 $pecial -r(er Analysis
'( 3
Even though the special order price or 2
million gallons o ice cream is below the
normal selling price o ;2.
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6-+# P2-,UC#$1 ,efinition
ave common processes cost o production up to a
split-o point.
'( 3
%ot o$ (rod"%tion
'( 3
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APP'E#+/E 6-+#
P2-,UC#+-
'( 3
E78+B+#E78+B+# *%9*%9
'( 3
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APP'E#+/E 1 Process 5urther Analysis
'( 3
Even though processing grade 4 apples
urther increases costs there is more
proit to be made rom making pie illing
than rom selling grade 4 apples by the
bag.
'( "
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C-$#2A+#$1 ,efinition
Are limitations a businessaces such as limited
resources or demand.
'( "
'( #
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P2+C+G1 'egal Aspects
redatory pricing
A means o setting price to eliminate competition
Dumping on international market
rice discrimination
!harging dierent prices to dierent customers
rice gouging%sing market power to set prices too high
'( #
'( $
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G2AP8+G $-'U#+-
'( $
E78+B+#E78+B+# *%:*%:
'inear programmingdemonstrates the easible
production region
optimal solution or
complex problems.
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THE END
CHA:TE; )+