PPTs t/a Management Accounting 2e by Banks & Neish. © 2003 McGraw-Hill Australia. Slides prepared by Peter Miller 11–1 This is the prescribed textbook for your course. Available NOW at your campus bookstore!

PPTs t/a Management Accounting 2e by Banks & Neish. © 2003 McGraw-Hill Australia. Slides prepared by Peter Miller 11–2 Differential costing and linear programming Chapter 11

PPTs t/a Management Accounting 2e by Banks & Neish. © 2003 McGraw-Hill Australia. Slides prepared by Peter Miller 11–3 Relevant and irrelevant data Historical costs Sunk costs Imputed costs Opportunity costs Future costs/benefits

PPTs t/a Management Accounting 2e by Banks & Neish. © 2003 McGraw-Hill Australia. Slides prepared by Peter Miller 11–4 Quantitative and qualitative data and information Quantitative: data or information stored as numbers Qualitative: other factors that cannot be expressed effectively in numerical terms

PPTs t/a Management Accounting 2e by Banks & Neish. © 2003 McGraw-Hill Australia. Slides prepared by Peter Miller 11–5 Differential cost analysis orPresent total figures for the alternatives in columns and show a final column for differences or Present only the differences, or increments, in revenues and costs ( e.g. advertising) Analysis and presentation of data or information

PPTs t/a Management Accounting 2e by Banks & Neish. © 2003 McGraw-Hill Australia. Slides prepared by Peter Miller 11–6 Qualitative and quantitative considerations in decision making Accept or reject a special order Make or buy a product or component Add, modify or drop a service, product or department Sell now or process further Shut down or seasonal closure

PPTs t/a Management Accounting 2e by Banks & Neish. © 2003 McGraw-Hill Australia. Slides prepared by Peter Miller 11–7 Decisions with constraints on resources Constraints are limits to the availability of resources Where there are several constraints, linear programming techniques may be used Determine the contribution margin per unit of a constraint when a resource is limited

PPTs t/a Management Accounting 2e by Banks & Neish. © 2003 McGraw-Hill Australia. Slides prepared by Peter Miller 11–8 Linear programming Maximise profits or minimise losses First constraint 2X + 1Y <

PPTs t/a Management Accounting 2e by Banks & Neish. © 2003 McGraw-Hill Australia. Slides prepared by Peter Miller 11–9 Linear programming (cont.) All constraints added

PPTs t/a Management Accounting 2e by Banks & Neish. © 2003 McGraw-Hill Australia. Slides prepared by Peter Miller 11–10 Linear programming (cont.) Objective function lines plotted

PPTs t/a Management Accounting 2e by Banks & Neish. © 2003 McGraw-Hill Australia. Slides prepared by Peter Miller 11–11 Linear programming (cont.) Constraints plotted and feasible solution space shaded

PPTs t/a Management Accounting 2e by Banks & Neish. © 2003 McGraw-Hill Australia. Slides prepared by Peter Miller 11–12 Linear programming (cont.) Minimisation

PPTs t/a Management Accounting 2e by Banks & Neish. © 2003 McGraw-Hill Australia. Slides prepared by Peter Miller 11–13 Chapter 12 Activity-based costing (ABC) Discusses