ADM 2341 Lecture Notes - Lecture 11: Transfer Pricing, Earnings Before Interest And Taxes, Computer Animation
16 Dec 2016
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Less relevant: fixed costs that can"t be traced to a particular division, but instead must be allocated reason: allocations. Fixed costs that would be eliminated if the division (or subcategory being measured) were to be eliminated. Specialized machinery, or supervisors would lose jobs if division were to be closed are arbitrary. Eg: allocating fixed costs based on relative sales. Research tells us that quantitative evaluation measures still dominate, in terms of management decision-making (text, p. Rogers got out of rental business entirely. Same amount of untraceable fixed costs in relation to divisions does not automatically get accounted for in the subcategories. Segment reporting is important for managerial accounting, but is also now mandatory for external financial reporting of diversified pubic companies. Segments: geographically, also by major products (text, p. 488-489) Performance evaluation of responsibility centres (text, p. 491) Central legal services: controlling costs, relative to what corporation would be paying to retain external counsel.
