ACC Threaded Discussion

  1. Traditional measures of financial and managerial accounting are often based on net income. However, net income is not the actual cash available to a given firm. As such, most bankrupt companies do not have sufficient liquidity (cash or assets easily convertible to cash) to cover pressing obligations. Discuss the relative importance of net income versus cash in the financial management of any company. Should we be focusing more on cash management? Why or why not.

    Don’t forget to make at least one original contribution and one response to a colleague on this topic. Providing an example or citing an interesting articles is a good way to approach the topic. Don’t forget to provide references in APA format. See http://owl.english.purdue.edu/owl/resource/560/01/ if you need to review the guidelines for APA format.

 

  1. The background materials present the computations for both Gross Profit on Sales and Contribution Margin. Gross profit is an important component of absorption income and contribution margin is used for variable costing, so we have two income statements. When and how do organizations use the two income statements? Does an organization need two separate income statements? Discuss.

    Don’t forget to make at least one original contribution and one response to a colleague on this topic. Providing an example or citing an interesting articles is a good way to approach the topic. Don’t forget to provide references in APA format. See http://owl.english.purdue.edu/owl/resource/560/01/ if you need to review the guidelines for APA format.

 

 

 

  1. We have shown in this module that poor decision making may result when acceptable prices are determined by adding a fixed percentage to the “full cost” of a product when that “full cost” includes a unitized fixed cost. The lesson in the module is that any selling price above the contribution margin will add to the wealth of the firm. This being the case, is there a danger in the decision rule that states “always accept any offer that has a positive contribution margin?”

 

  1. Some firms have a lot of fixed costs and few variable costs, while other firms are configured the other way around. What effect do you think the existence of a high proportion of fixed costs has on the desirability of using ABC methods?

 

  1. If non-traceable costs are not allocated to the various operating units within an organization, who ends up paying these costs?
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