What effects do the decisions you, your team, or your organization have on the financial performance of your business? Are the effects of these decisions effectively communicated throughout the organization? Typical decisions facing organizations can include introducing new products, organizing and managing resources, and measuring divisional financial performance.
Understanding the usefulness of the management accounting technique marginal costing analysis can help an organization solve a number of business problems.
Imagine a new product development team at a company that has developed a new automotive component that will enhance the economy and performance of a typical automobile. As the team prepares the business case to present at a board meeting to gain approval for manufacturing the component, they are faced with a number of business questions, which they need to find the answers to and must adopt a marginal costing approach to help them find the solutions.
The marketing director and the production director at the company’s west coast manufacturing plant are undertaking a risk analysis as part of a budgeting exercise. They decide to use a marginal costing analysis to identify the mix of production that will maximize profitability for the organization as a result of a failure in their supply chain, which leads to a shortage of a key component in their manufacturing process.
Difficult decisions need to be made by the company’s management, since they are concerned with the financial performance of the east coast distribution centers compared to the other distribution networks.
The Accenture Academy course Applying Marginal Costing Analysis in Business Decisions
will introduce to you to the benefits of adopting a marginal costing approach and help you make decisions with regard to managing capacity, scarcity, and contribution by following the management team at a fictitious company as they carry out a financial review of the distributors and make changes to the distribution network to improve the financial performance of the region. You will explore the differences between contribution and profit centers and discover the impact on distribution center performance when using different approaches to apportioning central overhead costs. You will enhance your knowledge, skills, and understanding of the importance of applying a marginal costing approach in solving a variety of business problems.