Question

Consider the follow management techniques used by management accountants.

1. Break-even point (Ch. 22)
2. Budget (Ch. 24)
3. Balanced scorecard (Ch. 26)
4. Capital budgeting (Ch. 27)

Pick two of the techniques and explain what they are and demonstrate how they might be used in a personal or professional situation.

Answer 1

In accounting, the breakeven point is calculated by dividing the fixed costs of production by the price per unit minus the variable costs of production.The breakeven point is the level of production at which the costs of production equal the revenues for a product.In investing, the breakeven point is said to be achieved when the market price of an asset is the same as its original cost.

Budgeting is the process of creating a plan to spend your money. This spending plan is called a budget. Creating this spending plan allows you to determine in advance whether you will have enough money to do the things you need to do or would like to do.

The balanced scorecard (BSC) is a strategic planning and management system. Organizations use BSCs to: Communicate what they are trying to accomplish. Align the day-to-day work that everyone is doing with strategy. Prioritize projects, products, and services.

Capital budgeting, and investment appraisal, is the planning process used to determine whether an organization's long term investments such as new machinery, replacement of machinery, new plants, new products, and research development projects are worth the funding of cash through the firm's capitalization structure