thursday Nov 11 2010

To illustrate the idea of incremental costing and pricing I used the example of the Last Minute Cruise. I mentioned that folks will show up an hour before the boat leaves the dock, hoping to make 'a deal' with the ship bursar on a discounted cabin. Well sure enoough

http://cruises.affordabletours.com/search/Last_Minute_Deals/

if you google last minute cruises you get quite  a list of travel agents doing the same thing. No one wants to leave the dock with emtpy rooms. At that point the fixed costs are covered, the crew, the fuel, are all fixed costs. What will the incremental cost be of adding one more passenger. In this case our cost line Bx is not a straight line, it is dropping!  I recall sitting by an officer on our Alaska and he said he knew nothing about navigating but he did know that we had eaten 1,032 eggs for breakfast.

Incremental costing and pricing usually sets fixed and sunk costs aside to look at the incremental cost of just one more order.

Thursday Nov 11 2010

Here is an interesting article that demonstrates a lot of what we study in managerial accounting.

Tao's is located in Vegas and despite the bust there remains a place to see and be seen, and dine at $70 a plate. I found it itneresting that the food preparation including cooking began in the morning, by the lat evening, one more minute is all that is required for the delicate fish and other seafood entrees.

This demonstrates standard costing, process and job order costing, and budgeting for both food and labor but particularly for TIME! Consider this observation from the article.

 Her job is to make sure tables are open for the least amount of time.

This is the perfect example of eliminating non value added costs, an empty table like an empty seat on an ariplane does nto make any money!  And so the concept of Just in Time works for the food being ready the table being filled, and all coming to gether at the right time.

 Here the lobster won tons are being prepared. Notice that there is a standard size for this, think budgeting and standard costing. 

You will enrich your college expericence by subscribing to the Wall Street Journal. You can read on line if you like.

Thursday Nov 11 2010

Here are some great off the wall ideas! Yept start your own business in an off beat niche. The key here is of course to find a business where

there is a real demand

the demand is not currently being met

the business has some longevity (for example, the fiero business is probably a ten year deal at best but he should find other niche cars in the mean time)

The ideas we study in managerial accounting are the foundation for such an enterprise, like break even and budgeting and standard costing.

Tuesday Nov 9 2010

We are studying incremental decision making in ACCT 3314 and the chapter features Mattel. Well

WMT and TGT are battling it out.   Yep it is the race to the bottom for the cheaper alternative. This is real deflation no matter what the FED says. Incremental decision making usually involves ignoring existing sunk or fixed costs. No doubt both retailers are squeezing suppliers to cut their margins. 

Students will recall that WMT and TGT have been battling on book prices, now toy prices. 

And yes I rented Toy Story 3 Sunday and loved it. In a rare exception this sequel could be the best of the series as the gang is shuttled to the Sunnyside Day Care Center beset with kids disrepectful of toys, yikes, thrills, chills, narrow escapes, will the gang get out of this one, clearly a better deal than Stallone's Expendables.