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Essay / Research Paper Abstract
This 6 page paper discusses the use of value-based accounting and costs volume profit assessments to determine whether or not they are still suitable for use in the 21st century. The discussion includes consideration of how and why it may be useful, the determination of whether there are industry or specific scenarios where it may be more beneficial in alternative approaches as well as some of the disadvantages associated with its use. The bibliography cites 6 sources.
Page Count:
6 pages (~225 words per page)
File: TS14_TEMAcvp21.rtf
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Unformatted sample text from the term paper:
all businesses is that of accounting, including management accounting. With the introduction of technology has been ability to undertake complex and accurate costing with the support of accounting programs providing
increased level of transparency, especially utilizing approaches such as activity-based accounting. It is within this environment that it may be argued that the concept of value costing is dated, and
no longer relevant for the 21st century. In order to assess this session it is necessary to consider what it is and consider the advantages that it may provide in
comparison to other methods, as well as look at the potential disadvantages in order to assess whether or not it is still relevant. Cost profit volume analysis (CPV) is a
tool that is utilized in management accounting, these applications relatively simple as it assesses the amount of goods the need to be sold in order to reach certain goals, usually
to assess the breakeven point, and possibly to assess a specific profit point. It is undertaken by determining the variable and the fixed costs for producing a good, the variable
costs of those which are incurred for each individual unit produced, and are not incurred if unit is not produce, usually incorporating elements such as the direct materials and the
direct labor (Chadwick, 2007). By deducting the variable costs from the revenues it is gained for any individual unit sold the remaining figure, which can be referred to as the
contribution, is the revenue that will first pay for the fixed costs, and when they are covered or to provide the profit. Fixed costs are those which are incurred regardless
of how many units are produced, such as factory space and administration costs. Therefore, knowing the contribution level can be utilized to assess the breakeven point, by dividing the fixed
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