Chapter 5

Financial Analysis Decisions

The accountant is constantly asked to conduct a variety of financial analyses regarding key management decisions. These analyses usually require a knowledge of analysis techniques well beyond the typical transaction processing and accounting presentation skills learned in college. Instead, the accountant must understand breakeven analysis, product mix analysis, how to create a what-if analysis with an electronic spreadsheet, how to create a cost variance table, how to allocate funds, and how throughput analysis can assist with a number of major decisions.

This chapter provides answers to all of these issues and more. The following table itemizes the section number in which the answers to each question can be found:

Section Decision
5-1 How do I calculate the breakeven point?
5-2 What is the impact of fixed costs on the breakeven point?
5-3 What is the impact of variable cost changes on the breakeven point?
5-4 How do pricing changes alter the breakeven point?
5-5 How can the product mix alter profitability?
5-6 How do I conduct a “what-if” analysis with a single variable?
5-7 How do I conduct a “what-if” analysis with double variables?
5-8 How do I calculate cost variances?
5-9 How do I conduct a profitability analysis for services?
5-10 How are profits affected by the number of days in a month?
5-11 How do I decide which research and development projects to fund?
5-12 How do I create a throughput analysis model? ...

Get Management Accounting Best Practices: A Guide for the Professional Accountant now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.