# management accounting

## CVP Analysis revision question (NBAA November 2016)

Midundo kabambe a manufacturer of electronic equipment, decided to analyze the profitability of new portable compact disc (CD) player. On CD player line, the company incurred TZS.2,520,000,000 of fixed cost per month while obtaining total revenue  of TZS.6000,000,000 from selling 20,000 units. The variable cost was TZS 120,000 per unit
Recently a new machine used in production of CD player … Read the rest

## Break-even chart -meaning and assumption

Break-even chart According to the Chartered Institute of Management Accountants, London the break-even chart means “a chart which shows profit or loss at various levels of activity, the level at which neither profit nor loss is shown being termed as the break-even point”. It is a graphic relationship between costs, volume and profits. It shows not only the BEP but … Read the rest

## Financial Operations Ratio-meaning and formula

The efficiency of the financial management of a firm is calculated through the financial operations’ ratio. This ratio is a calculating device of the cost and the return of financial charges. This ratio signifies a relationship between net profit after tax and operating profit.

## The formula for the computation of this ratio is:

Financial Operations Ratio =net profit after tax/operating Read the rest

## Current Ratio – meaning and formula.

The most widely used measure of the liquid position of an enterprise is the current ratio, that is, the ratio of the firm’s current assets to current liabilities.

It is calculated by dividing current assets by current liabilities:

Current Ratio = current asset/current liabilities

The current assets of a firm represent those assets which can be in the ordinary course … Read the rest

## Current budgets – definition

Current budgets are prepared for the current operations of the business. The planning period of a budget generally in months or weeks. As per ICMA London, “Current budget is a budget which is established for use over a short period of time and related to current conditions.” … Read the rest

## 3 Need For Depreciation Accounting.

In accounting terms, depreciation is defined as the reduction of the cost of a fixed asset in a systematic manner until the value of the asset becomes zero or negligible.

An example of fixed assets are buildings, furniture, office equipment, machinery, etc.. A land is the only exception that cannot be depreciated as the value of land appreciates with time.… Read the rest

## Going concern concept – meaning.

This concept assumes that the business enterprise will continue to operate for a fairly long period in the future. The significance of this concept is that the accountant while valuing the assets of the enterprise does not take into account their current resale values as there is no immediate expectation of selling it. Moreover, depreciation on fixed assets is charged … Read the rest