Accounting for Manager Essay Example | Topics and Well Written Essays - 1000 words

Accounting for Manager - Essay ExampleIf the management expects the revenue to be $700000, consequently it must not possess the proposal of the landlord as this go away increment the annual rent allowance to $45500 which is more than the fixed annual rent of $40000.The company can accept the order as this will result in a profit of $400000. This is because the fixed cost remain fixed irrespective of the coat of production (National Council on Economic Education, n.d. Mankiw, 2008, P274).If the order size is 12000 units, the company must not accept the wish as this will result in a loss of $492000. The company has to spend an additional core of $900000 as fixed costs because of an increase in the total capacity. This is because the fixed costs increase with the increase in the total capacity of the businessThe maximum order size that the company can accept is 100000 units. This is because beyond this capacity the fixed cost of the company doubles. For producing even one unit b eyond the total capacity the company has to incur the total amount of fixed expense as this cannot be adjusted with the number of units produced.The costs have been allocated as direct and indirect costs. Direct costs accommodate the cost of materials and labor cost that can be directly related to the product whereas indirect costs are the costs that cannot be directly identified with the product. The costs relating to general services are dealt out based on sales volume and the costs of the computer department are allocated based on the use. From this the operational income of the Tree division has been calculated as $480000. The net investment of the division is $1600000. This gives a harvesting of 30% on the investment.The performance evaluation can be done using Variance analysis, EVA and knuckle under earned on investment. To earn profits the business has to be managed efficiently. ROI is an important tool for evaluating the