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MANAGERIALACCOUNTING

20132014

Chapter1.CONCEPTUALASPECTSONMANAGERIALACCOUNTING

1.1.Identityandconceptofmanagerialaccounting
1.2.ManagerialAccountingObjectives
1.3.Thedefiningelementsofmanagerialaccountingasascienceofmanagement
1.3.1.Theobjectofmanagerialaccounting
1.3.2.Managerialaccountingfunctions
1.3.3.Informationandusersofaccountinginformation
1.3.4.PrinciplesofManagerialAccounting
1.3.5.ManagerialAccountingMethod
1.4.Conceptsoforganizationofmanagerialaccounting
1.4.1.Theconceptoforganizinginasimplegame
1.4.2.Theintegratedconceptoforganizationalmanagement
1.4.3.Thedualisticconceptoforganizationalmanagement
1.4.4.Modernconceptsoforganizationalmanagerialaccounting

Chapter2.CATEGORIESOFEXPENDITURE,COSTSANDCONSUMPTION

2.1.Theconceptofexpenseandcost
2.2.Theconceptofcosting
2.3.Criteriaforclassifyingcosts
2.4.Costcenters,costobjectsandresponsibilitycenters
2.5.Particularitiesofcostbehavior
2.5.1.Evolutionofvariableandfixedcosts
2.5.2.Proceduresfordelimitingfixedandvariablecostelementsincostcomponents
Total

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CHAPTERI.

CONCEPTUALASPECTSONMANAGERIALACCOUNTING

1.1.IDENTITYANDTHECONCEPTOFMANAGERIALACCOUNTING

Increasingthecomplexityofbusinessrelationshipsintheconditionsofincreasedcompetition
Manifestedintheprocessofallocationanduseofeconomicresourcesaswellasintheprocess
Adjudicationoftheoutletshasledtoaprofoundrevolutioninthefield
Managementandimplicitlyinaccountingasthemainsourceofinformationandassistance
Ofthedecisionmakingprocess.

Ontheotherhand,theconfigurationandcomplexityofthefunctionalandtechnical
Theorganizationalstructureoftheeconomicentities,thevarietyofactivitiescarriedoutandthecontinuousintroductionof
Advancedtechnologiesareendogenousfactorsthatrequiretheassertionofaccounting
Managementasanessentialcomponentoftheaccountingsystem. Inthiscontextoffactors
Externalandinternalentitiesareconstrainedtousetheinputsproducedin
Thetermsoftheeconomicoptimum,inwhichtheirconsumptionandtheireffortsareminimized
Andtomaximizethoserevenuestheeffectsoftheresourceallocationanduseprocess.

Theoptimizationofentities'activitiesisconditionedbyacontinuouscollectionprocess
Processingofeconomicinformationingeneralandofaccountinginparticular,meantto
Contributestoassistingdecisionmakingondifferenthierarchicalstagesoftheprocess
Management.

Theseelementsrequirethedevelopmentofasectionoftheaccountingsystem
Called"managerialaccounting"inordertoproviderelevantandreliableinformationfor
Makingthedecision.

Theconceptofmanagerialaccounting

Thedelimitationofthemanagerialaccountingconceptmustbebasedon
Twoaspects,namely:

1.Dependingonpreviousconcernsaboutdefiningthis"intimatesection"ofthesystem
Accountant
2.accordingtoitsobjectivesandthespecificsoftheprocessingofaccountinginformation.

1.Theconceptofmanagerialaccountinghascontractedquitehardintheliterature,
Accountingspecialistsgivinghimotherattributessuchas:managementaccounting
Analyticalaccounting.

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Theterm"managementaccounting"isnotanincorrectone,butitdoesnot
Theultimategoalofaccountinginformation,itsdestination,anditsdecision
Servesthemanagementofeconomicentities.

Theterm"analyticalaccounting"reflectsthetermsofapproachofthissectiona
Therespectiveaccountingforthedetailsofsomestructuresoftherespectivefinancialstatements,liabilities,
Equity,income,expenseandresultsthatareprocessedandanalyzedfromtheperspective
Managerialaccounting.

3.Theconceptofmanagerialaccountingiscircumscribedtotheobjectivesandspecificsoftheprocessing
Accountinginformationduetothefollowingconsiderations:

thefirstcategoryofusersofaccountinginformationthattheybenefitfromare
Managers

theirprocessingforinternalandexternalusebearsthecurrentdecision
Managerialaccountingperformsaconciliationofthegroupingofexpensesaccordingtotheirnature
Economicanddestinationtoachievetheobjectivesofmanagingentities
Economic.
Thus,managerialaccountingcanbedefinedasasetofprocedures
Identification,quantification,collection,analysisandreportingofaccountinginformationon
Operations,activities,processes,worksandservicesperformedbyeconomicentitiesin
Inordertosubstantiatethetacticalandstrategicdecisionsregardingtheachievementoftheobjectivessetbythe
entity.

Bysomeauthors,managerialaccounting"isawiderconceptinvolving
Knowledgeandprofessionalskillsinthepreparationandespeciallyinthepresentationofthenecessaryinformation
Leadershipondifferenthierarchicallevels.Thesourceofsuchinformationisaccounting
TheFinancialandaccountingmanagementcosts1 .

Andfromthisdefinitionofmanagerialaccountingresultsthemorecomprehensivesphereofa
Thanitsaccountingrecords.Wecansaythatmanagerscanbasetheirdecisions
Byresortingtocomplex,mixedinformationthatisreleasedtobothfinancialaccounting
Andcostaccounting.

1.2.ManagerialAccountingObjectives

Theidentityofmanagerialaccountingwithintheaccountingsystemisachievedthrougha
Asetofstructuralelementsthatindividualizeitasdisciplineitselfin
Theframeworkofeconomicdisciplinessuchasitsprimaryobjectives,theobjectof
Study,methodsandmethodsappliedwithinit.

1Caraiani,C.,Dumitrana,M.AccountingandManagementControl,Ed.InfoMegaBucharest2004,page11.
3

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Theobjectivesofmanagerialaccountingareanessentialelementofthis,which
Isanessentialargumentfromwhichresidestheneedtoorganizeitwithin
Economicentities.

Theobjectivesofmanagerialaccountingcouldbegroupedasfollows:

Objectivesofanalyticalevidenceofaccountingstructuresthatarise
Operationsandactivitiescarriedonbyentities:assets,liabilities,equity,income,
Expensesandresults
Performancetargetsforthecalculationofsomepartialandfullindicatorson
Measuringtheprofitabilityoftheentity'soperationsandactivitiesaswellastheircost
Forecastingandcontrolobjectivesachievedthroughrevenueandrevenuebudgets
Detailedexpendituresatentitylevelatfunctionlevel,technical
Organizationalactivity,product,workorservice.
Evidenceanalyticobjectivesoffinancialstatementsarecircumscribedstructures
Theframeworkforapplyingpoliciesandaccountingrecognitionoptionsandareintended
Thefollowingaims:

A)ensuringtheanalyticalstructureoftheassetcategories
B)ensuringtheanalyticalstructureofthenominatedequityandequitypositions
Notdenominated
C)ensuringtheanalyticalstructureofdebtpositionsgeneratedbydifferentformsof
Financing(commercial,bankcredit,capitalmarketfinancingorthroughoperations
Leasing)
D)ensuringtheanalyticalstructureofexpendituresonthethreeactivities(exploitation,
Financialandextraordinary)
E)ensuringtheanalyticalstructureofincomebyactivity
F)ensuringtheanalyticalstructureoftheresultsgeneratedbytheactivityoftheentities
Economic.
Goalsperformancereportingtotheentityinthecalculationofindicators
Finalorintermediateperformance,inwholeorinpart,toevaluatethemanagement
Economicandfinancialsituationoftheentity.

Theperformancesreportedbyfullfinalindicatorsarefocusedononehandon
Conceptualoutcomeoftheexercise,andontheotherhandtheentity'sperformanceisalsoreported
Throughthecostcategoryandcanbedevelopedwiththefollowinglevels:

determiningtheeconomicandfinancialresultsontheentity'sfunctionsandprofitability
Global
determinationofeconomicandfinancialresultsontheentity'sactivitiesandprofitability
Them

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determiningtheeconomicandfinancialresultsonprofitcentersandprofitability
Profitcenters
determinationofeconomicandfinancialresultsonproducts,worksandservices(PLSs)
Profitability
determinationofthecostofproducts,worksandservicesperformedbytheentitybutalsoof
Thecostofthefunctionalstructuresoractivitiesoftheentity.
Theperformancereportedbyintermediateperformanceindicatorsis
Basedonsomeconceptsthathighlightsomekeyaspectsofmanagement
Economicprocessoftheentityintheuseandallocationofresourcesaswellasintheinsurance
Selffinancingorfinancialequilibriumandreferstothefollowingindicators:

trademargin
valueadded
outputoftheexercise
grossexploitationsurplus
selffinancingcapacity
managerialreserve
workingcapital
workingcapitalrequirements
nettreasury.
Throughtheseobjectives,managerialaccounting"pushes"thelimitsofassisting
Ofthemanagerialprocessbeyondthescopeoftheoperatingactivity,onthefieldoffinancialactivity
Oftheentities.

Theforecastingandcontrolobjectivesenvisagethepreparationofrevenueandrevenuebudgets
Expensesfortheoverallactivityoftheentityaswellasthepreparationofpartialbudgetson
Functionsoractivitiesoftheentityrepresentedasfollows:

thegeneralactivitybudget
theproductionactivitybudget
thetreasuryactivitybudget
thebudgetoftheinvestmentactivity
thefinancingactivitybudget.

1.3.Thedefiningelementsofmanagerialaccountingasascienceofmanagement

Managerialaccountingisagoodpartoftheaccountingsystem
Individualizedbyitsstructuralelements,givingitanobviousscientificcharacterlikethat
Be:subjectandobjectofstudy.
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Theaccountinginformationsystemforexercisingthesubjectanditsownobject
Itsownfunctions,itsowninformationandusers,organizationalprinciples
Autonomyaswellasaspecificstudymethod.

Theaccountinginformationsystemofmanagerialaccountingisthewholesetofdata
Andtheinformationcollectedwithintheentityfortheirprocessing,theprocedures
Processingandpresentationofdataandinformationaswellastrafficandcommunicationchannels
Informationbetweenthethreebasiccomponentsoftherespectiveentity,thesystembeingmanaged
Leadershipandinternalinformationsystem.

Theaccountinginformationsystemofmanagerialaccountinghastheroleofregulating
Theentity'sactivitytoachieveitsoperationalandstrategicgoalsandcontributesto
Assistingthedecisionmakingprocess.

1.3.1.Theobjectofmanagerialaccounting

Thesubjectofmanagerialactivityistheentity'soperatingandfinancialactivity
Asawhole,aswellastheactivitiesofthefunctionalandtechnical
Itsorganizationalstructureduringtheexploitation,financingandinvestmentcycles.

Dupsomeauthors2 Financialtransactionsareexcludedfromaccounting
Management.

Informationfrommanagementaccountingonthecostoffinancingorcost
Investmentoutcomeofthefinancingorinvestmentisanimportantelementin
Assistingdecisionmakinginthesphereoffinancialoperations.

Theobjectofmanagerialaccountingisacomplexandcoherentsetofresources
Processes,processesandresultsobtainedwithintheentityanditscomponentsin
Followingtheallocationanduseofresourcescontrolledbytheentityandaimingattheirinclusionin
Theoptimaleconomicframework.

Theentity'sresourcesmaybeofamaterial,humanorfinancialnature
(Fixedassets,stocks,laborforce,financialresources).

Processeswithintheentityincludetypesofactivitiesgeneratedoverthecycle
Exploitation(supply,production,sales)oronthefinancingandinvestmentcycleor
Managementoftheentity.

Theresultsobtainedmaybeintermediateorfinal,partialorintegral.

2Nedera,etal.managerialaccounting,andpracticalteachingguide,Ed.ACAPChiinu2000pag11.
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1.3.2.Managerialaccountingfunctions

Anotherelementthatindividualisesmanagerialaccountingwithinthesystem
Accountantrepresentsitsrolewithintheentity,aroleplayedbyitsfunctions.

Thefunctionsofmanagerialaccountingconsistofasetoftasksthathaveastheirobjective
Meetingtheinformationneedsofdecisionmakers(generalmanagerandothers
Categoriesofmanagers:commercial,production,financial,staffmanager).

Themanagerialaccountingfunctionsconsistofthefollowing:

A)provideinformationtoalldecisionmakersinvolvedinthemanagementoftherequiredentity
Operationalandfinancialplanning
B)contributestotheaggregationofinformationthatisthemaincommunicationsector
Internalwithintheentityamongalldecisionmakersonsomeissuessuchas:
informationonthelevelofsupply
theoperativerecordsoftheproduction,ofthesetofresourcesandthedeterminationofthecosts
Productionandsaleprice
analysisoftheresultsandprofitabilityofthesalesandfinancialactivity
analyzingtheinformationonthestructureofassetsanditsownandattractedresourcesaswell
Theircost.
C)assurestheexerciseofoperationalcontrolatthelevelofentity,functionorsubdivisions
Technicalandorganizationalaspectsoftheseaswellastheevaluationandanalysisoftheresultsinview
Achievingtheentity'sobjectives
D)assiststheworkingprocessofshorttermdecisions(tacticaldecisions)andlongterm
(Strategicdecisions).

1.3.3.Informationandusersofaccountinginformation

Byconfidentialityandtheirinternaluse,theinformationprovidedby
Managerialaccountingisadeterminingfactorinthedevelopmentofsomecomponents
EssentialManagerialAccounting:Principles,MethodsandConceptsforOrganizingIt.

Theinformationprovidedbymanagerialaccountingreferstoprocesseddataandfacts
Carriedoutwithintheentityonthebasisofspecificorcommonproceduresoperatingwithintheentity
MethodologyofManagerialAccounting.

Informationprovidedbymanagerialaccountingisofaconfidentialnature
Exclusivelytoasinglecategoryofusers,theentity'smanagersasopposedto
Theinformationprovidedbytheothercomponentoftheaccountingsystemthatfinancialaccounting
Providespublicinformationforseveralcategoriesofusers.

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Inthisrespect,managementaccountinginformationmustanswerthefollowing
3:
Requirements
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1.tobepersonalizedorintendedforaconcreteperson
2.beoperative,ietimelytoserveatimelyandefficientdecision
3.Tobesufficient,ietoprovideasufficientamountofdatanecessaryfortheprocess
Decisionmakingprocess,whilealsorequiringtheremovalof"informalballasts"
4.beanalytical,thatis,tocorrespondtotheconfigurationoftheentityandthedecisionmakingprocess
Atdifferentlevels
5.beflexibleandresponsivetoinformationinitiatives,ietomeettherequirements
Concreteandtoensurethefullsatisfactionoftheusers'informationrequirements
Andatthesametimeensurethepossibilityofdifferentaccountabilitycenterswithin
Entitytomakeitsownviewsonuse,processingandtransmission
Informationoncommunicationchannelsoftheaccountinginformationcircuit
6.beuseful,ietosignalpotentialrisksandtoensuretheobjectiveassessmentof
Theactivitiesofdifferentcategoriesofmanagers(generalmanager,productionmanager,
Commercial,financialmanager,etc.)
7.beeconomical,ietoclaimaminimumconsumptionthatdoesnotexceedtheincome
Obtainedfromtheiruse.

1.3.4.PrinciplesofManagerialAccounting

OrganizationofManagerialAccountingtoAchieveFundamentalObjectives
Itisbasedonasetofrestrictiverulesthattakeintoaccountthenecessaryskills
Metandrespectedtomaketheinformationprovidedbymanagerialaccountinga
Akeyelementinassistingthedecisionmakingprocess.

Theseprinciplesinteractwiththecharacteristicsoftheinformationprovidedbythis
Sectionoftheaccounting,respectivelyconfidentialityandobjectivity,andreferstostandards
Ethicsoftheprofessionalaccountantoperatinginthemanagementaccounting.

"Theethicalstandardsoftheprofessionalaccountantmentiontheresponsibilitiesregarding
Competence,confidentiality,integrityandobjectivity".4

Competencerepresentsaprofessionalstandardthatcontinuestoderivefromthedevelopment
Accounting,respectivelychangesthatoccurinbusinesslife.

Jurisdictionmustbecircumscribedtothedecisionmakingprocesswithintheentities,through
Providinginformationandreportsinwhichaccountantsshouldrealizewhattheyare
Relevantdataandmethodsofreporting.

3Nederi,A,op.Cit.,P.15.
4NeedlesBelverdeE,...,..p.877.
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Operationalandfinancialanalyzesdevelopedbythespecialistinthecompartment
Themanagerialaccountingandthemanuscriptsdrawnupbythemanageroftheactivitymust
Meettherequiredreportingstandardsandincludetheaccountant'sconclusionsthatwillbetakenin
Considerationinthepreparationoffinancialdecisions.
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Confidentialityisanethicalstandardcharacterderivedfrominformationimpact
Majoronthecentralobjectiveoftheentity,namelytheprovisionoftheprofitabilityrate
Expected,providedinbudgets.

Confidentialinformationshouldnotdeviatefromitsitineraryestablishedwithin
Thedecisionmakingprocessthatcanbereadasfollows:

Financialanalystresponsiblepersonresponsibleresponsiblemanagerresponsiblemanager
generalmanager

Theconfidentialityconstraintsofinformationarecloselyrelatedtotwoaspectsand
certain:

disclosureofinformation
theuseofinformationforpersonalpurposes,orattheexpenseoftheentitythroughinterfaces.
Integrityisanethicalstandardthatreclamfromaccountingspecialist
Deletingtheactualorpotentialconflictofinterestthatdoesnotaffectthequalities
Confidentialinformation,thusthreateningtheachievementoftheentity'sfundamentalobjectives.

"Reportsprovidedbymanagerialaccountingmustbeaccurateandreal,
Irrespectiveofwhethertheresultsoftheanalysishaveapositiveornegativeimpactontheentity.Themodification
Reportstomeetcertaingoalsortoexceedcertainestimates,not
Isanethicalaction" 5.

Objectivityisaprofessionalstandardthatissittingatthebaseandfinancingthefundamentrii
Theinformationneededtoassistthedecisionmakingprocess.Thisstandardisinconnectionwith
Ethicalstandards.

Objectivityislimitedtothatattitudeofknowledgeofethicalandethicalnorms
Identificationofnonexistentactionstoavoidcompromisesituationsincollectingand
Providingthenecessaryinformationtoallcategoriesofmanagerwithintheentity.

Complyingwiththeseethicalandprofessionalstandardsisconditionalontheprocess
Substantiatingandbuildingthenecessarydecisionsforthemanagerialprocess.

5NeedlesBelverde,Eetal.,Op.Cit.,P.878.
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1.3.5.ManagerialAccountingMethod

Theindividualizationofmanagerialaccountingasastandalonescienceisrealized
Throughacomplexofinterrelatedelementstoachievetheobjectives
Itsfundamentalaspects,namely:

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conceptualelements
managerialaccountingobjectives
theaccountingaccountingsystemofmanagerialaccounting
accountinginformationandusersofaccountinginformationreleasedtoaccountancy
Managerial
theprinciplesofmanagerialaccounting
Managerialaccountingmethod.
TheManagerialAccountingMethodrepresentsthewholeoftheprocessesandmeansof
Reachingthecoreobjectivesoftheunitandrepresentingthemwithinthesystem
6totheentity'sinformation .

Someproceduresappliedinmanagerialaccountingarealsoapplicablewithin
Otherdisciplines,othersarespecifictomanagerialaccounting.

Theelementsofthemanagerialaccountingmethodaresummarizedasfollows:

observing,consuming,classifying,groupingandgeneralizingtheinformationitrepresents
Thesubjectofmanagerialaccounting
evaluating,groupingandgeneralizingaccountinginformationincriteriaandsituations
planningtheentity'sactivity
costcalculation
methodsofeconomicanalysis
thepresentationofinternalreportsforinformationanddecisionsupport.
Somemethodsoftheaccountingmethodapplyindependently,othersapplywithin
Budgetingandcalculationmethods.

Managerialaccountingisascientificapproachthatpresentsitselfasasetof
Structuralelementsthatindividualizeitwithintheoverallaccountingsystem,
Intheplanofeconomicsciences.

Supportingthisviewisbasedonanumberofargumentssuchas:

itsownterminologicalareaandcleardelimitationofthetheoreticalmethodologicalelements
Offinancialaccounting
thespecificfundamentalobjectives

6NederiaA.,etal.Op.Cit.Page12.
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Informationsystemdelineatedbytheentity'sinternalresourcesandinformationflows
Activatedbyspecificweightsofinformationprocessing
Subjectandobjectofstudy
welldefinedaccountingfunctions
accountancyinformationandexclusiveusers
principlesofselforganization
ownstudymethod.
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Fromthisinstrument,managerialaccountingappearsasascientificallydelimitedapproach
Upstreamoffinancialaccountinganddownstreamofmanagementcontroltoprovide
Themanagementprocessisanimportantsourceofinformationtocoordinateandregulateprocesses
Andtheeconomicphenomenawithintheentitiesinthesphereofproductionandservices.

1.4.Conceptsoforganizationofmanagerialaccounting

Formsoforganizationalmanagementareatinterference
Complexoffactorsrelatedtothefunctionalandoperationalstructuresoftheentity,tothespecificity
Thetechnologicalprocessandthenomenclatureofproducts,works,servicesandattributionsmadein
Theunit,thepartialorcompleteregroupingofthemanagerialaccountingobjectivesinthe
Processofassistingthedecisionalactaswellasthepermissivenessofusingasystemor
Otheraccountstoachievemanagerialaccountingobjectives.

Thissetoffactorsaffectingtheorganizationofmanagerialaccountingis
Gatheredwithintheconceptionoforganizationalmanagementaccounting.Evolution
Processesandeconomicphenomenaontheonehand,andontheotherhand,theevolutionoftheprocess
Decisionmakingoutlinedfourconceptsoforganizationalmanagement,respectively:

theconceptoforganizingmanagerialaccountinginasimpleparty
theconceptofintegralorintegratedorganizationofmanagerialaccounting
thedualisticconceptoforganizingmanagerialaccounting
Modernconceptionsoforganizationalmanagement.

1.4.1.Theconceptoforganizinginasimplegame

Thismethodoforganizingmanagerialaccountingisspecifictosimpleforms
Theorganizationofproductionprocessesandcanbeimplementedinsmallentities
Whichperformsasmallnumberofproducts,works,servicesoractivitiesinaprocess
Moderncomplexity.

Managerialaccountingisinspiredbytheprinciplesofaccounting
Simplepartyandisrepresentedbythesetof"booksor"journals"describesforeach

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Product,work,serviceoractivity,inwhichalltheoperationsarerecordedindetail
Generatingexpensesandrevenuesrelatedtotheacquisitionandsaleofproducts,worksand
Services.

Theworkingprocedureassociatedwiththisconceptoforganizationalaccountingmanagement
Summarizesthefollowing:

intheabsenceofaccountsthatoperateaccordingtotheDoublePartyAccountingPrinciplein
Each"book"or"journal"isrecordedwithoutaccountingcorrespondence,boththeexpenses

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(Debit)andrevenue(incredit),accordingtothemodel:
recordingcostsinthe"logs"ofproducts,works,servicesoractivities
(PLSA)iscarriedoutonthebasisofindividualsupportingdocumentsor
Centralizingoronthebasisofthecalculationandallocationofindirectcosts
Incomeregistrationfollowsvaluation(PLSA)atpricesandfares
Recovery.
Schematically,theconceptoforganizationalmanagementispresentedasfollows:

"Journal"or"Paper"PLSA"x"

DirectExpenses CostofIncomein

Embedded Productionpricesor

Recoveryrates

1.4.2.Theintegrativeconceptionoforganizationalmanagement

Thisformoforganizationalmanagementisbasedonanorganization
Concomitantflowofaccountinginformationonthetwochannelsofinternalcommunicationand
Externalentities,focusingonaunitarysystemofaccountsandaccountsrespectively
Financialaccounting.

Allmanagerialaccountingobjectivesare"focused"accordinglyformulatedon
Theexpenditureaccountinformation(class6),revenueaccounts(class7)oftheaccounting

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financial.Theintegratedorganizationoftheconceptualormonistsystemissuitablefor
Theobjectivesoftheanalysisoftheactivitycarriedoutontheeconomiccircuit:supplyproduction,
Sale.

Thesolutionofanintegratedaccountingsystemcanbeappliedtotheeconomicunitsinwhich
Theproblemofdeterminingeconomicresultsandanalyticalprofitabilityprevailsover
Thecostingobjectivesand,inparticular,thefullcostundera
Completeandefficientaccountingandaccountingsystemstoensurecostcoding
Andincomesthatmeettherequirementsofprocessingandinformationofboththeaccounting
Financialandmanagerialaccounting.

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Economicentitiesintheserviceandconstructionsectorsmayadoptone
Suchanintegratedaccountingsystem.

Withintheframeworkoftheconcept,thecostcalculationisbasedonaprocessing
Extracostinformationonexpenses.

1.4.3.Thedualisticconceptoforganizationalmanagement

Theconceptoforganizingmanagerialaccountinginadistinct,autonomouscircuitto
Financialaccounting,consistsintheestablishmentoftwoprocessingandprocessingcircuits
Expenditureandrevenue,anchoredonthedistinctobjectivesofthetwoaccounts.

Theorganizationofautonomouscircuitaccountingcanbeachievedbyusingasystem
Ofmanagerialaccountingaccountstoensuretheachievementofgoalsthroughacalculation
Exclusivelyinaccounting(class9).

Thedualisticconceptoforganizingmanagerialaccountingneedstomeetneeds
Toinformmanagersinthecontextofcomplexprocessesandphenomena
Economicactivitieswithintheentities.

Analyticalcodingofaccountscanmeettheconfidentialityrequirementsof
Accountinginformation.

1.4.4.Modernconceptsoforganizationalmanagement

Thenewchallengesoftheworldeconomyaredrivenbytheevolutionofproductionprocesses
Andmanagementundertheimpactofinformationandtelecommunicationtechnology
Aswellastheshorteningofthelifeoftheproductandtheestablishmentofadictatedgovernment
Customerrequirementsindeterminingthesellingpriceofresponsibledecisionmakersin

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Thecontextoftheeconomicentities,causingittoorganizeitsproductionprocesses
Reconsidertheactivitiescarriedoutwithintheentities.

Inthiscontext,monitoringandregulationofinformationprocessingwithintheprocesses
Decisionmakingprocessisnolongerbasedonthetraditionalfullcostconceptbuttakesintoaccountthenewconcepts
Productionapproachesbasedonadvancedmethodsofassistingdecisionmakingprocessessuchas:

operationalmodelsformanagingjustintime(JustinTimeJIT)
TargetCostingOperationalModels
Operationalcostingcalculationsbyactivity,ieABC(Activity
BasedCosting)
operationalmanagementmodelsbasedonthecentersorganizriientitilor

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CHAPTER2

CATEGORIESOFEXPENDITURECOSTSANDCONSUMPTION

2.1.Theconceptofexpenditureandcost

Literaturerevealedmultipledefinitionsandconceptualapproachesofcost
(Epuranetal.,1999Cristea2003Albu&Albu,2003Bouquin,2004Caraiani&Dumitrana,
2005MUIU&Muresan,2006Ftcean,2009Card,2010).AccordingtoEpuranetal.
(1999),thecostmustbeapproachedasaneconomiccategoryuniversallyaccepted,essence
Itisrelatedtotheexpressionvalueofallresourcesusedforproductionactivities,

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executionofworksandservices.
Regardlessofhowtoformulateadefinitionthatattachtotheconceptof
costmustretainitsessence,whichtakesintoaccountconsumptionorsacrificecertain
resourcesthatagivenentitywoulddotogetaproducttoperforma
workorprovideaservice.Somecommoncoordinatesthatshouldweconsider
theconceptualapproachofthecost:

Theexpressionofresourceconsumption:costidentifiesconsumptionofdifferentresources:
rawmaterials,labor,equipment,etc.(Risteaetal.,2000).

Contributetoachievinganeconomicentitybecausetheachievementsof
entityidentifiestheoutputsofitsworkembodiedintheproductsobtained,
workperformed,servicesrendered,whichareconsideredcostcarriers
(Card,2011).

Evaluationinmonetaryexpression,whichistheexistenceofthepossibilityevaluation
valueexpressionofboththeconsumptionofresourcesandoutputsofwhichresultedin
afterusingtheseresources.

Theamountofmoneyspentfortheproductionorpurchaseofproperty,makinga
workorprovideaservice.

resourceconsumptiongeneratedbycarryingoutofthecost,whichcanachieve
aproductperformingworkorprovidingaservice.

Themaincomponentsembeddedinthecoststructureofgoodsorservicesare
data:

Materialcosts

employmentcosts(salariesandothersalaryrelated)
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generalcostsgeneratedbyotherexpensessuchasrent,rates,maintenancebills(gas,
electricity,water,etc.),depreciation.

Assumingthatbothexpensesandcosts,sourceofinformationis
namelythesamefinancialaccounting,atfirstsightitwouldseemthatthetwoconcepts
costandexpensearesynonymous.Butithasmadeverycleardistinctionbetweenthetwo
notions.Therearedifferentapproachesanddefinitionsoftheconceptofcost,butinageneralsense,
expensecouldbedefinedasadownpaymentor"givingmoney"inreturnformaterial
Rawgoodspurchasedgoodsandservicesrenderedtotheentityand
othercommitmentsthattheentityhascommittedtopay.Theclassificationofanitemof
expensecategorycostelementsofthechargeswillbedeterminedintouchwith
specificactivity,production,orinotherwords,theconnectionelementofexpensetothework
consumptiontoachieveacostobject(makingaproduct,executinga
paperoraservice).Forexample,theacquisitionofvariousresourcesandpayment
theirentityisanexpenseandisacostelementwhensuch
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resourceconsumptiondatainordertoachieveacostobject.

2.2.Theconceptofcosting

Costingrepresentsasetofmathematicaloperations,moreorless
complex,whichisrealizedthroughtheidentification,assessment,grouping,splittingandaggregation
elementsandstructuresexpensesCostStructureobtainingor7 :

thecostoftheresourceused
thecostofsiteactivity
activitiicostandprocess
costoftheproduct
costperiod.

Objectcostcalculationisrepresentedbyalltheactivitiescarriedoutwithin
aentitieconomicharmonizationandobtainsoptimumuseofmethodsandprocedures
formriicalculationtoachievegoals,controlandcostanalysisina
costintegratedinformationsystemfordecisionmakingasistrii8 .

7Ebbeken,K.,Possller,L.etal,op.cit.pag23.
8BaciuA.,costorganization,plaificare,accountingComputercontrolandanalizEd.Dacia,ClujNapoca,
2001,p.71.
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Thepurposeofcostcalculationascomponentcontabilitiithemanager'srezum
FOLLOWINGaspects:

a.providingacoststructuresassociatedproducts,lucrrilor,servicesand
analyzedtheactivitiesofanentitybycombiningsystemscostmethods
costingandcostingtechniques
b.makingacostcalculationcontabilitiderulattheitinerary:
Processingcostsaccountingdisclosureoncosts
mediainformation(varioussituationsinternalcircuit)
c.controllevelandthecoststructurebyvariousmeans,techniquesand
tools(consumptionstandards,budgets,reports,audit)
d.achieveabudgetarycontrolbycombiningmrimiicostswithin
budgetswithactualrealizrile
e.articulationcalculationprocedurestoverifytheaccuracy
informationprocessingoperationsincontabilitiicosts.
Objectivescostcalculationcircumscribeitsscopefororganizat
costingandrezumTHEFOLLOWING:

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determiningthestructuresofaccountsbyusingthetechniques,processesand

systemscosts
pricingandtariffssalefromcoststructures.
determinationrentabilitilorandcontrolefficiencybyratesofreturn
determinationoftheassessmentbaseforelementsoftheproduction
exercise
assistingdecisionmakingbyprovidingnecessaryinformation
operationalmanagementonissuessuchas:
analysisofcostvolumeprofit
settingoptionstoproduceordiariesbuysaspecificgoodor
service
settingoptionstomaintainorreplacethemethodsor
productiontechnologies.
Thepresentationobjectives,goalsandobjectivescostingemerge
functionsitperformsaccountingcostcalculationor9 :
knowledgeandanalysisofcostsandoutcomesproducts,functionsand
theresponsibilities
useofinformationoncostcontrolinorderminimizrii

butnotingcalitiicostproductsandservicesprovidedlucrrilor
providingthenecessaryinformationmanagementindecisionmaking.

9Caraini,C.,DumitreanaM.,op.cit.,p.13.
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2.3.Classificationcriteriaforcosts

Alleconomicentitiesoperatinginthebusiness,nomatterwhat
activitywhichisactiveintheelementsofcostareconcernedthatgenerates
implementationoftheiractivities.Buthowthesecostelementsmightclassifydifferent,
dependingonthesectortheybelong.AccordingtoGarrisonetal.(2006)

manyeconomicentitiesoperatinginthebusinessworldwecouldbedividedintothree
categories:manufacturingentities(manufacturing)tradeentities(merchandising)entities

services(services).Giventheobviouspredominanceofeconomicentities
workinginproduction,inthefollowing,wewillfocusonclassification
costelements,particularlyaddressthissegment.
TohaveamuchclearerinFigureNo.1.theelementsarepresent

cost.

FigureNo.1.costitems

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Source:ownprojection

Aclassificationofcosts,whichcanhappenparticularlyifeconomicentities
inthefieldofproductionisshowninFigureNo.2.

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FigureNo.2Classificationofthecosts

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Source:adaptedfromGarrisonetal.(2007)
Regardingtheclassificationofcosts,theliteraturealsoreveals,
themultiplicityofcriteriaaccordingtowhichexpensesareclassifiedincorporatedinto

cost.However,below,weemphasizethemostimportantofthesecriteriaandthe
discommonlyusedincurrenteconomicpractice:

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A.Afterthepossibilityofidentifyingexpendituremadeproducts,services
workperformedandservices:

1.Directcosts:arethosecostswhichareincorporateddirectlyintothecost
products,worksandservicesintheirbeingembeddeddirectcosts
rawmaterialsandmaterialsanddirectlaborcostsoflivingsuchassalaries
directthoseinvolveddirectlyinproduction.

2.Indirectcosts:arecoststhatincludesexpensesthatcannotbeallocated
madedirectlyonproducts,services,works.Examplesof

Suchcostsarecostsofstaffsalariesaccountingoffice
costsofmaterialsdepreciationexpensesofequipmentusedinthework
ofproduction.Theseindirectcostsshouldbeallocatedonthebasisofkeys
allocation(distribution),thattogetherwithdirectcoststoformthetotalcost.

InFigureNo.3presentsthecomponentsofthetotalcostofaproduct,
workorservice:
FigureNo.3Thecomponentsofthetotalproductioncost

+ + +

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+ + +

= = =

Directmaterialcostincludesallofthoserawmaterialcostsandmaterials
becomepartofthefinishedproductmadeandcanbeidentifieddirectlyonthe

cost.Examplesofdirectmaterialcost:Melaminechipboardsformakingamobile
milkformakingicecream,etc.Indirectmaterialcostincludesthosecosts
materialsthatbecomepartofthefinishedproductdone,butcannotbeidentified
easilydirectlyonthecost.Examplesofindirectmaterialcosts:theadhesiveused

assemblyoffurniturelacquerfurniturepolish.

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Directlaborcostincorporatesallexpenditurerelatedtoworkforceinvolved
toachievethefinishedproductandcanbedirectlyattributedtothecostoftheobject.Examplesofcosts
directwage:wagesandsalaryelementsattachedtothembyworkers
directlyinvolvedinproduction.Indirectwagecostsarethosecosts
workforceemployedinactivitiesrelatedtoproductionactivity,butcannotbe

identifiedanobjectdirectlycost.Examplesofnonwagelaborcosts:salaries
guardsmanagersorshopfloor.

Otherdirectproductioncostsarethosecostsnecessarytoachievea
specificproduct,otherthanmaterialsorlabor.Examplesofothercosts
Directcosts:maintenanceofequipmentusedparticularlybymerelyreleasing

somefinishedproduct.Otheroverheadsincludeadiverserange
expensesrelatedtoproductionactivity,butcannotbereadilyidentifiedonsome

costobjects.Examplesofotheroverheads:rentexpenseswith
insurancepremiumsfortheheadquartersinwhichtheproductionactivity.

InFigureNo.4areshowntheelementsofnonproductioncost.

FigureNo.4elementsnonproductioncost

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Administrativecostsincludeallthecostsassociatedwithmanagementandactivity
Generalentitythatcannotbeassociatedwithanyproductionactivitynorthesale.

Examplesofadministrativecosts:staffsalariesintheaccountingdepartment
managementsalarieslegalpersonnelrentbuildingusedforadministrativepurposes.
Sellinganddistributioncostsincorporatesallexpenditureincurredfor
Promotionanddistributionofthefinishedproductonthemarket.Examplesofcostsofsale
anddistribution:packagingcosts,costsofadvertisingandproductpromotion,
commercialsalescommissionsforsalesrepresentatives,rentandinsurance
premisesusedforthesaleofproducts.

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B.Aftertheirbehaviorinrelationtoproductionactivitycanbedistinguished:
Fixedcosts:arecoststhatincorporatesexpendituresoccurringwhatever

thevolumeofworkperformedandthelevelofwhichdoesnotdependontheproductionvolume.

Examplesofsuchexpensesareinsuranceofbuildingsexpenses
rentmaintenanceexpenditureareas.
Variablecosts:arecoststhataredirectlyproportionaltovolumeproduction

andvariesinrelationtoit.Withinthesevariablecostsaredistinguished:costs
Directmaterialsthatenterdirectlyintothecostofproductsandservicesandgeneralcosts
variableswhichinfluencetheproductioncapacityareachieved.Anexampleofcost
Overallvariablecostofelectricityisconsumedbyequipment

production.

C.Aftertheirpositioninthebusinesscycle:
Costofproduct:includesallcostelementsthataregeneratedbyachievinga

product,performingworkorprovidingaservice.Thus,thecostoftheproduct

Itincludesmaterialcosts,laborcostsandotherproductioncosts.
D.Costperiod:coversallthecostelementsthatwerenotincludedinthecost
product,butincludesexpendituresthatweremadeduringthefinancialyear
reference.Examplesofexpensesrecognizedasperiodcosts:overheads
administrativedistributioncostsexpensespaidrentpenttruspaces
officeexpenses,insuranceadministrationbuilding.Sellingand

aretreatedasadministrativecostsoftheperiodbeingconsideredashavinga
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indirectnature.

D.Dependingonthedegreeofcontrolandtheabilitytoinfluencemanagement
thecosts:
Costcontrol:arethosecostitemsoverwhichthemanagerhas

possibilityofinfluence.ExampleofCostControl:wagecost.
Costsuncontrollable:includethosecostitemsthatarecausedbythirdparties

theexternalenvironmentoftheentityoverwhichthemanagercannotintervene.example
uncontrollablecost:thecostofinsurancepremiumsgeneratedbytheproductivespace.

E.Dependingontheircontributiontoassistmanagementdecisionmaking:
Themarginalcost:isthecostofthelastunitofproductassociatedwithanincreaseina

volumeofproductiontoanother.Itcanonlyhavethecharacterofavariablecost.
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Thecostdifferential:isaconceptbroaderthanmarginalcost,asithasin

thelastunitoftheproducttothecostduetoanychangesintheoverallcostof
activity,includingbothcostincreasesandcostreductionsandbetweentwo
alternativeproductionvolume.Thecostdifferentialcanhavebothacharacter
fixedcostandavariablecostnature.
Opportunitycost:thecostisdeterminedasacostgeneratedbytheactionofchoice

performedintwocases(alternative)different.Inotherwords,itisacostdeterminedby
analternativechoicewhenhaslimitedresources.Bysurrenderingthe
actionplan,thepositiveelementsoftheactionplanrejectedbecomesacost
opportunity.Example:ManagementofaneconomicentityproposedinAssembly

GeneralShareholdersinvestingasubstantialamountofmoneytopurchase
aplotoflandthatwillbeusedforexpandingbusinesspremisesoftheentity.
Thanbeinginvestedinlandplot,thisamountcouldbeusedfor
modernizationofproductionlines.Ifitwouldtaketheformeraction,profit

whichwouldbeachievedifselectedasthesecondembodiment,themodernizationofthe
manufacturingoftheamountinvested,becomesanopportunitycost.

Arelevantcostconceptinpracticeeconomicentitiesisthefullcost,whichis
costthatincorporatesallconsumptiongeneratedbyobtainingandsellingaproduct
(Costobject),includinginitsstructurebothcostofproductionandnonproductioncosts.In

Fig.5thecompletecostelements.

FigureNo.5costitemscompletely

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2.4.Costcenters,costobjectsandresponsibilitycenters

Foundationdesignandanadequatecostingisessential

toensuretherelevanceoftheinformationprovidedbymanagementaccounting.Must
Note,however,thatsuchasystemisbasedcostingafter

managementsystemandnotviceversa,isessentialforthemanagertohavetheperceptionoftheusefulness
howthesystemisdesignedtocosting.

Thefoundationandbuildingarelevantcostingsystemtobetaken
considerthefollowingkeyelements:

A.Businesscostthatistheactivitywhichisintendedtodetermine
distinctcostandhowexpensesareallocatedtoacostobjectserves
tohelpsubstantiatedecisionmakingonprofitabilityineach

part.Examplesofcostobjects:product,work,service,programdepartment,workshop
ofproduction.

B.Compliancecostsasdirectcostsandindirectcostsis
determinedhowtoestablishtherelationshipbetweencostsinvolvedandsubject
costconsidered.Compliancecostsaselementsofcost
attachedtoacostobjectisachievedbydirectlyaffectingthedirectcosts
directcostandformthatidentifiesadirectlinkbetweenexpenditureand
subjectofcost,aswellasdistributionacrossmultiplecostobjects
indirectcoststothecostobjectrelationshipisnotevidentallocation
therecanonlybebasedoncalculationsofemployment.

C.AnalysisCentersarethosewhichcollectinthestructure
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expenditurewillformindirectcosts.AnalysisCenterscanbedeployedin
outlooktask,activityoreconomicfunctiontheyserve,or

termsofresponsibilityexercised.Inthisrespect,therearecenters
responsibilitywhichisadepartmentorafunctionoforganizationalentity
whoseeconomicperformanceandeconomicprofitabilityistheresponsibilityof
somemanageratacertainhierarchicallevel.Inturn,thesecenters
responsibilitycantakemanyforms,suchas:
Costcenters:isdefinedascollectioncentersatacost

Organizationalunits,resultinginadivisionbasedonorganizationalwhichmaybe
bedeterminedonthebasisoffunctionalcriteriaoronthebasisofacriterion
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spacebar.Itshouldbeemphasizedthatthenetworkingcostcentersmust
Ahierarchyofcostcenterandeachcostcentercreatednewneeds

assignedtoagroupofcostcenters,accordingtothehierarchyestablished.Examplescenters
Cost:MarketingDepartmentcanrepresentagroupofcostcenters,and

WithinthissubgroupcanfindacostcenterPromotionandadvertising
followingcostcenters:

promotingmediachannelscostcenter

billboardspromotingthecostcenter
promotionthroughflyersadvertisingcostcenter

topromotedomestictradefairscostcenter
promotingexternaltradefairsandexhibitionscostcenter.
Centerofrevenue:revenuecollectioncentersareinoneunit

organizational.
ProfitCenters:aresimilartocostcenters,onlythatthisisthelevel

collectsbothcostsandrevenuesforanorganizationalunit,
reflectingtheprofitforaspecificorganizationalunits.
InvestmentCenter:issimilarprofitcenter,providedthatincludes

Additionalresponsibilitiestrackinghowcapitalinvestmentand
fundingopportunities,anditsperformanceismeasuredbytests

costeffectiveness,inordertodeterminereturnoninvestment.
Example:Ifasoftwarecompanydefiningthecenterinvestment
thetrainingofhumanresources.Supposethatthecompanywantsto
implementanewsoftwaretechnologythatwouldrequirefivenewposts.The50
employeeswhichmakethecompanydonothavetheknowledgerequiredtoimplement

thisnewtechnology.Ananalysisofreturnoninvestmentatthiscenter
investmentwouldimplyanefficiencyanalysisofhiringnewpeopleversus5

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effectivenessofinvestmentinvocationaltraining5thofexistingemployeesto
Ithasthenewskillsrequiredbytheimplementationofnewsoftwaretechnologies.

D.Criteriafortheassignmentrepresentthoseparametersandtechnicaleconomicvariables
Dependingonindirectcostscollectedatthecenterofanalysiswillbe
affectedacostobject.Thisparametercanbetechnicalfinancial(cost

directsalary,totaldirectcosts,turnover,directcostofproduction)or
nonfinancialortechnical,expressedinaphysicalunit(kgfeedstockprocessed,hours
labor,equipmentoperatinghours,mileage,etc.).Choosingparameterorcriterion
allocationdependingonwhichwillmaketheindirectcostallocationobjects
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costislatiduneaeconomicentity,butmusttakeintoaccounttheexistenceof
causallinkbetweenthatdimensionandindirectcoststobeallocated.Of

egforallocatingindirectcostsarisingfrommaintenanceandoperation
machineswouldlenditselfverywellasdistributionparametertheoperatinghoursof
thesemachines.

2.5.Featuresofcostbehavior

2.5.1.Theevolutionoffixedandvariablecosts

Inmonitoringtheactivitiesofeconomicentities,specialattentionshouldbepaid
themainfactorsthatinfluencetheevolutionandbehaviorofcosts.behavior
Costishowtheywouldreacttoapossiblechangeinvolume
activity.Thus,ifsomecostsremainfixedregardlessofchangesinvolume
activity,otherrangesinproportiontothechangesinthevolumeproductionwork.

Managementdecisionmakingisoftenbaseddependingonhow
costsandrevenuescouldevolveindifferentwaysoractionplans.Such
possibledecisionsaregiveninfindinganswerstoquestionslike:
Whatwouldbethevolumeofproductioninthenextperiodto
acertainlevelofprofit?
Itrequiresareductionofthesalespricetosellmoreunits

product?
Thereshouldbeacomponentoftheentityorproductis
profitablebuyingthemfromoutsideentity?

Theevolutionofcostsisinfluencedbyseveralfactors,amongthemthemostimportantbeing

volumeproductionoractivitylevel.Thevolumeorlevelofactivitycanbeexpressedinto
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oneofthefollowingsizes:

Numberofunitsproduced
thevalueofunitsoftheproductsold
Numberofproductunitssold
Thenumberandvalueofsalesinvoicesissued.
Abasicprincipleisthatthebehaviorofcostsasthevolume
increasebusinesscostsasawholealsowillincrease.responsibility
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accountantwillbetofindeachelementofthetotalcoststructureactivity
asproductionwilldevelopfurtheritsamendment.
Itisimportanttounderstandthatthecostisdefinedasthecostvariabletovarya

Withtheproductionlevelwemeanvariablecosttotal,whilevariablecostunit
perunitofoutputremainsunchangedaslongastheunitpriceofrawmaterials,
materialsandservicesconsumedremainsthesame.Ontheotherhand,fixedcosts
reactsinversely,meaningthatoveralltheywillremainconstant,butfixedcosts
unitvolumedecreaseswithincreasesinproduction.Thus,ifthefixedcostoverallremains
constantwithincreasingproductionvolumeatunitaryfixedcostunitwillbelower.

Evolutionvariablecosts

Thevariablecostsmaybedirectlyproportionaltothevolumevariationoractivity
recordarandomevolutionwithrespectthereto,therebygeneratingalinearmodelofdevelopment
namelydevelopmentnonlinearmodelofvariablecosts.

a.Theevolutionlinearvariablecosts
Evolutionlinearvariablecostswefindespeciallyinvariablecostsdata
Labor/unitproductcostofmaterials/productunit,etc.Weillustratethisidea,
assumingtheexampleofafurnituremanufacturingentitiesconsiderthatforeachseat

variablecostisachievedunit150RON.Intermsofproductionvolumedevelopments
accordingtotheaccompanyingtable:

Numberof Unitvariablecost Thetotalvariablecost

chairsmade
1 150lei 150lei
300 150lei 45,000lei
500 150lei 75,000lei
800 150lei 120,000lei
ItcanbeseeninFigureNo.6linearevolutionoftotalvariablecostinthisexample.

FigureNo.6linearregressionvariablecosts

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Ontheotherhandinthevariablecost/unitofproductdevelopmentsisconstant,after
AsshowninFigureno.7.

FigureNo.7evolutionoftheunitvariablecost

b.Thenonlinearevolutionofvariablecosts
Ineconomicpracticebuttheymayencountermanysituationswhereavariablecostnregistrea
developmentnonlinearwithrespecttooutput.Suchexamplescanbegivenby:

Thecostofutilities(electricityandgas).Asproductionvolumeincreases,consumption
utilitiesincrease,butdecreasestheunitcostofutilitiesconsumed.

Changesinthecostofdirectlabor,byincreasingordecreasing
productivity.

Leasecostsofequipment,theovertimecostsmorethan
Operatinghoursnormally.
Intheevolutionofnonlinearvariablecosts,tworelationshipscanhighlightpatternsofdevelopmentafter

asreflectedinFigureNo.8.
FigureNo.8Evolutionofnonlinearvariablecosts

(A)Cost (B)Cost

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productionvolume productionvolume

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Evolutionoffixedcosts

Fixedcostsarethosecoststhatremainconstantasawhole,regardlessofevolution
workload.Unlikevariablecosts,fixedcostsarenotaffectedby
changesinthelevelofactivity.Anexampleofafixedcostisthecostofrent.For

Toillustratehowevolvingfixedcost,weassumeinacompanyproduction
icecream,whichusesalineofmanufacturingactivityforwhichhepaysamonthlyrent

5000lei,thiscostisincurredregardlessoftheamountofunitsproducedresultsin
Afterproductionactivity.Intermsofproductionvolumeaccordingtodevelopments
tablebelow:

Monthlycost quantityproduction Fixedcost/unit

rentline product
production
5,000lei 10t 500lei
5,000lei 25t 200lei
5,000lei 35tons 143lei
5,000lei 40t 125lei

InFigureNo.9itcanbeseenintheexamplegiventheevolutionofthefixedcosts.

FigureNo.9Evolutiontotalfixedcosts

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Ontheotherhand,higherfixedcost/unitofproductisonedownwardasitcanbe
seeninFigureNo.10

FigureNo.10Evolutionoffixedcost/unitofproduct

Buttherearecertainsituationswhenandfixedcostscanbeinfluencedbypassingovera
specificactivitylevel(stepCosts).Agoodexampleofthiswouldbeifanentity
fortheachievementofitsoutputusingaproductionlinewithcapacityof
productionof1000pieces.Uptothislevel,regardlessofthevolumeactivityofproductioncost
Amortizationsamemanufacturinglineisbeingfixed.Ifvolumeexceeded1000
Eachisrequiredbutanewlineofproductionwillgenerateanothercostofdepreciation(for
twomanufacturinglines).ThegraphevolutionofsuchcostswouldappearasshowninFigure#11.

FigureNo.11Developmentcostsof"stepcosts"

Cost

productionvolume

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TocapturetheessenceofbehaviorfixedandvariablecostsinTable1,we
surprisedthemaincoordinatesoftheevolutionofthesecostsrelativetovolumeproduction
awhole,butalsotheunitofproduct.

Table1.Behavioroffixedandvariablecosts
Cost Costsbehavior(betweentworelevantlevelsofvolume
production)
overall Perproductunit

Thevariablecostsoftotalvariablecostvaries Theunitvariablecostremains
proportional modification constantperunitofproduct
workload
fixedcosts Totalfixedcostremainsconstantin Unitfixedcostdecreases
comparedwiththechangeinthevolumeof Asthevolumeofproduction
output increases,andincreasesas
productionvolumedecreases.

2.5.2.Proceduresfordeterminingthefixedandvariablecostelementsinthecomposition
totalcosts

Asensitiveissueistheseparationoffixedandvariablecosts,andtodelimit

Theircanuseseveralmethodsofwhichthemostimportantare:

a.methodofleastsquares
b.Theprocesspointsminimumandmaximum(highlowmethod)

Aleastsquaresmethodinvolvesthefollowingstagesofwork,
fromagivensituationcentralizinginformationonoutput
andtotalcostsofproduction:

1.Determinationoftheaverageproductionvolumebasedontherelationship:

where:

thephysicalvolumeoftheproductionmediumtakeninalltheanalyzedperiod

Qtthephysicalvolumeofproductionachievedinaperiodoftimet,

nnumberofperiodsconsidered.

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2.Establishtheaveragelevelofcostsfortheperiodconsidered

where:

totalcostsaveragetotalreviewperiod

CTttotalcostsofthereportingperiodt, Whichhaveseparatefixedcostsand

variablecosts.
nnumberofperiodsconsidered.

3.Determinationofthephysicalvolumeofproductiondeviationsforeachperiodconsidered
totheaveragelevelofproduction,accordingtotherelationship:

4.Determinationofthelevelofcostsineachperioddeviationsconsideredto
theaveragecost,accordingtotherelationship:

5.Establishunitvariablecostbasedontherelationship:

6.Establishtotalfixedcostsbylatelytakenintoaccount,
theprospectofasteadytrendforthecurrentperiod,accordingtotherelationship:

CF=CTnQnxCVU
where:
TheCarpathiantotalfixedcosts
CTntotalcosts

Qnquantityofproductsmadeinthereportingperiod"n"
CVUunitvariablecost.

B.Theprocedureofminimumandmaximumpointsinvolvingthefollowingsteps
workingfromagivensituationcentralizinginformationonvolume
productionandtotalcostsofproduction:

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Page33

1.Selectingtheseaandthatofthelowestlevelofcostsfortheperiod
review(CTmax,CTmin)

2.Selectthelargestrespectivelythesmallestlevelofproductionachievedin
periodanalyzed(QmaxQmin)

3.Determinationoftheunitvariablecostaccordingtothefollowingrelationship:

where:
CTmaxandQmaxisthemaximumcostandmaximumvolumeofactivity

productionrealizedduringthereportingperiodt, .
CTminandQministheminimumcostandminimumvolumeofactivity

productionrealizedduringthereportingperiodt, .

4.Determinationoffixedcostsaccordingtothefollowingrelationship:
CF=CTmaxQmaxxCVU
where:
TheCarpathiantotalfixedcosts
CTmaxtotalcostsoftheperiodwiththehighestlevelofactivity
Qmaxthequantityofproductsmadeduringthehighestlevelofactivity
CVUunitvariablecost.

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Practicalapplicationsolved:

1.SCExcelSAhasmadethefollowingstatementontotalcostsandquantities
productionmadeinthelastsixyears:

PhysicalVolume
Nr.Crt.Year production Totalcost(CT)
January20X0 32.320 808,000
220x1 28,800 772.800
320x2 31.680 801.600
420x3 35,200 836.800
520x4 33,600 820.800
620x5 30,400 788.800
Total 192,000 4.8288million

Itisrequiredtodeterminewhatwouldbethetotalcostthatwouldbeexpectedundera20X6
36.800productionvolumeofitems,byusing:

a.Processofleastsquares.
b.Processminimumandmaximumpoints.

a.methodofleastsquares

1.Determinetheaveragevolumeofproductionfortheentireperiodanalyzed:

2.Determinetheaveragetotalcostforthewholeperiodanalyzed:
=804.800lei/month

3.Determinethephysicalvolumeoftheoutputdeviationforeachperiodthevolumeofthe
averageproduction
Eg20X03232032000=320

4.Determinethetotalcostdeviationforeachperiodtotheaverage
Totalcost:
Eg20X0808000804800=3200

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Nr.Crt.YearQt CT Qt CTtQtxCTt
1808.00032.32020X0 3203,200 1.024million 102.400
232000320010240000077280020x110,240,00028,800
332032008016003168020x2 1.024million 102.400
420x335,200836,8003,20032,000102,400,00010,240,000
520x433,600820,8001,60016,00025,600,0002,560,000
620x530,400788,8001,60016,00025,600,0002,560,000
Total 192,0004.8288million 0 025804800025,804,800

5.Determinethevariablecosts:

6.Determinethetotalvariablecosts

20X0:10lei/pcsx32.320=323.200leipcs
Year20x1:10lei/pcspcsx28,800=288,000lei
Nr.Crt. year Qt CTT CVT
January20X0 32.320 808,000 323.200
220x1 28,800 772.800 288,000
320x2 31.680 801.600 316.800
420x3 35,200 836.800 352,000
520x4 33,600 820.800 336,000
620x5 30,400 788.800 304,000
Total 192,000 4.8288million1.92million

7.Determinethetotalfixedcosts

Nr.crt.year Qt CTT CVT CFt

January20X0 32.320 808,000 323.200 484.800
220x1 28,800 772.800 288,000 484.800
320x2 31.680 801.600 316.800 484.800
420x3 35,200 836.800 352,000 484.800
520x4 33,600 820.800 336,000 484.800
620x5 30,400 788.800 304,000 484.800
Total 192,000 4.8288million 2.9088million1.92million

8.Determinetheexpectedtotalcostduring20X6,intermsofvolumeof
productionof36,800piecesunderaconstanttrendoffixedcosts:

CT20X6=Cost+fixedcostvariablexTheoutputunit10RON=484800+x
36.800=852.800lei

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b.Theprocessofminimumandmaximumpoints:
1.Selectingtheseaandthatofthelowestlevelofcostsfortheperiod
review(CTmax,CTmin)

CTmax=836.800lei
CTmin=772.800lei
2.Selectthelargestrespectivelythesmallestlevelofproductionachievedin
periodanalyzed(QmaxQmin)

Qmax=35,200lei
Qmin=28,800

3.Determinationoftheunitvariablecostaccordingtothefollowingrelationship:

4.Determinationoffixedcostsaccordingtothefollowingrelationship:
CF=CTmaxQmaxxCVU
CF=83680035200x10=484800RON

5.Determinetheexpectedtotalcostduring20X6,intermsofvolumeof
productionof36,800piecesunderaconstanttrendoffixedcosts:
CT20X6=Cost+fixedcostvariablexTheoutputunit10RON=484800+x
36.800=852.800lei

Note!!!

Inthiscase,theresultsfrombothmethodsaresimilar,butsituationsmayarisein

thattheapplicationofthetwoprocesses,theresultsmaybedifferent.

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Practicalapplicationunresolved:

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2.SCProdturSAhasmadethefollowingstatementontotalcostsandquantities
productionmadeinthelast10years:

PhysicalVolume
Nr.Crt.Year production Totalcost(CT)
January2000 8080 202,000
February2001 7,200 193.200
March2002 7920 200.400
April2003 8800 209.200
May2004 8,400 205.200
June2005 7,600 197.200
July2006 7,850 199.700
August2007 8150 202.700
September2008 8350 204.700
October2009 7980 201,000
Total 80.330 2.0153million

Itisrequiredtodeterminewhatwouldbethetotalcostthatwouldbeexpectedin2010undera
productionvolumeof9,200pieces,byuseof:

a.Processofleastsquares.
b.Processminimumandmaximumpoints.
c.Processminimumandmaximumpoints,wherethepassagevolume
productionabove9,000pieces,fixedcostswouldshiftupwardwith

15%(duetothecostsofacquiringanewproductionlineto

facegrowthoftheproductionvolume).
d.Processminimumandmaximumpoints,whereattheendof2009
placepriceincreasesofrawmaterials,whichwillgenerateanincreaseinvariablecost
Unitin2010comparedto2009by3lei/piece.

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2.Aslu,T.,managementcontrolbeyondappearances,Ed.Economica,Bucharest,2001.

3.BaciuA.,costsorganization,planning,accounting,calculation,controlandanalysisPublishing
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