P2 Exam Dumps : Advanced Management Accounting

Functional analysis is carried out only on existing products and is concerned only with minimizing the cost of the originally defined functions of a product.

Value engineering is a fundamental rethinking and radical redesign of an organization's existing processes.

Target costing is continuously setting new stretch targets while the product is in production.

Value analysis is examining a product's costs in order to achieve its purpose at a reduced cost while maintaining its reliability and quality.

Kaizen costing is seeking to make cost savings by continuously making small incremental cost reductions while the product is in production.

1 + money rate = (1 + real rate) x (1 + inflation rate)

1 + real rate = (1 + money rate) / (1 + inflation rate)

1 + real rate = (1 + inflation rate) / (1 + money rate)

1 + money rate = (1 + inflation rate) / (1 + real rate)

1 + inflation rate = (1 + money rate) x (1 + real rate)

A negotiated transfer price could help to overcome the problem of establishing a single price for this external market.

A single market price for all of the division's output can be determined easily whereas a negotiated transfer price may result in protracted negotiations.

A negotiated transfer price will always result in goal congruence whereas this is not always true when using a single market-based transfer price.

A market-based transfer price will ensure both divisional autonomy and goal congruence because part of the division's output is sold to the external market.