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Profit Model
The profit model is the linear, deterministic algebraic model used implicitly by most cost accountants. Starting with, profit equals sales minus costs, it provides a structure for modeling cost elements such as materials, losses, multi-products, learning, depreciation etc. It provides a mutable conceptual base for spreadsheet modelers. This enables them to run deterministic simulations or 'what if' modelling to see the impact of price, cost or quantity changes on profitability. Basic model : \pi = pq - (F_n+wq) \, where: : is profit : ''p'' is sales price : ''F''''n'' is fixed costs : ''w'' is variable costs per unit sold : ''q'' is quantity sold For an expansion of the model see below. Background The justification for wanting to express profit as an algebraic model is given by Mattessich in 1961: :'To some operations analysts the mere translation of accounting models into mathematical :terminology, without a calculus for determining an optimum, might appear to be a ra ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Cost Accounting
Cost accounting is defined by the Institute of Management Accountants as "a systematic set of procedures for recording and reporting measurements of the cost of manufacturing goods and performing services in the aggregate and in detail. It includes methods for recognizing, allocating, aggregating and reporting such costs and comparing them with standard costs". Often considered a subset or quantitative tool of Management accounting, managerial accounting, its end goal is to advise the management on how to optimize business practices and processes based on cost efficiency and capability. Cost accounting provides the detailed cost information that management needs to control current operations and plan for the future. Cost accounting information is also commonly used in financial accounting, but its primary function is for use by managers to facilitate their decision-making. Origins of cost accounting All types of businesses, whether manufacturing, trading or producing services, r ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
What-if Analysis
Sensitivity analysis is the study of how the uncertainty in the output of a mathematical model or system (numerical or otherwise) can be divided and allocated to different sources of uncertainty in its inputs. This involves estimating sensitivity indices that quantify the influence of an input or group of inputs on the output. A related practice is uncertainty analysis, which has a greater focus on uncertainty quantification and propagation of uncertainty; ideally, uncertainty and sensitivity analysis should be run in tandem. Motivation A mathematical model (for example in biology, climate change, economics, renewable energy, agronomy...) can be highly complex, and as a result, its relationships between inputs and outputs may be faultily understood. In such cases, the model can be viewed as a black box, i.e. the output is an "opaque" function of its inputs. Quite often, some or all of the model inputs are subject to sources of uncertainty, including errors of measurement, err ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Algebra
Algebra is a branch of mathematics that deals with abstract systems, known as algebraic structures, and the manipulation of expressions within those systems. It is a generalization of arithmetic that introduces variables and algebraic operations other than the standard arithmetic operations, such as addition and multiplication. Elementary algebra is the main form of algebra taught in schools. It examines mathematical statements using variables for unspecified values and seeks to determine for which values the statements are true. To do so, it uses different methods of transforming equations to isolate variables. Linear algebra is a closely related field that investigates linear equations and combinations of them called '' systems of linear equations''. It provides methods to find the values that solve all equations in the system at the same time, and to study the set of these solutions. Abstract algebra studies algebraic structures, which consist of a set of mathemati ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
