12 Jun W2D2
This week, you were asked to access a number of videos and websites. These are great resources to help you learn the materials this week. Consider what type of resource you find most helpful in learning new materials (videos, examples, text, etc). Then consider which topic you struggled with the most this week. Complete an online search for a new resource that will help you with that topic. For example, if you learn best from videos and you struggled with the topic double entry accounting, then complete an online search for “double entry accounting videos”. If you learn best by examples, search for “double entry accounting examples”. Select one of the items you find in your search that you found particularly helpful in learning the topic you struggled with the most and post a summary of the resource and a link to the resource.
INITIAL POST
Cite and summarize the resource.
FOLLOW UP POSTS
As you review what your peers have posted, use your critical thinking skills to respond to their interpretations and conclusions. Seek clarification for points of interest to you.
Write at least 300 words
Post at least two replies to either peers or the instructor
Write at least 150 words per reply
Deborah Banks
I am pleasantly surprised at my ability to understand the concepts in Chapter 2 and 3. The course book is clear and easy to follow as the accounting concepts are laid out and built upon. I decided to seek additional information about the high-low method to analyze mixed costs. The high and low levels of activity do not always match the high and low amounts of cost, but, are used by analysts to reflect the greatest variation in activity. (Noreen, 2017). I usually am a visual learner, but, I was able to understand this method through text and decided to conduct an online search for an article this week.
I used Ebsco host, entering ‘high-low method of accounting’ and stumbled across an article questioning the validity of accountants using this method. This paper suggests an unrecognized ambiguity of the high-low method, stating there are more sophisticated methods available for analyzing mixed costs. The high-low method relies on two extreme outputs, the highest and lowest to reflect the change in cost that results in change in output. It is also held that this method utilizes the two points representing the greatest variation. “Thus, the reader either assumes that periods of high (low) activity correspond to periods of high (low) cost, or he is at a loss to choose between activity or cost to determine the high and low points.” (Nurnberg, 1977). This article used graphs to demonstrate the three approaches to the high-low method, two actual-paired observation approaches and one hypothetical-paired observation approach. The author goes on the explain each approach in detail. I gained additional knowledge and understanding of the high-low method and would recommend this article to others.
References:
Noreen, E. (2017). Managerial Accounting for Managers (4th Edition). Mcgraw-Hill Education
Nurnberg, H. (1977). An Unrecognized Ambiguity of the High-Low Method. Journal of Business Finance & Accounting, 4(4), 427–442. https://doi.org/10.1111/j.1468-5957.1977.tb00726.x
Reginald Mann
I found mixed costs, fixed costs and variable costs to be the easiest concept to learn this week through the videos provided and lectures. The week 2 power point lectures also provided a more in-depth understanding of each of the concepts, allowing me to understand them better. I still will need more practice with understanding a lot material in this course because it is new to me. Cost Volume Profit analysis too a little time to fully understand. The videos this week provided a detail explanation of CVP, however I researched further through YouTube videos to try to get a better understanding of the concept. CVP determines how changes in costs and volume will affect a company’s operation and net income Contribution margin is the amount that remains from sales revenue after the variable expenses have been deducted (Noreen, 2017, p. 41). Contribution margin determines the break-even point (sales) by dividing the fixed costs by the contribution margin ratio. The High-Low method is another concept I struggled with. It is used to calculate the fixed and variable costs. It takes the highest activity level and lowest level and compares the total costs at each level. I haven’t had much experience with this concept but with more practice and research I can get better at understanding it.
Cost Volume Profit Analysis (CVP): calculating the Break Even Point . (2013, July 11). Retrieved from YouTube: https://www.youtube.com/watch?v=Nw2IioaF6Lc
High-low method example – How to calculate variable cost, fixed cost using high-low method. (2015, June 1). Retrieved from YouTube: https://www.youtube.com/watch?v=hnJfjNK4rEI
Noreen, E. (2017). Managerial Accounting for Managers (4th ed.). Mcgraw-Hill Education.
Tutor, T. A. (2014, October 24). Contribution Margin and CVP Analysis (Part 1 of 2) . Retrieved from YouTube: https://www.youtube.com/watch?v=IOE9QB6RYJU
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