a.In order to assist the managers and Board of Management you are compiling a resource which will define the various management accounting terms used in the process of strategic analysis. Provide an explanation of the following terms, with examples which incorporates a reason why each concept is relevant or not relevant to decision-making.
Sunk cost, incremental cost, opportunity cost, cost experience, contribution margin, limiting resource, cost structure, tactical decisions, value-based costing and sensitivity report.
b.Included in the tasks in F & B is the job to set-up conferences and special groups. An analysis of set-up costs indicates a reduction over time where similar corporate event are produced which you have attributed to cost experience. What is meant by the term ‘cost experience'? Explain what ‘80%' refers to when used in the term ‘80% cost experience curve.