Library / Management Accounting Principles Framework
Jump to passage
In this reading

Link to current text

Published source confirmed at last check

Source changed 2026-10-03 02:22:15 UTC · snapshot created 2026-10-03 03:38:22 UTC · last check 2026-10-03 03:45:20 UTC

MA.3:5 - Archetypal Grounding

A shared support arrangement costs 1,200 per period. Its supplied terms keep the payment unchanged if either segment closes during this horizon. A required internal charge uses observed support-hours: six for A and four for B. The agreed assignment is therefore 720 to A and 480 to B.

A has revenue 900 and other avoidable payments of 300. B has revenue 700 and other avoidable payments of 200. After the shared assignment, A shows −120 and B 20; together they show −100.

If A closes and all other conditions remain unchanged, the group loses its 600 contribution while the shared payment remains 1,200. B’s remaining account is 700 − 200 − 1,200 = −700. The assigned loss of 120 did not identify a 720 payment saving.

If an actual permitted supply change instead avoids 300 of the shared payment in the relevant horizon, include that changed amount. The comparison now differs by −600 + 300 = −300, under the stated remaining premises. OPS.14 performs the choice with any further displacement, timing and feasibility consequences. Reallocating the same 1,200 does not supply this change.