ABSTRACT: This teaching case, based on the activities of an actual local CPA firm, explores the application of management accounting principles to the management of a CPA firm. Management principles explored include: basic cost accounting; managerial discretion when classifying variable versus fixed costs, and direct versus indirect costs; the use of regression analysis to further explore classification of variable versus fixed costs; and cost-volume-profit analysis. In this case, students have the opportunity to explore the use of management accounting concepts and tools in a service industry context. Additional materials are made available to the instructor to extend the cost analysis to explore operational budgeting and variance analysis using extensive spreadsheet assignments.

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