Data, data flows, and model specifications for linking multi-level contribution margin accounting with multi-level fixed-charge problems

Area of Science:

• Management Accounting
• Operations Research
• Quantitative Methods

Background:

• Cost accounting systems often lack integrated optimization capabilities.
• Multi-level contribution margin accounting provides detailed profitability insights.
• Multi-level fixed-charge problems (MLFCP) offer a framework for optimization.

Purpose of the Study:

• To link multi-level contribution margin accounting with MLFCP for improved decision-making.
• To demonstrate how this linkage uncovers hidden optimization potentials.
• To provide practical spreadsheet implementations for this integration.

Main Methods:

• Integration of cost accounting data with MLFCP models.
• Utilization of mathematical optimization techniques.
• Development of three spreadsheet versions: deterministic, stochastic, and robust optimization.
• Application of sensitivity analysis.

Main Results:

• Successful linkage between multi-level contribution margin accounting and MLFCP.
• Identification of previously unrecognized optimization opportunities.
• Development of downloadable, ready-to-use Excel files for deterministic, stochastic, and robust optimization.
• Specifications for solver add-ins and sensitivity analysis provided.

Conclusions:

• The integration enhances decision-making by revealing optimization potentials.
• The provided data and spreadsheet tools support research, practice, and education.
• This approach offers a valuable template for various applications in management and cost accounting.