You may have heard about cost centers, revenue centers, profit centers, and investment centers. These are typical organizational units (responsibility centers) that companies have these days. A micro (pseudo) profit center is a similar concept, but it differs in its size, purpose and, sometimes, results. In this article, we will talk about micro profit centers in accounting and how they fit and work in organizations.

Transfer pricing is an important topic for top management, accounting and finance departments, and financial auditors, especially among multinational corporations. Transfer pricing is important for at least two reasons: performance evaluation of business units or segments; and tax strategy. There are several methods that can be used to calculate an optimal transfer price. In this tutorial, we review these methods and provide examples.

Intercompany transfer pricing is a large area of attention for top management, chief financial officers, finance directors, auditors, and others within organizations with multiple business units or subsidiaries. In this accounting tutorial, we take a look at what transfer pricing is, why intercompany transfer pricing is important, different transfer pricing methods, and the tax implications of transfer pricing.

Organizations need to estimate costs to make pricing decisions, manage expenditures and investments, forecast litigation outcomes, bid for government contracts, and so on. The common methods used to estimate costs include: account analysis, statistical analysis, and engineering analysis. In this article, we will review an example of account analysis.

Accountants and auditors have a lot of career opportunities. Choosing an accounting job in an industry with better pay may ultimately provide a much better financial return over the course of your career. In this article we will discuss industries with the highest (and lowest) salaries for accountants and auditors.

Cost estimation is a process of estimating (predicting) the cost of a cost object. A cost object is anything we are interested in estimating or calculating a cost for. Examples of cost objects include products, services, projects, activities, business units, product lines, customers, suppliers, and so on. Before we discuss common cost estimation methodologies and tools, we need to understand the reasons for cost estimation.

Key performance indicators are usually associated with organizational departments or units with highly visible outputs (sales, customer services, production, etc.). However, accounting and finance departments also have stakeholders to whom they provide services. It makes sense then to have KPIs for accounting and finance departments to measure and increase their performance.

“Can we decrease the selling price of a product and stay profitable?” “Should we purchase a component part from a supplier in Mexico, Canada, China, or the EU, or should we manufacture it locally?" “How much would it cost us to manufacturer a product?” “What is the estimated profit of our North American division next year?” “How much in advertising expenditures can we budget for the next quarter?” “How much should we bid for a federal construction project?" “What is the anticipated cost of a litigation case?" … The list of questions managers face in their daily decisions is infinite. Managers are paid to manage people and make decisions. Many decisions are forward-looking and require an estimate of future benefits and costs. This is called a cost-benefit analysis. Often the cost-benefit analysis involves the comparison of a few alternative courses of actions, but sometimes it can be used to evaluate just one scenario.

Over the years we created hundreds of accounting articles and tutorials on various accounting topics ranging from debits and credits for accrued payroll to results of interesting peer reviewed accounting research to financial analysis. These are the most popular articles and tutorials on our website for your enjoyment.

Accounting is one of the desirable professions that brings a relatively stable and high income to those who choose it. In this article, we will take a look at accountant and auditors’ salaries by state and how the cost of living impacts them, which can be important when deciding where to find a better paying job.