Managerial Accounting

One of the things we keep discussing in Managerial Accounting is how you should think of cost distribution in a company as a tax. For example, when you allocate overhead by headcount (one way of distributing against labor) you give your employees incentive to reduce headcount. This will cause managers to pursue less employees (so hopefully they are very skilled) rather than more employees (who may have less skill but may be cheaper labor). The point of this is NOT to say that it is a bad thing, just to be aware (as a manager) what motivations your subordinates will have when looking at their budget. This really also delves into basic economics and externalities (who gets the gains and who pays for something) as well, but many of our classes overlap. It is better that way. You have to learn something more than once before it sticks.

This got me thinking about food in this country and around the world. In the US, food is often not taxed or taxed less than other items. With the government paying for people’s health care, people are not given incentive to concern themselves with their health, people are not properly weighing out the cost benefit of their health because others bear some of the costs, and thus overeating. Perhaps we should tax food more so that people quit eating so much.