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CryoLife Inc. Message Board

  • thebuckeye777 thebuckeye777 Mar 25, 2013 2:13 PM Flag

    An accounting lesson

    Yes I did attend probably the best college in accounting west of the Mississippi. One of my professors who I took 4 courses from finished number two in the nation on the CPA exam. That was Frank Weinberger. Both Frank and his buddy Ed Celeski were so good that a number of the students were on the edge of their seats. They now have a building at my old school named after them.

    Ed Celeski was a specialist in cost accounting. I took two classes on cost accounting from Ed. Probably Ed's best message was the dangers of cost allocation in making business decissions. His example was four Chinese grocery stores owned by the same family. If you used cost allocation it looked like two of the gocery stores were losing money and it would be a smart idea to close them. However if you did the company would end up losing money. The reason is the important number is contribution!!!!!!!!!! If a division is making a contribution towards fixed overhead then it is a viable part of overall profitability of the business!!!!!!!

    Now that doesn't mean that the division can't be improved or the capital deployed in a better way. It just means that if the division is making a contribution then it is contributing to the overall profitability of the company.

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    • dlhild Mar 25, 2013 4:39 PM Flag

      buckeye, I accept that Ed Celeski was a great accountant and a great instructor. I assume then too that he would have shared this "contribution formula" with you and other students. Would you then be so kind as to apply the "contribution formula" your talking about specifically to the two tissue cost centers? Please use either CY2011, or CY2012, data. In addition, please explain what is important about the subject "contribution formula", as well as sharing with us the details of any related math calculations? Thank you.

11.81Jun 30 4:02 PMEDT