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What is the importance of costing
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“Dealing with today’s competition is challenge enough, even when you have all the right information. But if you are responding to wrong information, you could well be in losing battle”( b.b. turney). These words accurately show importance of relevant information and systems which allow managers to make good decisions. One of the most important issues of the analysis of the company’s business activities is determine their indirect costs. For decades the most used cost accounting method were traditional systems- rely on volume-related measures to trace overheads to products. However, “while this approach has the advantage of simplicity, it will result in systematic miscosting, where overheads are not volume driven”(innes&Mitchell citat in Krishnan, p.77). Therefore, traditional cosing methods are not capable of accurately determining process costs, and without that full term effectiveness and efficiency implemented actions is simply impossible. Moreover, they “tend to report less accurate costs, because they use cost drivers where no cause-and –effect relationships exist to assign support costs to cost objects”( drury p.253).Traditional procedures for the settlement of indirect costs were for decades the only procedures to assign costs indirect costs to product. These methods were appropriate at a time when the company produced a limited number of products, and the cost of materials and direct wages for example in firms costs were much higher than the share of indirect costs. Indirect costs accounted for a small part of the cost product, theircalculation did not pay too much weight, and the resulting distortion in the calculation of the product were not significant. Rapidly changing environment and a high degree of complexity proces...
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...s the amount of work, effort as data collection and analysis requires a large commitment of employees. Furthermore, variability of activity will need to continuosly update the model as it does not allow for long-term use of automated procedures. Therefore, “given the general perception of the amount of work involved with ABC it is not suprising that implementation of the costing system is relatively more difficult for the small companies who experienced lack of trained staff and computer resources.”( cob,p.17) Besides that, doubts about benefits of the model cause, that other companies activities are in priority before the creating sufficient cost model. Implementing the ABC is difficult from the technical side of the process. However, these problems becoming less serious in favour of the problem of overcoming resistance for a change, which seems to be major issue.
[4] Colin Drury, Management and Costing Accounting, (7th edition), Chapter 3, Cost Assignment, p. 54-59
The presentation of the material is in dollars only. Overhead is applied to products as a percent of direct labor dollar cost. Factory profit for each year is found by subtracting direct material, direct labor, and direct overhead costs from total sales. The overhead percentage is calculated at the same time budgeting and is applied as a single overhead pool throughout each model year. The consulting company used 435% of direct labor costs in 1987 for their study; the budgeted was actually 437% (OH/DL=107,954/24,682). A similar percentage applies in the following year (109890/25294=434.5%). However in the next two years, after the outsourcing of oil pans and mufflers was enacted, the allocation of overhead in...
The Small Claims Procedure The small claims procedure is regulated by RSA 503 in 1973. It is a simple, speedy, and informal method by which an individual appears before a judge of the district or municipal court, presents his or her claim, and explains why another person or business owes money to him or her. Small Claims Court can award up to $5000 in damages (larger claims can be heard, but the maximum that can be awarded is $5000). Although not required in Small Claims Court, any persons or businesses involved in the proceedings may be represented by a lawyer if they wish. Another aspect of a small claims proceeding is that a judge may ask to hear any evidence deemed relevant and proper, since the technical rules of evidence do not apply in a small claims proceeding.
Even though a myriad of tools and techniques learnt in the Strategic Cost Management and Strategic Business Analysis courses are not fully exploited in this essay, it is generally recognised that those techniques are useful for a corporate to formulate strategy, do strategic planning, control costing and quality, as well as eventually elevate its values, regardless the nature and size of organizations.
Louisiana is made up of a diverse background. People immigrated to Louisiana from all around the world in hopes of better lives and everything associated with it, my family was no exception. No one in my family seemed to have very extensive knowledge of our background or how we immigrated to America. Through research I discovered that Vicknair is a derivative of the German surname Wichner. According to this my family must have descended from Johann Nikolaus Wichner, who came to America in the 1720’s. Actually all Vicknair’s in Lousiana can trace their heritage back to him. Supposedly under French and Spanish occupation of Louisiana the government documents got crossed and there were some difficulties in translation so Wichner became Vicknair. Johann would have settled in the area that has become known as the German Coast. Johann migrated at a time when many immigrants were migrating into America all looking for a better life with more opportunities than what they left in their home countries.
Do a further analysis of production costs to improve efficiencies. If all else fails, either increase prices to the point where the contribution margin is positive, or drop the customer. 3. What is the difference between a'smart' and a Managerial Implications and Analysis Limitations Managerial Implications: What are the benefits of Moving from a traditional cost accounting system to ABC can reveal hidden costs and hidden profits on the basis of the identified activities (i.e. customers, orders, etc. ). Treating overhead costs as "fixed" can cause an unfair and highly misleading distribution of overhead costs, which are in fact variable.
"College Accounting Coach." Process Costing-Definitions And Features(Part1) « Process Costing « Cost Accounting «. Feb. 2007. Web
The contained paper has been prepared with objectives of elaborating over the three different costing methods namely, Absorption/Full Costing, Variable/Marginal Costing, and Activity Based accounting. The first segment of the report seeks to define and illustrate the costing methods based on the personal understanding of the writer gained through the class room and the academic readings. Part two of the report takes a form of short essay, written critically to evaluate the application of standard costing and variance analysis to any size of business, and concludes with a verdict that whether or not standard costing and variance analysis is applicable to each business with consideration of its costs and benefits of the system.
Alternative Dispute Resolution or ADR refers to a number of various processes that can be used to resolve legal disputes other than by litigation. Recently, methods of dispute resolution which focus on arbitration, mediation and negotiation as an alternative to adjudication have gained notoriety. This notoriety may have been caused by the public perception that ADR methods are less expensive, more efficient, and more satisfactory than the normal traditional course of litigation. The goals of establishing these processes to resolve disputes as an alternative to more formal legal processes include: 1) to make the regular court system more efficient, less costly and more responsive to the needs of the litigants; 2) to offer alternative methods of dispute resolution in addition to the regular court system; and 3) to provide public education about the available alternatives.
Cost Accounting: Its role and ethical considerations Introduction: Accounting is the process of identifying, measuring, and communicating economic information about an entity for the purpose of making decisions and informed judgements. The major areas of within the accounting are: Financial Accounting, Managerial Accounting/Cost Accounting and Auditing- Public Accounting Managerial accounting is concerned with the use of economic and financial information to plan and control the activities of an entity and to support the management in planning and decision-making process. Cost accounting is the subset of managerial accounting and it helps management in determination and accumulation of product, process or service cost. Role of Cost Accounting: Increased competition and uncertain business conditions have put significant pressure on corporate management to make informed business decisions and maximize their company?s financial performance. In response to this pressure, a range of management accounting tools and techniques has emerged.
Hansen, D., Mowen, M., & Guan, L., Cost Management: Accounting & Control 6th ed., Mason, Ohio: South-Western
Advantages and Disadvantages of Alternative Dispute Resolution. Alternative Dispute Resolution (ADR) involves dispute resolution processes and techniques that fall outside of the government judicial process. There has been moves against ADR in the past by entities of many political parties and their associates, despite this, ADR has gained inclusive acceptance among both the broad community and the legal profession in past years. In fact, many courts now entail parties to remedy to ADR of some type, usually mediation, before allowing the parties' cases to be tried. The increasing attractiveness of ADR can be clarified by the increasing caseload of traditional courts, the perception that ADR imposes fewer costs than litigation, a preference for confidentiality, and the desire of some parties to obtain larger control over the selection of the individual or individuals who will decide their dispute.
1.What is the ABC cross model? Define what is meant by the product costing, process costing, and the “what-if” cost-modeling perspectives of ABC.
Others feel that ABC would be more widespread in industry if it were marketed better by the cost accounting profession itself [1]. As the dust has settled, ABC has turned out to be less a revolutionary technique than a useful refinement to proven systems. The costs of products and services must be accurate, or management can be misled. Decisions... ...
Firms today are trying to introduce activity-based costing into their system, however, some firms are unsuccessful in the implementation, which later result in abandoning the ABC system. According to research, the reason of failure ABC implementation in People’s Bank of China is due to lack of a clear business purpose about the implementation, lack of education about ABC, poor ABC model design, lack of participants, individual and organizational resistance to change, and few outsourcers available. To solve these problems, top management support and cross-functional involvem...