than being fixed in amount. Purpose:--The purpose of a flexible budget is to develop an estimate or estimates of cost for one or more levels of activity. Activity levels are typically measured in terms of activity inputs, levels, or outputs. Such a budget is flexible in the sense that it depends upon a specified level of activity volume. Acquisition budgets focus on the costs to be incurred to acquire actual or planned levels of resources. Labor budgets, purchasing plans, and similar budgets
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Merchandising firms | Purchase authorization | Production planning and control function | Inventory control function | Monitor inventory records The inventory control monitors and records finished goods inventory levels, when inventories drop to a predetermined reorder point, a purchase requisition is prepared and sent to the prepare purchase order function to initiate the purchase process. Prepare purchase order The prepare purchase order function receives the purchase requisitions, which are sorted
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THE CASE BETA COMPANY SYNOPSIS Beta Company produces two Product A and B and standard costs of each product were predetermined by management. During November actual production for Product A was 4,200 units while Product B was 3,600 units. For material X, 39,000 pounds were purchased at $14.40 and for material Y, 11,000 pounds were purchased at $9.70. Variance analysis for actual cost versus standard cost should be prepared for the said month to be able to measure results of operations, which
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units Labor Hours Required = 200 000 hours Activity (Cost Driver) | Budgeted Costs for 2010 | Cost Driver Used as Allocation Based | Cost Allocation Rate | Material Handling | $ 325 000 | Number of parts used | $ 0.25 per part | Cutting & Lathe Work | $ 2 340 000 | Number of parts used | $ 1.80 per part | Assembly & Inspection | $ 5 000 000 | Direct labor hours | $ 25.00 per hour | Units Produced | Direct Materials Costs | Number of Parts Used | Direct Labor Hours | 3 800 |
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large shipment of the collection is scheduled for delivery to schools in South America at the end of the week, just in time for the beginning of the school year. The approximate cost to reproduce and repackage the toy collection is $100,000. This report identify three possible ways to address the situation using a standard decision making process. The report will evaluate several considerations for each possible solution and make an ultimate recommendation. The impact of this decision on customer
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Integrity 5 Credibility 5 Corporate Social Responsibility 5 Manufacturing Costs: 6 Non-Manufacturing Costs 6 Product Costs vs. Period Costs 6 Prime Costs vs. Conversion Cost 7 The Activity Base (Cost Driver) 7 Fixed Cost and Variable Costs 7 Cost Classifications for Predicting Cost Behavior 7 Mixed Costs 8 The High-Low Method 9 Cost Classification for Decision Making 10 Opportunity Cost 10 Sunk Costs 10 Types of Product Casting Systems 10 Why use an allocation base? 11
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objective basis for rewards DISADVANTAGES * Cost (to both employer and employee) * System complexity * Declining or variable pay * Union resistance * Delay in receipt * Rigidity of system * Narrowness of performance Incentive Measure | Example | Description | Amount of output | Piece rate; sales commission | Merit pay or more pay for more production. | Quality of output | Piece rate only for pieces meeting the standard; commission only for sales that are without
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effectiveness throughout the plant. Without a doubt, old technology makes it harder for the manufacturing process and takes longer to get the products to the end user. A five year plan to update technology would be more cost effective and can address the technology issues on a predetermined plan over the five year term. (02) Purchase new equipment to eliminate sharing manufacturing equipment between the two different types of anchors. The new equipment should be state of the art to assist with the technology
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marketing of petroleum products as well as new energies. TOTAL’S APPROACH TOTAL’s financial statements are presented in EUROS and have been prepared on the basis of International Financial Reporting Standards. TOTAL’s financial reporting is in complete accordance with IFRS accounting standards in nearly all aspects of its financial statements. There are also a few accounting maneuvers conducted by TOTAL that have yet to be covered by IFRS. The following are a few ways they are in accordance with
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Page of notes Variances COST VARIANCE is deemed unfavourable if actual>standard and vice versa DIRECT MATERIAL PRICE VARIANCE = PQ (AP-SP) PRICE VARIANCE = (PQ-AP)-(PQ-SP)…. If given a sentence such as ‘purchased 320,000kg of direct material at a total cost of $608,000 substitute (PQ-AP) with $608,000. E.g. $608,000 – (PQ-SP) DIRECT MATERIAL QUANTITY VARIANCE = SP (AQ-SQ)……..SQ = standard KG/unit x actual good output (e.g. 38,000 dartboards)……AQ = actual kg of direct material used
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