Costing Model: There are two costing models that can be used to allocate costs: traditional costing and activity based costing. Both costing models allocate direct material costs, direct labor costs and manufacturing overhead costs to the products being manufactured. However, the difference between the two models involves how the manufacturing overhead costs are allocated. Traditional costing allocates overhead costs to the products manufactured on the either direct labor hours, number of units produced, or machine hours used in production. The traditional costing method lumps all overhead costs into a single pool and allocates those costs across all products produced based on one of the three cost drivers (direct labor hours, number of units produced, or machine hours).
Throughput is the rate at which the system generates money through sales while inventory is all the money that the system has invested in purchasing things which it intends to sell. And operational expense is all the money the system spends in order to turn inventory into throughput. In traditional meaning, throughput is defined as the rate at which the system generates money through production whereas inventory includes the direct labour cost invested on the products and operational expense is all the money the system spends in order to turn inventory into throughout. I found the new definition is useful because it eliminates the confusion over whether the money spent is an investment or an expense . 2.
Authors Pearce and Robinson (2009) suggest, a balanced scorecard “Is a set of measures that are directly linked to the company’s strategy,” “Directs a company to link its own long-term strategy with tangible goals and actions,” and “Provides a framework to translate a strategy into operational terms” (p. 202). A balanced scorecard is comprised of four perceptions: financial, customer, internal business process, and learning and growth (Pearce & Robinson, 2009). Utilizing Kaplan and Norton’s development of the balance scorecard AB Cleaners (ABC) evaluated its strategies relative to their mission and vision. The preceding matrix echoes ABC’s measurements, its targets, and supporting initiatives for each of the four perspectives associated with the
Advanced Practitioner Certificate Module 1: Provision of Effective & Efficient Administration Contents Task Introduction 1. Pay Method, Procedures and Audit 2. Types of Payroll Outputs and Recipients 3. Total Quality Management Conclusion Recommendations Reference List Bibliography Appendix Advanced Practitioner Certificate Module 1: Provision of Effective & Efficient Administration The Task: Using your own work area as the subject for study assess the effectiveness of the internal procedures that are used to administrate the payroll function and provide information to other stakeholders Introduction The aim of this report is to outline and assess the effectiveness of the internal administration procedures within Sita UK Limited. The company is a nationwide waste management organisation divided within two main divisions of Logistics and Processing.
According to authors of text book, Operations Management (Reid & Sanders, 2010), SCM is also defined as the “design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally”. The objective of the integration effort is to maximize company value to maintain competitive advantage in the market place. For this purpose Durham International Manufacturing Company needs to take action in response to market demand. Market demand can be ascertained if there is integration with the regional distribution centers and retail centers that distribute and sell the products of Durham International Manufacturing Company. The integration process should first start with the distribution and then should reach out with suppliers (Ellram, 1991).
Analyze the income statement of Eastman Kodak. Write a summary that includes important points that an analyst would use in assessing the profitability of Eastman Kodak. Include your analysis of indicators such as earnings per share, operating income, and comprehensive income. In analyzing Eastman Kodak’s income statement there are many points an analyst might consider when analyzing the income statement trying to assess the profitability of Eastman Kodak. The first thing an analyst may look at is Kodak’s sales and operating costs.
Chapter 01 What Is Organizational Behavior? True / False Questions 1. Strategic management focuses on the product choices and industry characteristics that affect an organization's profitability. True False 2. The theories and concepts found in OB are drawn from two disciplines: human resources management and strategic management.
Full costing is an account of the entire cost involved in production or rendering service. Atrill & McLaney (2009, pp.92) puts it as a process that accounts for all cost associated with producing a product or service. Full costing is an essential process to the prizing of any product or service because it aids with the classification of all expenses involved in production and manufacturing and aids in the final costing of the product or service. Full costing is used by managers as earlier mentioned to decide product pricing and output, it is used to exercise control in all work process, it is used by managers to assess relative efficiency which will aid in the comparism of cost related to type of product or area of production to determine cost efficiency, it is finally used by managers according to Atrill & McLaney (pp.93, 2009) to assess performance which has to do with measuring business performance like income or profits. Activity based costing (ABC) on the other hand does not just rely on cost of materials for production or service but rather, also, on issues like overhead costs caused by certain activities, charges on overhead to outputs due to driving rates and the established overhead cost pools (Atrill & McLaney, pp 136-140).
Smurfit Paper Company (SPC) Marginal cost and pricing decisions in a commodity industry Objectives of this case study: • To review costing methods • To calculate the profitability of an incremental order using a full cost and a marginal cost approach • To understand the cost/volume/profit dynamics • To determine the break-even point of an incremental order • To review and measure the opportunity gains and costs of this additional order in a context of constraining capacity • To reengineer a cost structure according to a target costing approach • To understand strategic consequences of using a particular costing method. • To discuss the pricing issues in the context of a commodity business : the paper industry. The Smurfit Paper Company (SPC) is the local branch of an international paper giant which manufactures and sells paper-based packaging to various businesses in Spain and increasingly for European accounts. This company uses mainly recycled paper as raw materials. In June 2000, 6000 units of paper-based packaging1 were manufactured and sold.
For production, there were various personnel in-charge of both order and volume related work, these include stock persons, production planners, foremen, operators and people responsible over products ready for transportation. Old cost system There were two pools of indirect costs which were manufacturing costs allocated on a basis of direct labor, and selling/admin costs that were treated as period costs. Production overhead, selling and admin costs were all fixed. Most of the company’s sales, marketing and admin. costs were recognised as a percentage of sales revenue.