Do you Agree or disagree? Give at least three specific reasons for your answer and provide at least one counter argument and rebut it. Week 2 Discussion Questions Question A Provide and discuss an example of a situation where a company would use a job cost sheet. As part of your analysis, be sure to explain the nature and importance of a job cost sheet. Question B Discuss the advantages and disadvantages of Job Order Costing.
Suppose one of GP Manufacturing’s executives typically uses the payback as a primary capital budgeting decision tool and wants some payback information. a. What is the project’s payback period? Projected payback period = 4.28 (cell B73) b. What is the rationale behind the use of payback as a project evaluation tool?
Traditional allocations with one resources to spread overhead often charges products an "average rate" and so fussy and difficult products get a break (charged less than they consume or "under costed") and easy low-hassle products look worse than they are (charged more then they consumer or "over costed"). Companies that benefit from ABC are those that have significant levels of variable overhead and those with products that use disproportionate share of overhead resources. Companies with small overhead or products that all use overhead in about the same proportion would get about the same overhead allocation under traditional and ABC methods. Since ABC methods are more work (so more expensive), if there isn't a benefit, it is better to stick to a simpler and cheaper method. Krishnan (2006) implemented ABC at a university (actual university was kept anonymous in the study) to help them understand their costs and cost drivers in order to better understand why their operation costs were so high.
As the time horizon increases, variable costs rely less on existing factors and restrictions and therefore will begin behaving differently which will in turn affect the cost of production (Wright, 2007). The second way a firm that’s into profit maximization can decide its greatest level of output is by way of the marginal revenue -- marginal cost method. This is done by subtracting the marginal cost from the marginal revenue that a product generates. Using marginal cost and marginal revenue as the bases, profit maximization will be obtained at the point when marginal revenue is equal to marginal cost. If the marginal revenue is greater than marginal cost this would be when a profit maximizing firm would need to increase production until marginal revenue is equal to marginal cost.
| Outsourcing and offshoring | Outsourcing is the aspect of tasking a third party contractor. Offshoring is basically moving the headquarters of a business to another country. | Investipedia.com | Inventory turnover | The inventory turnover ratio is the inventory sold and replenished over a period of time. | Investipedia.com | Just-in-time inventory (JIT) | A plan that is conducted when receiving and producing inventory; maximizing efficiency of warehousing. | Titman, S., Keown, A. J., & Martin, J. D. (2014).
Something that requires much more machine hours will appear to have a lower cost, when in fact it could be costing the company a great deal more. The consultants system is the best out of the three because it most clearly directs costs to a pool. The machine hour rate due to overhead is a lot higher in the mechanical room then the main room. Therefore products that spend more hours in
Cost is determined using the last-in, first-out (“LIFO”) method. Under the LIFO method, the cost assigned to items sold is based on the cost of the most recent items purchased. Cost is determined using the item cost method and the retail method for inventories. Safeway values its inventories at the lower of cost on a last-in, first-out (“LIFO”) basis or market value. All remaining inventory is valued at the lower of cost on a first-in, first-out (“FIFO”) basis or market value.
Input includes the wholesale price and retail price for an item. The output is the item's profit, which is the retail price minus the wholesale price. Use three modules. The main program declares global variables and calls housekeeping, detail, and end-of-job modules. The housekeeping module prompts for and accepts a wholesale price.