Running any business requires immense responsibility. In a company, managers need to know the logistics of every department, from the cost of a box of paper clips to the biggest deal made, in order to run it successfully. Managers who aren’t very involved with their company’s finances don’t usually do well. The ultimate goal is to make a profit by eliminating unnecessary costs. In order to make an analysis of this, cost accounting comes into play.
Though cost accounting and management accounting are separate entity but both of them are interrelated to each other. Management accounting is a broad concept than the cost accounting because a manager must have to depend on cost accounting for taking his managerial decision. Cost accounting it is a system that has been developed to provide managers with a structure to examine the day-to-day finances of the company, while not having tax factors to worry about. From the information gathered, managers can make decisions on where to cut costs to improve the company’s profitability. Cost accounting doesn’t follow any specific standards, such as the GAAP (Generally Accepted Accounting Principles), as it is not used for external purposes. A cost accounting system to help managers keep control over the daily finances and be closely involved in almost every aspect of the business. Management uses cost accounting, a subset of management accounting, for planning and controlling operations and for decision making. The guiding light for cost accountants is usefulness. The cost data must be accumulated, classified, interpreted, and presented in ways that are useful to managers for decision making. A budget, the key to planning and controlling, involves cost accounting data. Where to set an optimal price for a product or service cannot be decided without knowing the cost of what is to be sold.
ACtivItY BaSeD CostinG, Value ChAin AnalysiS, TargeT cosTing & Life Cycle Cos...Sonu Sah
It is the small presentation on the topic of activity based costing, value chain analysis, target costing and life cycle costing of the Cost and Management Accounting.
ACtivItY BaSeD CostinG, Value ChAin AnalysiS, TargeT cosTing & Life Cycle Cos...Sonu Sah
It is the small presentation on the topic of activity based costing, value chain analysis, target costing and life cycle costing of the Cost and Management Accounting.
Activity based costing is considered to be useful only for Manufacturing Organizations whereas reality is that it is equally usefull to Service providers
Under this technique all costs are classified into fixed costs and variable costs. Only variable costs are considered product costs and are allocated to products manufactured. These costs include direct materials, direct labor, direct expenses and variable overhead. Fixed costs are not considered for computing the cost of products or valuation of inventory.
1.1 identify the type of accounting
1.2 difference between Cost Accounting , Cost Accountancy and Costing
1.3 understand the Management information needs
1.4 identify the objectives of cost accounting
1.5 difference between Cost Accounting Vs. Financial Accounting
1.6 identify the role of cost accountant
Activity based costing is considered to be useful only for Manufacturing Organizations whereas reality is that it is equally usefull to Service providers
Under this technique all costs are classified into fixed costs and variable costs. Only variable costs are considered product costs and are allocated to products manufactured. These costs include direct materials, direct labor, direct expenses and variable overhead. Fixed costs are not considered for computing the cost of products or valuation of inventory.
1.1 identify the type of accounting
1.2 difference between Cost Accounting , Cost Accountancy and Costing
1.3 understand the Management information needs
1.4 identify the objectives of cost accounting
1.5 difference between Cost Accounting Vs. Financial Accounting
1.6 identify the role of cost accountant
Following Details,
1) Different cost management strategies - Target costing, Kaizen costing, life cycle costing
2. Activity based management
3. Balance scorecard and its significance as a performance measurement techniques
4. Performance measures for decentralized unit
Evaluate Your Learning OutcomesWrite a critical evaluation o.docxturveycharlyn
Evaluate Your Learning Outcomes
Write a critical evaluation of your learning outcome. In your response, consider:
1. Your managerial accounting skills/knowledge prior to taking this class
2. Base on the course content, discuss the new skills you acquired from this class? How relevant are the new skills in your profession?
3. How would you apply your new knowledge?
Required:
1.
Post your original discussion. Read and respond to three (3) your classmates.
See the class syllabus for posting requirements.
2.
Be sure to support your work with specific citations using APA format
3.
Read a selection of your colleagues' postings using one or more of the following ways:
· Share an insight from having read your colleagues' postings, synthesizing the information to provide new perspectives.
· Offer and support an alternative perspective using readings from the class materials or from your own research.
· Validate an idea with your own experience and additional research.
· Make a suggestion based on additional evidence drawn from readings or after synthesizing multiple postings.
· Expand on your colleagues' postings by providing additional insights or contrasting perspectives based on readings and evidence.
· Return to this Discussion several times to read the responses to your initial posting. Note what you have learned and/or any insights you have gained as a result of the comments your colleagues made.
Course Description:
This course introduce students to a variety of topics related to financial and economics concepts and theories including general micro- and macroeconomics concepts, investments in different types of financial assets (stocks, bonds, options, etc.). CAPM, financing of projects, financial structure, agency theory and agency costs, corporate governance, diversification, mergers and acquisition, and asset collateralization.
Course Objectives & Learning Outcomes
Upon completion of the course, students should be able to:
1. Understand the role of cost accounting in information for managerial decision making
2. Understand fundamental concepts and techniques of cost/managerial accounting.
3. Understand the general concepts of cost estimation.
4. Understand costing and control of materials, labor, and factory overhead. Syllabus Course # Page 2 of 14
5. Learn objectives of cost accumulation system and be able to distinguish between “periodic versus perpetual” and “actual and versus standard.”
6. Understand job order, process, and activity-based cost systems.
7. Learn accounting for joint product and by-product costing.
8. Understand and interpret variances.
9. Become familiar the budgeting process.
10. Understand the different types of budgets: operating, flexible, and capital budgets.
11. Learn the standard cost system.
12. Learn the general analysis of cost and profit
13. Use computer applications in solving cost accounting problems
14.
Summary of this courseHealth care business analysesHealth Care.docxmattinsonjanel
Summary of this course
Health care business analyses
Health Care Business Operations and Performance
Introduction
In this module, you will explore the relationship and potential synergy created by consistent vision, mission, goals, and strategic plan. Health care strategy can be formed in one of two ways: it is intended and deliberate, which is created by plans, or it emerges through a pattern of uncoordinated decisions and actions (it just happens). Plans help to create a deliberate strategy. This is a discovery process in which health care organizations define their markets and assess internal operations. Plans move the organization forward toward the realization of a vision. The strategic plan or plan of action is necessary to achieve certain goals and objectives. The plan helps to create alignment and consensus around the organization's intentions. Key managers help to organize efforts and garner momentum for these strategies.
The Strategic Plan
The strategic plan changes or creates additional service lines, clinical procedures, and geographic locations of new clinics, rooms, or other facilities. The plan helps decide where to allocate resources for the high-level initiatives such as new medical technologies. The plan also identifies potential partners for an integrated delivery network or expanded system. When assessing a health care organization, ask what evidence you see of them attempting to work towards a certain vision. What services are they providing? How do they implement the strategy? How are they different from other clinical organizations in the community? How do they remain competitive?
Operations Internal Assessment and Improvement
Introduction
In this module, you will learn to identify methods of assessing and improving the quality of a health care organization. Developing processes is critical in assessing and improving quality since a process is how work gets accomplished. Until processes are fully documented, the interactions and steps cannot be appreciated. The "as-is process" documents what is actually occurring, versus what is supposed to occur. The "to-be process" documents the vision and the proposed process once improvements have been made. By fixing the process, you improve performance. The business process is a set of activities and tasks that are performed in sequence to achieve a specific outcome. The strategy of process improvement increases the throughput (capacity or volume) of a process; eliminates choke points or bottlenecks; and reduces costs, steps, waste, and resources. Look for steps that add value and eliminate those that do not. Reduce the variation in performance over time, remembering that variability causes resource inefficiency.
Analyzing Performance
Methods for analyzing performance include trend analysis and benchmarking. Trend analysis helps health care organizations answer the question, "How are we performing over time?" Benchmarking asks how we compare to our competition. Benchmarking is th ...
Pert, cpm and other tools of project management for intrapreneurs Dr. Trilok Kumar Jain
This material is for PGPSE / CSE students of AFTERSCHOOOL. PGPSE / CSE are free online programme - open for all - free for all - to promote entrepreneurship and social entrepreneurship PGPSE is for those who want to transform the world. It is different from MBA, BBA, CFA, CA,CS,ICWA and other traditional programmes. It is based on self certification and based on self learning and guidance by mentors. It is for those who want to be entrepreneurs and social changers. Let us work together. Our basic idea is that KNOWLEDGE IS FREE & AND SHARE IT WITH THE WORLD
Human Resource Information System: A study on Telecommunication Industry of B...Masum Hussain
In today’s organizations Human Resource is considered as one of the key resources of business organizations. The transaction processing layer of information system (IS) in human resource function deals with routine activities like attendance recording and payroll calculations. The operational level activities also include maintaining the employee records which is used as a basis for strategic layers. With the growing importance of human resource management and increasing size of the organizations, maintenance of employee related data and generating appropriate reports are the crucial aspects of any organization. The Human Resource Information System (HRIS) is a collection of men, tools, procedures and software to perform various business tasks at various levels in the organization. Many organizations have separate MIS departments which are involved in maintaining records, performing transactions, report generations and consolidation of the important information which will be supplied to the various levels of the management. MIS has three basic levels: operational, middle management and top management where the information is passed from bottom to top. This report is an attempt to design an information system for Bangladesh telecommunication industry, which involves attendance capturing & recording system which will be used in monitoring the staff, control over the irregularities and reporting to the top management and show how it is useful in decision making. This paper is an attempt to highlights the role of information systems in Human Resource Management and show how it helps in taking management decisions related to management function especially for the top management.
Today, the world has undergone massive changes: the Internet bubble has come and gone, and emerging countries such as China and India have become prominent global users and providers of ICT equipment and services. Struggling to emerge from the financial crisis, developed economies are striving to return to higher levels of growth and competitiveness while fighting stubbornly high unemployment rates, especially among their youth. Both emerging and developed economies are focusing on innovation, competing globally for talent, resources, and market shares. Information flows and networks have spread across borders in ways that could not be imagined before the onset of the Internet, the global adoption of mobile telephony and social networks, and the rapid growth of broadband. Business models have been redefined, the workplace has been redesigned and entire functions of society (education, health, security, privacy) are being rethought. Apart from these HRIS has various advantages and the most crucial is the employee retention as employees as themselves crucial for the organizations; it is also ratified by all that an HRIS blunt the edge of staff attrition by providing HR officers with the information they need.
Managing team and organizational conflictMasum Hussain
In our culture, we reflexively tend to think of the term “conflict” in the negative. When we discuss conflict in the business world, we speak of it (often unwittingly) as a diminishing force on productivity, an ill that only compounds the difficulties of a job, and an element that needs expunging if companies are to achieve their goals. Normally seen as the byproduct of a “squeaky wheel” rather than a natural derivative of business itself, conflict is a force that causes short-term anxieties, and many view “fixing” ongoing conflict as synonymous with “eliminating” it.It is commonplace for organizations today to work in teams. Whether they be leader-driven teams or self-directed teams; the hope is that productivity, creativity, and results will be greater in a team environment. While this is a proven approach, any time you bring together people from differing backgrounds and experiences, it is inevitable that conflict will occur.
Every organization encounters conflicts on a daily basis. The conflicts cannot be avoided, but it is possible to manage them in a way that we recognize them on time. It is necessary to continuously track the organizational signals which point to their existence. If we do not react duly, this can lead to the situation that the conflict itself manages the organization. One of the more important determinants of productivity, efficiency and performance, and finally job contentment is also the conflict as an independent variable of organizational behavior. By systematic research of organizational behavior we want to make a positive influence on dependent variables, but first we have to understand and get a good insight into individual elements of organizational behavior. By this paper we want to brighten the meaning of conflict on the organization, the conflict process and possible conflict management styles. We will show the relationship between the level of conflict and the impact on the organizational performance.
Managing team and organizational conflictMasum Hussain
In our culture, we reflexively tend to think of the term “conflict” in the negative. When we discuss conflict in the business world, we speak of it (often unwittingly) as a diminishing force on productivity, an ill that only compounds the difficulties of a job, and an element that needs expunging if companies are to achieve their goals. Normally seen as the byproduct of a “squeaky wheel” rather than a natural derivative of business itself, conflict is a force that causes short-term anxieties, and many view “fixing” ongoing conflict as synonymous with “eliminating” it.It is commonplace for organizations today to work in teams. Whether they be leader-driven teams or self-directed teams; the hope is that productivity, creativity, and results will be greater in a team environment. While this is a proven approach, any time you bring together people from differing backgrounds and experiences, it is inevitable that conflict will occur.
Every organization encounters conflicts on a daily basis. The conflicts cannot be avoided, but it is possible to manage them in a way that we recognize them on time. It is necessary to continuously track the organizational signals which point to their existence. If we do not react duly, this can lead to the situation that the conflict itself manages the organization. One of the more important determinants of productivity, efficiency and performance, and finally job contentment is also the conflict as an independent variable of organizational behavior. By systematic research of organizational behavior we want to make a positive influence on dependent variables, but first we have to understand and get a good insight into individual elements of organizational behavior. By this paper we want to brighten the meaning of conflict on the organization, the conflict process and possible conflict management styles. We will show the relationship between the level of conflict and the impact on the organizational performance.
Organizational change in transition periodMasum Hussain
As the Greek philosopher Heraclitus (525 – 475BC) pointed out: change alone is unchanging. Nowhere is this truer than in corporate North America. Globalization; quantum leaps in technology; mergers and acquisitions; shifting markets and client demands; and, significant changes in the workforce make changing to survive a strategic imperative. All organizations need to have a greater reach, be in more places, be aware of regional and cultural differences, and integrate coherent strategies for different markets and communities. (Kanter, 1999) Failure to change, to change rapidly enough, or to make the right changes, has turned corporate giants into subsidiaries, seemingly overnight. With change having been a constant for over 2500 years, why are businesses still so bad at managing it? Why do so many change initiatives wither and die leaving only confusion and mangled processes in their wake? This paper explores some of the reasons corporate change programs fail and offers some ideas as to how organizations institutionalize change to become a constantly evolving success story.
Influence of Work-life balance in employee’s performanceMasum Hussain
Despite the popularity of work-life conflict as a topic of academic and practitioner debate, and the mounting prevalence of work-life balance practices in organizations around the world, research on the organizational effects of such practices is not well integrated. Competing demands between work and home have assumed increased relevance for employees in recent years, due in large part to demographic and workplace changes such as rising numbers of women in the labour force, an ageing population, longer working hours, and more sophisticated communications technology enabling near constant contact with the workplace. In response to these changes and the conflict they generate among the multiple roles that individuals occupy, organizations are increasingly pressured to implement work practices intended to facilitate employees’ efforts to fulfil both their employment- related and their personal responsibilities. While there is no one accepted definition of what constitutes a work-life balance practice, the term usually refers to one of the following: organizational support for dependent care, flexible work options, and family or personal leave.
Influence of Work-life balance in employee’s performanceMasum Hussain
Work–life balance is a concept including proper prioritizing between "work" (career and ambition) and "lifestyle" (health, pleasure, leisure, family and spiritual development/meditation. This is related to the idea of lifestyles choice. The work–leisure dichotomy was invented in the mid-1801s. Paul Krassner remarked that anthropologists use a definition of happiness that is to have as little separation as possible "between your work and your play". The expression "work–life balance" was first used in the United Kingdom in the late 1970s to describe the balance between an individual's work and personal life. In the United States this phrase was first used in 1986 The business case for work-life balance practices, as espoused by many organizations, rests on attracting better applicants and reducing work-life conflict among existing employees in order to enhance organizational performance. This review of the literature provides some evidence for the claim regarding recruitment, but there is insufficient evidence to support the notion that work-life practices enhance performance by means of reduced work-life conflict. We suggest that the business case may therefore need to be modified to reflect the number of additional routes by which work-life balance practices can influence organizational performance, including enhanced social exchange processes, increased cost savings, improved productivity, and reduced turnover. The impact of these processes may, however, be moderated by a number of factors, including national context, job level, and managerial support.
Influences of Poter’s five forces model in an industryMasum Hussain
Porter’s Five Forces model is a powerful management tool for analyzing the current industry profitability and attractiveness by using the outside-in perspective. Within the last decades, the model has attracted some criticism because of the developing Internet economy. Due to an increasing significance of Digitalization, Globalization and Deregulation, the industry structure of the ‘Old Economy’ changed fundamentally. The ‘New Economy’ is not comparable with the ‘Old Economy’, which is the basis of the Five Forces model. Moreover the last decades have shown that Information Technology became more and more important. Nowadays Technology is one of the most important drivers for change and not only important for the implementation of change. Today new technology is one of the most important drivers for change. Furthermore Porter also couldn’t take the growing significance of ‘Government Deregulation’ into account. In 1979 the government was able to regulate the market by defining and enforcing “property rights and the rules of competition”. In the past 20 years, governmental influence on industries decreased steadily. Therefore the most of the concerned industries (airlines, communication, or banking industry) were able and constrained to search for alternatives and to structure their business in a new way.
The purpose of business is to make money. However, the profit motive is sometimes viewed as less than virtuous because it emphasizes self-interest. Nevertheless, self-interest is not the same as selfishness, which emphasizes one's own interests at others' expense. Self interest is simply a concern for financial reward and is arguably necessary if society is to be maximally productive and efficiently allocate its resources. Business is an inseparable and embedded part of the society. In addition to its economic role in society, business also has several other roles and responsibilities towards society viz. responsible conduct of business activities while pursuing economic gains; the social and environmental responsibilities of the business towards its stakeholders; and business’s contributions that would benefit the society at large. Companies around the globe are recognizing the importance of engaging in Corporate Social Responsibility (CSR) that is crucial to their survival and growth. It is evident that when an organization integrates appropriate CSR practices in its strategy that embed the societal and environmental concerns, these practices undoubtedly bring tangible benefits to the business along with a sustainable competitive advantage.
The rate at which employees leave a company and are replaced by new Employees. One of the critically challenging issues in business world. Estimated probability that employees will stay or leave the organization. May triggered by - quits, attrition, exits, mobility, migration, succession. Obstacles toward achieving organizational objectives. Delay in innovation process & weak service consistency. Increasing pressure for the current employees in organization & Reflects poor organizational image. Overall bad impact on organizational performance & effectiveness.
Industrial relations are the relationship between management and employees or among employees and their organization. Industrial relation deal with either the relationships between the state and the employers and the workers organization or the relation between the occupational organizations themselves. The ILO uses the expression to denote such matters as freedom of association and the protection of the right to organize, the application of the principles of the right to organize, and the right of collective bargaining, collective agreements, conciliation and arbitration and machinery for cooperation between the authorities and the occupational organizations at various levels of the economy.
The term Industrial Relations refers to relationship between Management and Labor or among Employees and their organizations that characterize or grow out of employment. Theoretically speaking, there are two parties in the employment relationship labor and management. Both parties need to work in a spirit of cooperation, adjustment and accommodation. In their own mutual interest certain rules for co-existence are formed and adhered to. Over the years, the State has also come to play a major role in Industrial Relations one, as and initiator of policies and the other, as an employer by setting up an extremely large public sector.
Importance of information system in raising public awareness about domestic v...Masum Hussain
Across the globe, information system tools have helped fuel social movements. Information system has been shown to strengthen social actors’ ability to challenge and change power relations in society, providing platforms for debate, reflection, influencing and mobilizing people. To better understand the potential of information system to engage especially young people in efforts to prevent domestic violence the Partners for Prevention regional project, Engaging Young Men Through Information system for the Prevention of Domestic violence’ which supported information system awareness campaigns designed to raise awareness and motivate young people to take action to prevent domestic violence has revealed practical lessons from three awareness campaigns on the effective use of information system tools for violence protection.
Use of technologies in the banking sector of BangladeshMasum Hussain
Among the financial service industry, the banking sector was one of the first to embrace rapid globalization and benefits significantly from technology development. The technological revolution in banking started in the 1950s, with the installation of the first automated bookkeeping machines at banks. This was well before the other industries became tech savvy. The first Automated Teller Machine (ATM) is reported to have been introduced in the USA in 1968 with only a cash dispenser. Automation in banking have become widespread over the past few decades as banks quickly realized that much of their labor intensive information-handling processes could be automated the use of computers. Against this background the paper examines the technology driven banking services reference to the present and future of Technology driven banking in Bangladesh.
Use of technologies in the banking sector of BangladeshMasum Hussain
Among the financial service industry, the banking sector was one of the first to embrace rapid globalization and benefits significantly from technology development. The technological revolution in banking started in the 1950s, with the installation of the first automated bookkeeping machines at banks. This was well before the other industries became tech savvy. The first Automated Teller Machine (ATM) is reported to have been introduced in the USA in 1968 with only a cash dispenser. Automation in banking have become widespread over the past few decades as banks quickly realized that much of their labor intensive information-handling processes could be automated the use of computers. Against this background the paper examines the Technology driven banking services reference to the present and future of Technology driven banking in Bangladesh.
Importance of information system in raising public awareness about domestic v...Masum Hussain
Across the globe, information system tools have helped fuel social movements. Information system has been shown to strengthen social actors’ ability to challenge and change power
relations in society, providing platforms for debate, reflection, influencing and mobilizing people. To better understand the potential of information system to engage especially young
people in efforts to prevent domestic violence the Partners for Prevention regional project, Engaging Young Men Through Information system for the Prevention of Domestic violence’
which supported information system awareness campaigns designed to raise awareness and motivate young people to take action to prevent domestic violence has revealed practical
lessons from three awareness campaigns on the effective use of information system tools for violence protection.
Role of compensation practices on employees’ motivation: A study on Prime Ban...Masum Hussain
Workforce today is more expressive about their needs. Employees desire the best of everything competitive salaries, comfortable & inspirational lifestyles, job security, career enhancement options, work-life balance, and so on. Competition for talent is ever increasing and organizations need to have well-defined philosophies and strategies to help them develop innovative ways of tapping intrinsic motivation of employees by engaging their hearts and minds. The focus should be given on how managers are able to implement these types of motivation into their specific work place. This will show how motivation is important to all industries, and how it can change and impact the amount sales a bank performs. Motivated employees will in turn create a successful bank.
Development of internet technology in BangladeshMasum Hussain
Bangladesh is a developing country of South Asia with a huge population of 160 million living within a small geographical boundary of 1,47,570 square kilometers. Bangladesh is popularly known as one of the most densely populated countries of the world where the density rate is 1015 per sq. km. So it's a great challenge for the Bangladesh government to feed up the increasing population as the cultivable lands are decreasing day by day. Moreover providing cloths, accommodation facilities, giving education and health care facilities to the people which are the primary duties of the government are also becoming difficult for the increasing population. Apart from these being a developing country the government can't also affords to set up new industries and create employment opportunities for the people. So it's very difficult for the country to compete with the rising economic powers in the global arena with the burden of this population. But it's a matter of concern that there is no chance of decreasing these problems in upcoming days rather these are turning into a devastating shape. Proper and planned utilization of internet technology can be a nice solution in this regard. Somebody may be surprised to hear this. They may argue that how it's possible to change the overall scenario of the country through using internet technology. Rather they may show the logic against this theory and say that use of technology will accelerate unemployment problems of the country, high cost is involved to use this and expert knowledge is required to avail this facility of modern science. But the reality doesn't match with their imagination. Here I'll try my level best to prove the fact that use of internet technology can be a great medium for the sustainable development of the country through logical explanation from different points of view.
The story behind the first concerted effort to make financing accessible to the world’s poorest is the stuff of folklore. Befitting the goal of poverty alleviation, the setting for this early experiment was a time of great tragedy in Bangladesh, one of the poorest countries in the world. A small country in the Indian subcontinent with a population of 130 million, a gross national product (GNP) per capita of about $300 and a literacy rate of only 38 percent for those over 15 years of age, 1 Bangladesh experienced drought and famine in 1974 that killed 1.5 million people (Macfarlane 2002). Having recently completed studies as a Fulbright scholar in the United States, Professor Mohammad Yunus was lecturing on economic theory at Chittagong University and growing increasingly frustrated at his inability to ease his neighbours’ suffering.
Understanding barriers to youth entrepreneurship as a career choice for youthMasum Hussain
People say this is the age of business as it is backed by sophisticated technologies, blessed by loads of relevant information. & in this business age the young people are leading from the front as entrepreneurs. Wherever you go from Silicon Valley to Middle East young talents are making significant marks in creating new businesses even sometime more efficiently than the older experienced people. Think of Mark Zukerbourgh, or Michael Yung, they are shaking the world with their innovational business ventures, & people like them are at speed in growing. Different studies provide proof that the young people are the greatest contributors in the arena of business.
Sylhet is a division & a major city of North Eastern area of Bangladesh. This city is rapidly growing than the other cities of this country because of her peoples increasing purchasing power as the area is booming with business projects, a lots of liquid money is in the hands of the peoples as a result of remittance provided by the people living abroad. As we know many people of this area lives in different wealthy country of the world mainly in the United Kingdom (as we know in London there is a town named ‘ Bangla Town’ mainly inhabited by the Sylheties) & middle east many families have enough money in hand almost all the time. Problem with the Sylheti’s is that though they have money they are not interested in investing them in the country for business purpose as most of them are risk averse , & do not know the ABC of business.
Walton Hi-Tech Industries Ltd. is the one and only manufacturer of multi-staged Refrigerator, Freezer, Air Conditioner, Television and Motorcycle technology and is treated as one of the sophisticated manufacturing plant in Bangladesh and South Asia. R.B. Group (Parent Company) is one of the top business groups in the country operating with a great reputation since 1977. Walton has become a sensation all over Bangladesh and in the world of electronics, electrical and automobile industries.
Corporate Social Responsibilities and Managerial EthicsMasum Hussain
Ethical theories and principles bring significant characteristics to the decision-making process. Although all of the ethical theories attempt to follow the ethical principles in order to be applicable and valid by themselves, each theory falls short with complex flaws and failings. However, these ethical theories can be used in combination in order to obtain the most ethically correct answer possible for each scenario. For example, a utilitarian may use the casuistic theory and compare similar situations to his real life situation in order to determine the choice that will benefit the most people. The deontologist and the rule the rights ethical theory when deciding whether or not to speed to make it to the meeting on time. Instead of speeding, they would slow down because the law in the rights theory is given the highest priority, even if it means that the most people may not benefit from the decision to drive the speed limit. By using ethical theories in combination, one is able to use a variety of ways to analyze a situation in order to reach the most ethically correct decision possible. We are fortunate to have a variety of ethical theories that provide a substantial framework when trying to make ethically correct answers. Each ethical theory attempts to adhere to the ethical principles that lead to success when trying to reach the best decision. When one understands each individual theory, including its strengths and weaknesses, one can make the most informed decision when trying to achieve an ethically correct answer to a dilemma.
In the Adani-Hindenburg case, what is SEBI investigating.pptxAdani case
Adani SEBI investigation revealed that the latter had sought information from five foreign jurisdictions concerning the holdings of the firm’s foreign portfolio investors (FPIs) in relation to the alleged violations of the MPS Regulations. Nevertheless, the economic interest of the twelve FPIs based in tax haven jurisdictions still needs to be determined. The Adani Group firms classed these FPIs as public shareholders. According to Hindenburg, FPIs were used to get around regulatory standards.
LA HUG - Video Testimonials with Chynna Morgan - June 2024Lital Barkan
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We will dig deeper into:
1. How to capture video testimonials that convert from your audience 🎥
2. How to leverage your testimonials to boost your sales 💲
3. How you can capture more CRM data to understand your audience better through video testimonials. 📊
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Discover the innovative and creative projects that highlight my journey throu...dylandmeas
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Discover the innovative and creative projects that highlight my journey throu...
Effect of Different Classes of Cost in Decision Making
1. ‘‘Effect of Different Classes of Cost in
Decision Making
Course Title: Cost and
Chowdhury Tabassum Shakila
Department of Business Administration
LEADING UNIVERSITY, SYLHET
Name
Syed Ali Hasan
Abu Ahmed Shahib
Abdul
Ehsan Ahmed Chowdhury
Mahmudul Karim Newaz
Masum Hussain
Section
Department of Business Administration
LEADING UNIVERSITY, SYLHET
Submission date: 21Submission date: 21Submission date: 21Submission date: 21
An Assignment
On
Effect of Different Classes of Cost in
Decision Making”
Course Title: Cost and Management Accounting
Course Code: ACC - 340
SUBMITTED TO
Chowdhury Tabassum Shakila
Lecturer (Accounting)
Department of Business Administration
LEADING UNIVERSITY, SYLHET
SUBMITTED BY
Torch Bearer’s
Name ID
Syed Ali Hasan 1201010248
Abu Ahmed Shahib 1201010247
Abdul Motin 1201010219
Ehsan Ahmed Chowdhury 1201010230
Mahmudul Karim Newaz 1201010205
Masum Hussain 1201010202
Section: E Semester: 8th
Batch: 30th
Department of Business Administration
LEADING UNIVERSITY, SYLHET
Submission date: 21Submission date: 21Submission date: 21Submission date: 21stststst July, 2014July, 2014July, 2014July, 2014
Effect of Different Classes of Cost in
Management Accounting
2. Acknowledgement
At first, we are grateful to Almighty Allah for creating us in such a beautiful
country like Bangladesh and also for controlling our life. For the mercy of him,
we got such courage to start this assignment on ‘‘Effect of Different Classes of Cost
in Decision Making”
After that we want to give thanks to our honorable Head of the Department Dr.
Bashir Ahmed Bhuyian for giving us the opportunity to study in this subject.
We would like to express our thanks to the Librarian of Leading University for
all of his help that we have received.
Our respected parents who gave us mental support and inspiration for our
assignment, there is a special thanks for them.
We also want to give a lot of thanks to our honourable course teacher,
Chowdhury Tabassum Shakila for giving us mental support and a clear concept
about this assignment.
Without the help of our friends and classmates it was quite impossible to
prepare such kind of assignment. They gave us some necessary information
about this topic which was unknown to us. So, we would like to give thanks to
all of them.
3. Abstract
Running any business requires immense responsibility. In a company,
managers need to know the logistics of every department, from the cost of a box of
paper clips to the biggest deal made, in order to run it successfully. Managers who
aren’t very involved with their company’s finances don’t usually do well. The
ultimate goal is to make a profit by eliminating unnecessary costs. In order to make an
analysis of this, cost accounting comes into play.
Though cost accounting and management accounting are separate entity but
both of them are interrelated to each other. Management accounting is a broad concept
than the cost accounting because a manager must have to depend on cost accounting
for taking his managerial decision. Cost accounting it is a system that has been
developed to provide managers with a structure to examine the day-to-day finances of
the company, while not having tax factors to worry about. From the information
gathered, managers can make decisions on where to cut costs to improve the
company’s profitability. Cost accounting doesn’t follow any specific standards, such
as the GAAP (Generally Accepted Accounting Principles), as it is not used for
external purposes. A cost accounting system to help managers keep control over the
daily finances and be closely involved in almost every aspect of the business.
Management uses cost accounting, a subset of management accounting, for planning
and controlling operations and for decision making. The guiding light for cost
accountants is usefulness. The cost data must be accumulated, classified, interpreted,
and presented in ways that are useful to managers for decision making. A budget, the
key to planning and controlling, involves cost accounting data. Where to set an
optimal price for a product or service cannot be decided without knowing the cost of
what is to be sold.
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Introduction……………………………………………………..
Objective of the Study………………………………………...
Limitation of the study ………………………………………..
Literature Review…………
i. Discuss about Cost……………………………………..
ii. Different Types of Cost…………………………………
iii. Application of Cost……………………………………..
iv. Advantages of Cost…………………………………….
v. Criticism against Cost…………………………………..
vi. Limitation of Cost System……………………………...
Importance of the Study………………………………………
Group Evaluation ……………………………………………..
Conclusion……………………………………………………
References…………………………………………………….
5. Introduction
To reach its goal a present-day business has to sail through a variety of odds. Social
and economic environments are quickly changing all over the world especially in the
developing countries due to frequent change in political outlook and switchover to
globalization of economy. A business has to stand firmly on its foot and accept challenge to
face global competition. Protection to industries due to their infancy is unacceptable in the
present day.
Any business has to secure the shareholders fund and generate reasonable return every
year. It has to discharge its social responsibility and look after the human factors engaged in
the business. Changes in governmental outlook creating impact upon the business require
proper adjustment in the management of the business. To keep the most sensitive factor, cool
and properly motivated, any kind of confrontation with the labor organizations should be
tactfully avoided and at the same time, the labor and their organizations shall have to be
convinced that there is nothing to hide from them.
Thus, the present-day management of business grown in size and complexity cannot
be compared with the management of earlier business having no keen competition, no
necessity of adjustment due to changes in social, economic and political outlook.
Globalization of economy has put extra responsibility on the present-day business which the
earlier business had not to bear.
The owner of a business in earlier times could maintain personal contact with the
business and gather all information relating to the business whenever necessary due to the
facts that the business was small in size, no keen competition existed and the business
environment was free from complexity. This situation does not prevail in the present times.
So detailed information relating to the business collected through mechanism established,
appropriate management policy on the basis or the detailed information and proper execution
of such policies can only lead the business to success.
In modern treatment of sick persons various pathological and other information are to
be gathered before prescribing medicine. Exactly in the same manner, modern management
of business requires to gather various information regarding the business before making any
policy decision.
6. Objective of the study:
Primary objective
The first and most important objective of the assignment is to gather knowledge about cost its
classification and effect of different classes of cost in decision making. Moreover we will
know deeply about the implementation of Cost, Cost Application, Advantages and Limitation
for Appling Cost in an Organization.
Secondary objective
1. Help students to acquire knowledge and skills needed to carry out their rights
and responsibilities.
2. To help students for increasing their thinking skills and decision making
process.
3. Gather information and ideas.
4. Apply questions to decision-making situations.
5. Increasing the vocabulary of students.
6. To identify the causes responsible for increasing the cost of a firm.
7. Help students to use skills in finding, comprehending, organizing, and
communicating.
Limitation of the study:
i. Time Limitation: As our submission date of assignment is 22th
July we can’t
get enough time to collect necessary data for enriching the assignment.
ii. Budgetary Limitation: we are living in developing country & we are also
student that’s why we don’t have sufficient money to spend for betterment of
the assignment.
iii. Internet Limitation: In our country the internet service is too slow that’s why
we can’t access to internet so easily and find the necessary information
regarding the assignment.
iv. Shortage of necessary books: There is shortage of sufficient books in our
campus library about this topic.
7. Literature Review
Costs:
Costs are the necessary expenditures that must be made in order to run a business.
Every factor of production has an associated cost. The cost of labor, for example, used in the
production of goods and services is measured in terms of wages and benefits. The cost of a
fixed asset used in production is measured in terms of depreciation. The cost of capital used
to purchase fixed assets is measured in terms of the interest expense associated with raising
the capital.
Cost accounting
Is a process of collecting, analyzing, summarizing and evaluating various alternative
courses of action? Its goal is to advise the management on the most appropriate course of
action based on the cost efficiency and capability. Cost accounting provides the detailed cost
information that management needs to control current operations and plan for the future.
Businesses are vitally interested in measuring their costs. Many types of costs are
observable and easily quantifiable. In such cases there is a direct relationship between cost of
input and quantity of output. Other types of costs must be estimated or allocated. That is, the
relationship between costs of input and units of output may not be directly observable or
quantifiable. In the delivery of professional services, for example, the quality of the output is
usually more significant than the quantity, and output cannot simply be measured in terms of
the number of patients treated or students taught. In such instances where qualitative factors
play an important role in measuring output, there is no direct relationship between costs
incurred and output achieved.
Different ways to categorize costs
Costs can have different relationships to output. Costs also are used in different
business applications, such as financial accounting, cost accounting, budgeting, capital
budgeting, and valuation. Consequently, there are different ways of categorizing costs
according to their relationship to output as well as according to the context in which they are
used. Following this summary of the different types of costs are some examples of how costs
are used in different business applications ---
8. Fixed and Variable Costs
The two basic types of costs incurred by businesses are fixed and variable. Fixed costs
do not vary with output, while variable costs do. Fixed costs are sometimes called overhead
costs. They are incurred whether a firm manufactures 100 widgets or 1,000 widgets. In
preparing a budget, fixed costs may include rent, depreciation, and supervisors' salaries.
Manufacturing overhead may include such items as property taxes and insurance. These fixed
costs remain constant in spite of changes in output.
Variable costs, on the other hand, fluctuate in direct proportion to changes in output.
In a production facility, labor and material costs are usually variable costs that increase as the
volume of production increases. It takes more labor and material to produce more output, so
the cost of labor and material varies in direct proportion to the volume of output.
For many companies in the service sector, the traditional division of costs into fixed
and variable does not work. Typically, variable costs have been defined primarily as "labor
and materials." However, in a service industry labor is usually salaried by contract or by
managerial policy and thus does not fluctuate with production. It is, therefore, a fixed and not
a variable cost for these companies. There is no hard and firm rule about what category (fixed
or variable) is appropriate for particular costs. The cost of office paper in one company, for
example, may be an overhead or fixed cost since the paper is used in the administrative
offices for administrative tasks. For another company, that same office paper may well be a
variable cost because the business produces printing as a service to other businesses, like
Kinkos, for example. Each business must determine based on its own uses whether an
expense is a fixed or variable cost to the business.
In addition to variable and fixed costs, some costs are considered mixed. That is, they
contain elements of fixed and variable costs. In some cases the cost of supervision and
inspection are considered mixed costs.
Direct and Indirect Costs
Direct costs are similar to variable costs. They can be directly attributed to the
production of output. The system of valuing inventories called direct costing is also known as
variable costing. Under this accounting system only those costs that vary directly with the
volume of production are charged to products as they are manufactured. The value of
inventory is the sum of direct material, direct labor, and all variable manufacturing costs.
9. Indirect costs, on the other hand, are similar to fixed costs. They are not directly
related to the volume of output. Indirect costs in a manufacturing plant may include
supervisors' salaries, indirect labor, factory supplies used, taxes, utilities, depreciation on
building and equipment, factory rent, tools expense, and patent expense. These indirect costs
are sometimes referred to as manufacturing overhead. Under the accounting system known as
full costing or absorption costing, all of the indirect costs in manufacturing overhead as well
as direct costs are included in determining the cost of inventory. They are considered part of
the cost of the products being manufactured.
Product and Period Costs
The concepts of product and period costs are similar to direct and indirect costs.
Product costs are those that the firm's accounting system associates directly with output and
that are used to value inventory. Period costs are charged as expenses to the current period.
Under direct costing, period costs are not viewed as costs of the products being
manufactured, so they are not associated with valuing inventories.
If the firm uses a full cost accounting system, however, then all manufacturing
costs—including fixed manufacturing overhead costs and variable costs— become product
costs. They are considered part of the cost of manufacturing and are charged against
inventory.
Other Types of Costs
These are the basic types of costs as they are used in different accounting systems.
Controllable and Uncontrollable Costs—
In budgeting it is useful to identify controllable and uncontrollable costs. This simply
means that managers with budgetary responsibility should not be held accountable for costs
they cannot control.
Out-of-pocket and Sunk Costs—
Financial managers often use the concepts of out-of-pocket costs and sunk costs when
evaluating the financial merits of specific proposals. Out-of-pocket costs are those that
require the use of current resources, usually cash. Sunk costs have already been incurred. In
evaluating whether or not to increase production, for example, financial managers may take
into account the sunk costs associated with tools and machinery as well as the out-of-pocket
costs associated with adding more material and labor.
10. Marginal Costing:
Marginal costing is a technique of costing in which allocation of expenditure to
production is restricted to those expenses which arise as a result of production, e.g., materials,
labor, direct expenses and variable overheads. Fixed overheads are excluded in cases where
production varies because it may give misleading results. The technique is useful in
manufacturing industries with varying levels of output.
Differential cost:
When a charge is made in the level of output or in product-mix the resulting increase
in total cost is called differential cost. It is important to ascertain differential cost in order to
judge the desirability of effect the change from the point of view of cost, revenue and profit.
Uniform Costing:
A technique where standardized principles and methods of cost accounting are
employed by a number of different companies and firms is termed as uniform costing.
Standardization may extend to the methods of costing, accounting classification including
codes, methods of defining costs and charging depreciation, methods of allocating or
apportioning overheads to cost centers or cost units. The system, thus, facilitates inter- firm
comparisons, establishment of realistic pricing policies, etc. Systems of Costing It have
already been stated that there are two main methods used to determine costs. These are: ·
• Job cost method
• Process cost method
It is possible to ascertain the costs under each of the above methods by two different ways:
• Historical costing
• Standard costing
Historical Costing:
Costs which are ascertained after they have been incurred are historical costs. It may
be found to be similar to diagnosing a disease by postmortem analysis. This is the traditional
costing. So far as cost control is concerned, it doesn’t bear much value.
Historical costing can be of the following two types in nature:
• Post costing
• Continuous costing
Post Costing:
11. Post costing means ascertainment of cost after the production is completed. This is
done by analyzing the financial accounts at the end of a period in such a way so as to disclose
the cost of the units which have been produced.
For instance, if the cost of product A is to be calculated on this basis, one will have to wait till
the materials are actually purchased and used, labor actually paid and overhead expenditure
actually incurred. This system is used only for ascertaining the costs but not useful for
exercising any control over costs, as one comes to know of things after they had taken place.
It can serve as guidance for future production only when conditions in future continue to be
the same.
Continuous Costing:
In case of this method, cost is ascertained as soon as a job is completed or even when
a job is in progress. This is done usually before a job is over or product is made. In the
process, actual expenditure on materials and wages and share of overheads are also estimated.
Hence, the figure of cost ascertained in this case is not exact. But it has an advantage of
providing cost information to the management promptly, thereby enabling it to take necessary
corrective action on time. However, it neither provides any standard for judging current
efficiency nor does it disclose what the cost of a job ought to have been.
Standard Costing:
Standard costing is a system under which the cost of a product is determined in
advance on certain pre- determined standards. With reference to the example given in post
costing, the cost of product A can be calculated in advance if one is in a position to estimate
in advance the material labor and overheads that should be incurred over the product. All this
requires an efficient system of cost accounting. However, this system will not be useful if a
vigorous system of controlling costs and standard costs are not in force. Standard costing is
becoming more and more popular nowadays.
Incremental and Opportunity Costs—
Financial planning efforts utilize the concepts of incremental and opportunity costs.
Incremental costs are those associated with switching from one level of activity or course of
action to another. Incremental costs represent the difference between two alternatives.
Opportunity costs represent the sacrifice that is made when the means of production are used
for one task rather than another, or when capital is used for one investment rather than
another. Nothing can be produced or invested without incurring an opportunity cost. By
making one investment or production decision using limited resources, one necessarily
12. forgoes the opportunity to use those resources for a different purpose. Consequently,
opportunity costs are not usually factored into investment and production decisions involving
resource allocation.
Imputed Costs—
Also of use to financial planners are imputed costs. These are costs that are not
actually incurred, but are associated with internal transactions. When work in process is
transferred from one department to another within an organization, a method of transfer
pricing may be needed for budgetary reasons. Although there is no actual purchase or sale of
goods and materials, the receiving department may be charged with imputed costs for the
work it has received. When a company rents itself a building that it could have rented to an
outside party, the rent may be considered an imputed cost.
Applications of different types of costs
Costs as a business concept are useful in measuring performance and determining
profitability. What follows are brief discussions of some business applications in which costs
play an important role.
Financial Accounting
One of the major objectives of financial accounting is to determine the periodic
income of the business. In manufacturing firms a major component of the income statement
is the cost of goods sold (COGS). COGS is that part of the cost of inventory that can be
considered an expense of the period because the goods were sold. It appears as an expense on
the firm's periodic income statement. COGS is calculated as beginning inventory plus net
purchases minus ending inventory.
Financial accounting consists of recording, classifying and analyzing the business
transactions so as to facilitate the preparation of profit and loss account for a period and also
the position statement as on particular date. Thus, the emphasis of financial accounting is on
the ascertainment of profit or loss of the concern and not on the more important aspects of the
business i.e.. Planning, control and decision-making. Cost accounting analyses the
transactions in an objective manner for the purpose of planning, control and decision making.
Depreciation is another cost that becomes a periodic expense on the income
statement. Every asset is initially valued at its cost. Accountants charge the cost of the asset
to depreciation expense over the useful life of the asset. This cost allocation approach
13. attempts to match costs with revenues and is more reliable than attempting to periodically
determine the fair market value of the asset.
In financial accounting, costs represent assets rather than expenses. Costs only
become expenses when they are charged against current income. Costs may be allocated as
expenses against income over time, as in the case of depreciation, or they may be charged as
expenses when revenues are generated, as in the case of COGS.
Cost Accounting
Cost accounting, also sometimes known as management accounting, provides
appropriate cost information for budgeting systems and management decision making. Using
the principles of general accounting, cost accounting records and determines costs associated
with various functions of the business. These data are used by management to improve
operations and make them more efficient, economical, and profitable.
Two major systems can be used to record the costs of manufactured products. They
are known as job costing and process costing. A job cost system, or job order cost system,
collects costs for each physically identifiable job or batch of work as it moves through the
manufacturing facility and disregards the accounting period in which the work is done. With
a process cost system, on the other hand, costs are collected for all of the products worked on
during a specific accounting period. Unit costs are then determined by dividing the total costs
by the number of units worked on during the period. Process cost systems are most
appropriate for continuous operations, when like products are produced, or when several
departments cooperate and participate in one or more operations. Job costing, on the other
hand, is used when labor is a chief element of cost, when diversified lines or unlike products
are manufactured, or when products are built to customer specifications.
When costs are easily observable and quantifiable, cost standards are usually
developed. Also known as engineered standards, they are developed for each physical input
at each step of the production process. At that point an engineered cost per unit of production
can be determined. By documenting variable costs and fairly allocating fixed costs to
different departments, a cost accounting system can provide management with the
accountability and cost controls it needs to improve operations.
Budgeting Systems
Budgeting systems rely on accurate cost accounting systems. Using cost data
collected by the business's cost accounting system, budgets can be developed for each
14. department at different levels of output. Different units within the business can be designated
cost centers, profit centers, or departments. Budgets are then used as a management tool to
measure performance, among other things. Performance is measured by the extent to which
actual figures deviate from budgeted amounts. In using budgets as measures of performance,
it is important to distinguish between controllable and uncontrollable costs. Managers should
not be held accountable for costs they cannot control.
In the short run, fixed costs can rarely be controlled. Consequently, a typical budget
statement will show sales revenue as forecast and the variable costs associated with that level
of production. The difference between sales revenue and variable costs is the contribution
margin. Fixed costs are then deducted from the contribution margin to obtain a figure for
operating income. Managers and departments are then evaluated on the basis of costs and
those elements of production they are expected to control.
Cost of Capital
Capital budgeting and other business decisions—such as lease-buy decisions, bond
refunding and working capital policies—require estimates of a company's cost of capital.
Capital budgeting decisions revolve around deciding whether or not to purchase a particular
capital asset. Such decisions are based on a cost-benefit analysis, an estimate of the net
present value of future revenues that would be generated by a particular capital asset. An
important factor in such decisions is the company's cost of capital.
Cost of capital is a percentage that represents the interest rate the company would pay
for the funds being raised. Each capital component—debt, equity, and retained earnings—has
its own cost. Each type of debt or equity also has a different cost. While a particular purchase
or project may be funded by only one kind of capital, companies are likely to use a weighted
average cost of capital when making financial decisions. Such practice takes into account the
fact that the company is an ongoing concern that will need to raise capital at different rates in
the future as well as at the present rate.
Other Applications
Costs are sometimes used in the valuation of assets that are being bought or sold.
Buyers and sellers may agree that the value of an asset can be determined by estimating the
costs associated with building or creating an asset that could perform similar functions and
provide similar benefits as the existing asset. Using the cost approach to value an asset
15. contrasts with the income approach, which attempts to identify the present value of the
revenues the asset is expected to generate.
Finally, costs are used in making pricing decisions. Manufacturing firms refer to the
ratio between prices and costs as their markup, which represents the difference between the
selling price and the direct cost of the goods being sold. For retailers and wholesalers, the
gross margin is the difference between their invoice cost and their selling price. While costs
form the basis for pricing decisions, they are only a starting point, with market conditions and
other factors usually determining the most profitable price.
Advantages of Cost Accounting
Let us now examine the advantages that are derived from cost accounting. The nature
and extent of the advantages that may be expected from a costing system depends upon the
type, adequacy and efficiency of costing system installed and also upon the preparedness of
management, at all levels, to accept and act upon the advices given by the costing system.
The following are the principal advantages of a well installed and well accepted costing
system:-
(a) Elimination of wastes, losses, inefficiencies: Idle time, lost time, idle facilities,
wastage of materials in the form of spoilage, excessive scarps etc. Can be eliminated
by employing a good costing system.
(b) Cost reduction: By operational research new and improved methods of production
are invented by a good costing system so as to reduce cost.
(c) Detection of reasons for profit or loss: A costing system finds out the actual reasons
for reduction in profit or increase in profit. It identifies the production that runs at a
loss and suggests to the management the way of its improvement or possibility of
shutting it down.
(d) Advices on various matters: Cost accountant, on the basis of cost information, can
advise the management in such a way the management can rightly choose the best out
of many alternatives. Management, without appropriate advice from the cost
accountant, cannot decide whether to buy or make, whether to accept orders below
cost or not.
(e) Fixation of price: Cost accounting helps the management to fix price and to prepare
estimates for submission of tenders etc.
16. (f) Cost control: Cost accounting, by fixing standards and budgets and comparing the
actual with standards or budgeted figures and finally analyzing the variances, points
out to the management the weak and strong points so that the management can
exercise control.
(g) Assisting the Government, Trade unions etc. : The government uses cost
information for maximum price fixation, price control, tariff protection, minimum
wage fixation etc. Trade unions also use cost information for solving trade disputes
etc.
(h) Marginal analysis of cost: It is done for facilitating short-term decisions, particularly
in times of trade depression.
(i) Fixation of responsibility: For appropriate cost accounting cost centers and
responsibility centers are determined. When responsibilities are properly defined and
fixed on individuals, it becomes difficult to evade responsibility of performance and
as a result, overall efficiency improves.
(j) Helping preparation of final accounts under financial accounting system: Cost
accounts readily supplies the figures for closing materials, work-in-progress and
financial goods. So final accounts can be prepared without any delay for ascertaining
such values.
(k) Prevention of Frauds etc. Thereby helping the management, the Government and
others connected with the organization: By introducing cost audit, frauds can be
prevented; correct and reliable data can be obtained, not only by the management but
also by the Government, the shareholders, the creditors etc.
Criticisms against Cost Accounting
The following points of criticism are sometimes leveled against the costing system:
1. Heavy amount of expense is involved in installing a costing system. It is often argued
that costs involved in installing the system will enhance cost of production, but it
actually reduces cost of production through cost control.
2. Costing system meant for the organization may not suit the organization at all. If the
nature of the business is studied and a costing system suitable for the business is
installed, this criticism does not stand. costing system is to suit the business and not
vice versa.
17. 3. Employees often resist installation of a costing system. This is due to ignorance on
the part of the employees and their suspicion. If employees are properly educated so
that they are in a position to understand the benefits that accrue to them, no such
resistance shall be forthcoming.
4. Instances of failure in many cases are often cited. Failure of a costing system may be
due to defective procedure or due to rejection of the advice of the cost accountant by
the management or due to both.
5. When the old industries prospered without the help of a costing system why the
modern industries should require? Old industries did not have to face keen
competition as the modern industries have to face now. So a costing system is
essential now, just to keep the cost within control, in order to enable the industry to
stand competition.
6. Monotonous work of costing system is another criticism. Where is the absence of
monotony? Is it not present event in daily life? In a costing system, “only forms and
statements are to be prepared” – this is a statement made by many criticisms.
Limitations of Costing System
The real limitations of costing system may be summarized as below:
1. Cost statistics relate to past performances, whereas all decisions are to be taken
about the future.
2. The cost of previous year may not continue to be the same in the current or future
year due to price variations.
3. The cost ascertained on the basis of full utilization of capacity may not be true
when utilization is only partial, for any reason.
4. Non-inclusion of some cost (notional in nature) may reduce cost. Different
methods used in pricing the materials and in absorption of overheads may result in
different costs.
5. Management may believe that, detailed records may give benefit, but they are
costly too.
6. Various management problems may be solve d by value analysis, work study,
time and motion study, operation research and other cost reduction techniques.
Cost accounting fails to tackle such problems.
7. To maintain all records for control, under a costing system, is also very expensive.
18. 8. Delay in receiving costing information does not help the management to take
decision at the right moment.
9. Rigid costing does not serve all purposes.
Importance of the Study:
In management accounting, cost accounting establishes budget and actual cost of
operations, processes, departments or product and the analysis of variances, profitability or
social use of funds. Managers use cost accounting to support decision-making to cut a
company's costs and improve profitability. As a form of management accounting, cost
accounting need not to follow standards such as GAAP, because its primary use is for internal
managers, rather than outside users, and what to compute is instead decided pragmatically.
Costs are measured in units of nominal currency by convention. Cost accounting can
be viewed as translating the supply chain (the series of events in the production process that,
in concert, result in a product) into financial values.
Group Evaluation
All types of businesses, whether service, manufacturing or trading, require cost
accounting to track their activities. Cost accounting has long been used to help managers
understand the costs of running a business. Modern cost accounting originated during
the industrial revolution, when the complexities of running a large scale business led to the
development of systems for recording and tracking costs to help business owners and
managers make decisions.
In the early industrial age, most of the costs incurred by a business were what modern
accountants call "variable costs" because they varied directly with the amount of
production. Money was spent on labor, raw materials, power to run a factory, etc. in direct
proportion to production. Managers could simply total the variable costs for a product and
use this as a rough guide for decision-making processes.
Some costs tend to remain the same even during busy periods, unlike variable costs,
which rise and fall with volume of work. Over time, these "fixed costs" have become more
important to managers. Examples of fixed costs include the depreciation of plant and
equipment, and the cost of departments such as maintenance, tooling, production control,
purchasing, quality control, storage and handling, plant supervision and engineering. In the
19. early nineteenth century, these costs were of little importance to most businesses. However,
with the growth of railroads, steel and large scale manufacturing, by the late nineteenth
century these costs were often more important than the variable cost of a product, and
allocating them to a broad range of products lead to bad decision making. Managers must
understand fixed costs in order to make decisions about products and pricing.
For example: A company produced railway coaches and had only one product. To
make each coach, the company needed to purchase $60 of raw materials and components, and
pay 6 laborers $40 each. Therefore, total variable cost for each coach was $300. Knowing
that making a coach required spending $300, managers knew they couldn't sell below that
price without losing money on each coach. Any price above $300 became a contribution to
the fixed costs of the company. If the fixed costs were, say, $1000 per month for rent,
insurance and owner's salary, the company could therefore sell 5 coaches per month for a
total of $3000 (priced at $600 each), or 10 coaches for a total of $4500 (priced at $450 each),
and make a profit of $500 in both cases.
20. Conclusion:
In this work we have analyzed the preprocessing performance in the framework of
imbalanced datasets against other approaches in this problem such as cost-sensitive learning.
We have observed that the approaches used to address the imbalanced problem improve the
overall performance in all the paradigms used in the study, which was the expected
behaviour. The comparison between preprocessing techniques against cost-sensitive learning
hints that there are no differences among the different preprocessing techniques. The
statistical study carried out let us say that both preprocessing and cost-sensitive learning are
good and equivalent approaches to address the imbalance problem.
Finally, we develop a discussion about how to go above preprocessing and cost-sensitive
learning limits. We try to analyze the problem according to the results and we focus on the
problems of costing from different point of view. Specifically, we have emphasized on the
techniques of costing moreover other issues like the class overlapping and dataset shift
problems that arise in some cases and can prove detrimental in terms of classification
performance. Since overcoming these problems is the key to the improvement of the
organizational efficiency, the management body should be more conscious regarding this.
Cost information is part of the basic information needed by managers and policy makers for
making decisions about how to improve the performance of an organization and where to
allocate the resources within or among organization. Cost data are not always available from
routine data systems, due to poor information systems and lack of resources devoted to
organization management. Without quality cost data it is not possible to make accurate
projections, improve technical efficiency, control expenditure and enhance accountability of
managers. A scientific costing system is a very important tool for managements to fulfill
these needs and hence, is imperative for the successful running of an organization
21. References:
1. Theory and Practice of Costing, Basu & Das, Volume One, 2009 Edition.
2. http://www.flexstudy.com/catalog/schpdf.cfm?coursenum=9623a
3. http://ocw.mit.edu/courses/sloan-school-of-management/15-501-introduction
to-financial-and-managerial-accounting-spring-2004/lecture notes/lec19cost_acc
4. http://www.quickbooks.co.za/product/accounting-software/cost-accounting-importance/
5. http://bookboon.com/en/managerial-and-cost-accounting-ebook