Even the lowest-level managers and employees are empowered to make decisions and have that valued democratic voice.
ADVANTAGES:

An advantage of this form of measurement is that it tends to be more encompassing, since it accounts for all uses of capital. It is susceptible to manipulation by managers with a short-term focus, or by manipulating the hurdle rate used to evaluate divisions. The frequently occurring problem, in concern to a lack of coordination among autonomous managers, can be quickly reduced by clearly redefining the company's strategy and communicating it effectively throughout the organization; accordingly, problems will occur, but Investment Centre Management has discovered a quicker means to establish resolution.

An investment center is a classification used for business units within an enterprise. The essential element of an investment center is that it is treated as a unit which is measured against its use of capital, as opposed to a cost or profit…...

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Bibliography

Management Accounting for Business, Colin Drury, 4th Ed. 2009 Thomson.

Management Accounting for Decision Makers, Peter Atrill and Eddie McLaney, 6th Ed. 2008 Prentice Hall

Corporate Finance (Principles and Practice), Denzil Watson and Antony Head, 3rd Edition 2006 - Prentice Hall

Sullivan, Arthur; Sheffrin, Steven M. Economics: Principles in Action (2003). Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. pp. 111. ISBN 0-13-063085-3.

ABC Cost Method
Activity-Based Costing (ABC) method is a calculation technique that was initially developed to enhance the profitability of products and selection of manufactured products optimal mix. This costing method can be defined as a technique that entails allocating manufacturing overhead costs to goods using a more logical approach. In this case, the technique first allocates costs to activities that are the actual causes of overhead. Once this is carried out, the activity-based costing then allocates the cost of those activities only to products that require the activities. The method involves cost allocation and decision making since it was developed to incorporate long-term planning components and forecasts (Dorin & Diaconescu, 2014, p.111).

Activity-Based Costing differs from traditional costing methods because cost allocation involves the use of a more logical approach. In essence, ABC cost entails a more logical means of assigning costs unlike traditional costing methods where costs are assigned depending…...

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References

Dorin, I. & Diaconescu, C. (2014, June). The Influence of ABC Cost Calculation Method on Economic Entities Performance. Internal Auditing & Risk Management, 2(34), 111-117.

Utku, B.D., Cengiz, E. & Ersoy, A. (2011). Comparison of the Theory of Constraints with the Traditional Cost Accounting Methods in Respect to Product Mix Decisions. Dogus University Journal, 12(2), 317-331.

absorption costing method, and why?
In this case, the absorption method would be the best choice due to the way the method incorporates only the overhead. The overhead is allocated to the 80,000 units sold. The variable method normally counts fixed overhead as a period expense. This means that the fixed overhead during this period is calculated on the basis of the 95,000 units made. This calcuation method would be used if the absorption method is chosen. The absorption method is only utilized to calculate fixed overhead on the basis of the 80,000 units sold. The method also provides management a more precise picture of the profitability of the fishing lures. Therefore, making the absorption costing method optimal.

• What are the benefits of the two methods?

Under absorption costing system, the product cost consists of all variable including fixed manufacturing costs. When variable costing system is utilized, the fixed cost, including…...

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References

Horngren, C. (1981). Introduction to Management Accounting. Englewood Cliffs, N.J: Prentice Hall.

Izar, R., & Hontoir, J. (2000). Accounting, Costing, and Management. Oxford: Oxford University.

Riahi-Belkaoui, A. (1991). Handbook of Cost Accounting Theory and Techniques. New York: Quorum Books.

Absorption costing is a costing method which treats all costs of production as product costs without considering whether these costs are variable or fixed (AccountingforManagement, 2013). Under the absorption costing method the cost of a unit product comprises direct materials, direct labor, and both variable and fixed overhead. This costing method allocates a portion of fixed manufacturing cost to each unit of a product along with the variable manufacturing cost (AccountingforManagement, 2013). It includes all costs of production as product cost. That is why it is often called a full costing method.
Under variable costing costs of production varying with output are treated as product costs. Product costs under this costing method therefore include costs of direct material, direct labor, and variable portion of manufacturing overhead. Fixed manufacturing cost does not therefore fall under product costs (AccountingforManagement, 2013). It is nevertheless, treated as period cost and just like selling and administrative…...

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References List

AccountingforManagement. (2013). Variable Costing vs. Absorption Costing. Retrieved from  http://www.accountingformanagement.org/variable-vs.-absorption-costing/ 

Daphne, A. (2013). Why Variable Costing is not allowed with GAAP. Retrieved from http://www.ehow.com/info_8790382_variable-costing-not-allowed-gaap.html

Johnston, K. (2013). GAAP & Absorption vs. Variable Costing and Tax Implications. The Houston Chronicle.

Another example of pure job costing is web development, where the processes themselves vary hugely from project to project, meaning the cost and time involved also varies.
esponse

Dosch & Wilson (2010) do seem to do a good job of defining job and process costing, and the person who posted this seems to have understood these definitions fairly well in the abstract -- that is, the definitions provided seem reasonable and the application of these definitions to businesses chosen by the poster are explained in a way that clearly links them to these definition. At the same, the poster seems to have had some trouble accurately identifying companies where job costing might be employed, despite grasping the abstract technicalities of the definition of job costing. While it is likely that an individual laborer might be able to identify that they worked on a particular section of an airplane or wall of…...

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References

Chan, Y. (1993). Improving hospital cost accounting with activity-based costing. Health care management review 18(1).

Dosch, J., & Wilson, J. (2010). Process Costing and Management Accounting in Today's

Business Environment. Strategic Finance, 92(2), 37-43. Retrieved from EBSCOhost.

Managerial Accounting for Sleepease Ltd.
"Identify, discuss and critically evaluate the advantages and problems of using the following costing methods for internal reporting purposes":

absorption costing; marginal costing.

"Refer to the Sleepease case as and when necessary"

absorption costing

The absorption costing is the type of managerial costing where both the variable and fixed costs are charged to process or product. Thus, "absorption costing is a method for appraising or valuing a firm's total inventory by including all manufacturing costs as product costs, regardless of whether they are variable or fixed and therefore it is frequently referred as the full cost method." (Nawaz, 2013 p 50).

Accordingly, the company will be able to determine costs of a product after determining both the variable costs and fixed costs. Sleepease will derive several benefits from using the absorption costing for the production of their product.

First, the absorption costing will assist the company to take the account of all…...

Stadium Jumps" the writers discuss the cost of building a baseball stadium and renovating obert F. Kennedy memorial stadium in Washington, D.C. The cost analysts note that the original cost estimate for the project was too low, and that the actual costs of completing the project could be as much as $91 million dollars more than originally anticipated. D.C. councilmen overseeing the project expect that the total costs for the project could climb as high as $486 million dollars, a problem as the original cost estimate was less than $400 million.
The cost estimate is off because it did not account for additional costs with regard to improvements for roads surrounding the stadium, addition of sewers and Metro routes, the money necessary to completely renovate the stadium and more than $30 million dollars in contingency funds for "the likely cost of overruns."

The problems associated with the poor cost estimate are…...

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References:

Goodman, Keith. "Life-Cycle Cost Analysis -- Evaluation and Economic

Investment Team." September 28, 2004. United States Department of Transportation -- Federal Highway Administration. 17, November, 2004:  http://www.fhwa.dot.gov/infrastructure/asstmgmt/lccafact.htm 

Maluso, Nancy. "Activity-Based Costing: What is it and how can reengineering teams use it?" (2001). BPR Online Learning Center. 17, November, 2004:  http://www.prosci.com/abc1.htm 

Nakamura, David & Montgomery, Lori. "Cost Estimate on Stadium Jumps." Washington

Joint costing systems should bear in mind the legal constraints on the use of such systems, and should provide accurate information to managers in order to be most useful in the managerial accounting context.
Firms need to remain competitive, which indicates that the market will set prices to some degree. This implies that firms can make better decisions with respect to what projects/products they wish to pursue by understanding the cost structure of the product. If the product is not viable at the cost at which it can be produced, then the firm can improve profitability by dumping the product.

orks Cited:

Banham, R. (2000). Off target? CFO Magazine. Retrieved April 5, 2011 from http://www.cfo.com/article.cfm/2990860/c_3046531?f=magazine_alsoinside

Frederick, S. (2011).

The persuasive power of opportunity costs. Harvard Business Review. Retrieved April 5, 2011 from http://hbr.org/2011/01/column-the-persuasive-power-of-opportunity-costs/ar/1

Katz, D. (2002). Activity-based costing (ABC). CFO Magazine. Retrieved April 5, 2011 from http://www.cfo.com/article.cfm/3007694

McKinsey & Co. (2004). Pricing new products. CFO Magazine.…...

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Works Cited:

Banham, R. (2000). Off target? CFO Magazine. Retrieved April 5, 2011 from  http://www.cfo.com/article.cfm/2990860/c_3046531?f=magazine_alsoinside 

Frederick, S. (2011).

The persuasive power of opportunity costs. Harvard Business Review. Retrieved April 5, 2011 from  http://hbr.org/2011/01/column-the-persuasive-power-of-opportunity-costs/ar/1 

Katz, D. (2002). Activity-based costing (ABC). CFO Magazine. Retrieved April 5, 2011 from  http://www.cfo.com/article.cfm/3007694

Dibsa should turn towards the market-based pricing strategy, which sees the implementation of competitive prices for the 3-in-1 Lawnmower. The selection of this combination of strategies would generate several impacts upon the company, but most of them would be obvious at product lifecycle level. In this order of ideas:
The sales revenues would be significantly high throughout the first six months and they would allow the company to cover for the large costs incurred in the manufacturing of the product as well as register profits; they would however decrease with the implementation of the market pricing strategy and the 3-in-1 Lawnmower would metamorphose from a star product into a cash cow

The costs incurred in the manufacturing of the new lawnmower have already begun to decrease and will continue to do so; the actual impact of the pricing strategy is limited, with the specification however that these costs will not be…...

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References:

Berman, K., Knight, J., Case, J., 2006, Financial Intelligence: A Manager's Guide to Knowing what the Numbers Really Mean, Harvard Business Press

Bolander, S.F., Gooding, C.W., Mister, W.G., 1999, Transfer Pricing Strategies and Lot Sizing Decisions, Journal of Managerial Issues, Vol. 11

Drudy, C., 2004, Management and Cost Accounting, 6th Edition, Cengage Learning EMEA

Goetz, Jr., J.F., 1985, the Pricing Decision: A Service Industry's Experience, Journal of Small Business Management, Vol. 23

CVP is very useful for small business also because the analysis takes
into consideration variables like eturn on Investment, or Customer
Acquisition Cost. This analysis allows the company to determine what the
maximum profit volume can be, and how the above mentioned variables can be
changed in order to become successful.
CVP analysis is also able to determine the results of media campaigns,
especially for small business, where results are more visible and can be
observed after a shorter period of time. Furthermore, these results can be
translated into a successful company strategy, given the fact that the
strategy would be based on verified results. In relation to this, market
share can increase due to such a strategy.
For small business, CVP analysis is also used in establishing the
company's budget for certain activities. The analysis is able to provide a
flexible budget variant, which is exactly what a small company needs, given
the fact that environmental changes affect small companies more than they
affect…...

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Reference list:

1. Cost Volume Profit Analysis (2008). Business Owner's Toolkit.

Retrieved May 14, 2008 from

 

00.

2. CVP Analysis (2008). Wikipedia, the free encyclopedia.

Retrieved May 14, 2008 from

 http://en.wikipedia.org/wiki/CVPanalysis .

3. Kee, Robert (2007). Cost volume profit analysis incorporatinghttp://www.toolkit.com/smallbusinessguide/sbg.aspx?nid=P0675 

The work and materials required to make and serve regular coffee is considerably different than the work involved in making and serving a venti half-caf mocha-vanilla soy frappucino, for instance, and though some long-term regularity would be expected in the number of each drain that is ordered estimating costs based on a time scale for this area of operations would be cumbersome and inaccurate. Using the job order costing method and determining how much the materials and labor cost for each type of drink (or, in the case of coffee, the cost for making a single batch of the drink), and thus more accurate prices can be set that reflect the company's costs and allow it to continue making a profit (and frappucinos). By utilizing both costing methods as appropriate, then, Starbucks can place itself in a more advantageous position regarding cash flow in and out of the business.
Benefits…...

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References

Hortens, J. (n.d.). Job order vs. process costing. Accessed 14 May 2012.  http://faculty.mdc.edu/jhortens/ACG%202071/transparenciesm02.pdf 

Ingram, D. (2012). Advantages & Disadvantages of Job Order Costing & Process Costing. Accessed 14 May 2012.  http://smallbusiness.chron.com/advantages-disadvantages-job-order-costing-process-costing-3082.html 

Starbucks. (2012). Accessed 14 May 2012.  http://www.starbucks.com/ 

JOB ORDER COSTING

Product Costing systems (ABC, job costing, put costing, .) advanced topic managerial accounting the thesis statemenit a position body paper show evidence support position. The paper discuss opposite point view discuss position valid.
Product costing systems

Product costing system is a management tool which identifies the actual cost of producing each product. It identifies the profits and loss which can be gained or incurred on each product, hence giving companies the opportunity of identifying and promoting of profitable product while dropping, re-pricing or redesigning of unprofitable products Brierley, 2008.

Product costing is a highly sensitive area for managerial accountants, recently, most of them have changed their focus such that they give their attention to appropriate treatment costs which are directly associated with resources that are committed to support activities, which within the company do not vary proportionally to production once the initial capacities have been set. In such as an event, it is…...

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References

Brierley, J.A. (2008). Toward an Understanding of the Sophistication of Product Costing Systems. [Article]. Journal of Management Accounting Research, 20, 61-78.

Brierley, J.A. (2010). The determinants of overhead assignment sophistication in product costing systems. [Article]. Journal of Corporate Accounting & Finance (Wiley), 21(4), 69-75. doi: 10.1002/jcaf.20597

Brierley, J.A. (2011). A Comparison of the Product Costing Practices of Large and Small- to Medium-Sized Enterprises: A Survey of British Manufacturing Firms. [Article]. International Journal of Management, 28(4), 184-193.

Drudy, & M. Tayles. (2005). The British Accounting Review Explicating the design of overhead absorption procedures in UK organizations, 37(1), 47 -- 84.

Many managers who already are involved with competition in time-based industries realize that manufacturing strategy is often influenced by the traditional cost management system and this proves to be a mistake as time management system might have worked better (Hutchinson, 2007, p. 31). In the manufacturing sector, the traditional managerial cost accounting reporting system is still used but as many managers are ready to adopt the advanced manufacturing strategies and technologies, the managers object to the inclusion of cost accounting system as the only decision criterion in manufacturing (Hutchinson, 2007, p. 32).
The managerial cost accounting reporting system should also involve the activity of performance measurement that provide an impressive influence on the performance and motivation of the workers. Furthermore, it also provides extra information for the managers to take proper decisions that may help in achieving the pre-determined organizational goals to achieve future prospects and profits (Maskell, Baggaley, 2001,…...

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References

Alnoor, Bhimani., 2003. Management Accounting in the Digital Economy, Oxford University Press: Oxford.

Brian, Maskell H; Bruce, Baggaley L., 2001. Future of Management Accounting in the 21st Century, Journal of Cost Management, 15(5), pp: 24-32.

Dale, Geiger R., 1995. The Emerging Need for Managerial Cost Accounting, The Government Accountants Journal 44(3), pp: 46-53.

George, Joseph., 2006. Understanding Management Accounting Techniques in the Context of Organizational Change, Management Accounting Quarterly 7(4), pp: 24-32.

Managerial accounting, there are different types of costing that can be used. Each method of costing has its advantages and disadvantages in different situations. It must be remembered, when determining what the best type of costing method is, that the objective of managerial accounting is to deliver useful information that can assist in managerial decision-making. Thus, managerial accounting matters to the extent that it can help to deliver on overall organizational objectives by providing strategic or tactical insights (Investopedia, 2016).
There are two major costing methods -- absorption costing and marginal costing. Absorption costing is a system of cost accounting that seeks to accumulate the different costs associated with the production process, and portion these out to different products. So the costs would be broken out into direct materials, direct labor, variable overhead and fixed overhead, rather than the convention categories in financial accounting. Using absorption costing has a few benefits.…...

Activity-Based Costing and AIS
Activity-Based Costing (ABC) is an accounting method that identifies the activities a company carries out and then assigns indirect costs (overhead) to products.

Activity-based costing shows the relationships between the activities, the costs, and the products, and correctly associates the lion's share of the resources used with the actual production or provision of services.

The recognition of these relationships enables the indirect costs to be assigned to products in a more rational, less arbitrary manner than traditional methods that would allocate a broad percentage of costs to products without any true measure of the accuracy of the approach.

By using activity-based costing, a company can treat more indirect costs as direct costs. This is important because some products or services consume more indirect costs than do other products or services.

In effect, the activity-based costing enables an accountant to trace the resource consumption and costs, which are mapped to the final…...

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References

Romney, M.B., and Steinbart, P.J. (2009). Accounting information systems. Upper Saddle River, NJ: Pearson Prentice Hall.

____. Accounting Information Systems: Information on Collection, Storage and Processing of Financial and Accounting Data. Accounting Information Systems.

The accounting coach. Retrieved  http://www.accountingcoach.com/activity-based-costing/explanation/1