1. The importance of accurate cost allocation is an essential component to the manufacturing process. Explain the types of problems companies encounter during the allocation process, include specific examples as part of your answer. There are problems that accrue when costs are allocated. - Uncontrollable allocations consistent with responsibility accounting. But, only costs for which the individual manager has control. - Arbitrary allocation that It is impossible to determine what to allocate and this requires long and serious management discussions. - Allocations of fixed costs that appear to be variable costs. This happens when fixed costs are unitized or stated on a per unit basis. Examples include fixed general and administrative costs like administrative salaries. These costs …show more content…
Any company has to have a plan to solve their issues with following strategies that management must approved. Knowing the nature of issues and the people who work in your company is an effective tools to start solving problems and control the business. Management have to sit a strong internal control and that will save the business a huge amount of issues that cost you effort and money. For example, the case in Lululemon Company did not focus on the product issue that they have and blame the women’s body for it. If the company in every problem they face make a meeting to identify the problem or conceptual antecedent clearly of the challenge they have. Then, provide a brain storm for solutions and discuss the effectiveness of each solution. After that Management can decide which the best solution that drive the company to the company’s goals. Organization must train their employee to follow this process for any issues. http://www.au.af.mil/au/awc/awcgate/army/rotc_dm_ps.pdf
John Deere Component Works (JDCW), subdivision of John Deere and Co. was in charged specifically of the manufacturing of tractor component parts. The demand for JDCW’s products had problems due to the collapse of farmland value and commodity prices. Numerous and constant failures in JDCW’s competition for bids, alerted top management to start questioning their current costing methods. As an outcome, the analysis has to be guided to research on the current costing methods with the intention of establishing legitimacy and to help the company in adopting a more appropriate costing system.
Lululemon, a premium yoga-focused retail chain, serves two market segments. One segment consists of consumers who are characterized as “trendy urban” and the other segment consists of “wealthy” consumers. The “trendy urban” segment, in summary, is fashion oriented or active women who live in metropolitan areas. The “wealthy” market segment is affluent women who live in either urban or suburban areas. As discussed below, these two market segments are defined by differences in demographics, geography as well as behavioral and psychographic characteristics.
Since 1998, Lululemon has transformed the way people dress to workout. Through innovative products and technical athletic fabrics, a brand was created to provide clothing for workouts such as yoga, running and cycling. Lululemon opened its first store in Vancouver in 2000 with the plan to have the store be a community hub for people to learn and discuss their physical fitness and overall health goals. As Lululemon was more than a store to provide products for consumers, their goal was to influence every person who walked into the store. A basic criterion for investment is Lululemon’s mission to create components for people to live longer, healthier, fun lives. All Lululemon locations maintain strong relationships with local communities and host in-store events such as complimentary yoga classes and goal-setting workshops.
Lululemon Athletica, Inc. (Lululemon) is renowned for its technical, high-quality yoga-inspired apparel for women. However, the company is growing beyond this niche market and is therefore altering its competitive strategy. Lululemon utilizes a broad differentiation strategy because its target market is broad and its product line is varied, it stresses product innovation, and its community-based marketing and retail experience sustain its differentiation from competitors.
The traditional budgeting approached consumed a lot of the time of the companies and still are unresponsive any change in external environment (Neely et.al, 2003).
The idea for this company came from the CEO Kevin Plank who, in 1996, wanted to make a shirt to be worn under football gear that wouldn’t get bunched up and gross while playing football. Under Armour started out by selling compression clothing designed to keep cool, dry, and comfortable for any sport or workout, and have expanded to incorporate all aspects of sportswear. They started their business in college football and gradually grew to being big in the NFL. Under Amour is now a company, like Nike and Adidas, who is a supplier of athletic shoes, equipment, and sportswear to psychically active people.
The overall purpose of cost accounting is to advise top administration and the management team on the most suitable and cost effective methods and actions to employ based on cost, capability and efficiencies of a given product or service. It can be defined as the method where all the expenditures used during execution of business activities are gathered, categorized, examined and noted down (Horngren & Srikant, 2000). Once these numbers are gathered and recorded the information is used to determine a selling price and/or to identify possible investment opportunities. Although the principal aim or function of cost accounting is to help the business administration with their decision making and business planning process, the cost accounting data
B. Overview of Process Costing. Manufacturing costs are accumulated in processing departments in a process costing system. A processing department is any location in the organization where work is performed on a product and where materials, labor, and overhead costs are added to the product. Processing departments should also have two other features. First, the activity performed in the processing department should be essentially the same for all units that pass through the department.
Due to the complex global business environment, managers and leaders are under higher pressure to ensure effective management of organization. Taking the recent trends into consideration, it is observed that several organizations across the globe have failed, but some companies have clearly enjoyed the success and growth. It is deduced from the research study that the primary reason behind the success and/or failure of any organization purely depends on the management and leadership. Similarly, it is also observed from the past conducted research studies and case studies that since the volume and intensity of issues and threats are increasing, it is becoming more and more difficult for managers to ensure the
For example: with the increase of the number of products produced, the cost of operating a machine also increase. Second we have batch level costs which is associated with batches; producing a multiple units of the same product that are processed together is called a batch. The third type is product level costs which arise from any activity in order to support the production of products. The fourth and the last type is facility level costs, this costs cannot be determined with a particular unit, product or batch; this costs are fixed with respect to batches, products and number of units produced. A single measure of volume is used for allocating costs to each service or product in traditional method for example: direct material cost, machine hours, direct labor cost and direct labor hours. A cost driver is an activity that generate costs, it can be generated by two types of costs the first is a particular machine 's running costs where the costs is driven by production volume as machine hours; the second is quality inspection costs where the cost is driven by the number of times the relevant activity occurs as the number of
Over the past hundred years management has continuously been evolving. There have been a wide range of approaches in how to deal with management or better yet how to improve management functions in our ever changing environment. From as early as 1100 B.C managers have been struggling with the same issues and problems that manager’s face today. Modern managers use many of the practices, principles, and techniques developed from earlier concepts and experiences.
“Management is the process of working with people and resources to accomplish organizational goals. Good managers do those things both effectively and efficiently.” (Bateman & Snell, 2004). Management contains four basic functions; planning, organizing, leading, and controlling. By using these four functions, one can create an organization both successfully and proficiently. Planning is specifying the goals to be achieved and deciding in advance the appropriate actions needed to achieve those goals. Planning sets the stage for actions and for major achievements. Organizing is assembling and coordinating the human, financial, physical, informational, and other resources needed to achieve goals. Organizing attracts people to the organizations, specifying job responsibilities, grouping jobs into work units, marshaling and allocating resources, and creating conditions so that people and things work together to achieve maximum success. Leading is directing, motivating,...
Businesses are very hard to maintain, there are ways to accommodate their relative difficulties. By learning the steps to success from the ground up of management, it would be possible. So what is it that makes businesses or management itself so problematic? The main concern about management is their ability to make careful decisions. Without the capability of managing people and the industry itself, there would be no movement with the company. There are many concerns when dealing with decisions that are to be made by managers. These concerns will help the company prioritize of what’s important and what isn’t. Organizing the company, planning objectives, and controlling the surroundings are kits to solve the main concern when making decisions.
...that the budget administration/execution process cannot be successful unless there are stringent controls in place to ensure that disadvantageous disturbances do not occur to the budget as formulated. This is because there are many forces that can affect the budget administration process. Some of the forces are voluntary while others are involuntarily sparked, both of which need to be handled with stringent administrative measures. Voluntary flaws to a are introduced by unscrupulous individuals who want to reap benefits from the budget; to curb this, the budget administration team should ensure that the execution of the budget is done by credible people with the right expertise. The budget administration team should ensure that measures, such as maintenance of proof and accurate records, are implemented to prevent involuntary errors to the budget control process.
Consequently, the most important object to learn is that external factors, coupled with the internal environment factors have a decisive impact on the functioning of the organization. All factors are closely twisted and affect each other. The manager should be able to analyze all these factors together and without losing any of the mind and make the right