Introduction:
Joe Runyan-a tree hugger, the Hangers Cleaners’owner. Overcoming the competitors, he is the first person using the environmentally nontoxic dry cleaner in Kansas City. Founded in 2010, he has had 35 employees up to now and achieved the revenue of $1.6 million in 2015. This report plans to help Joe Runyan design an effective management accounting system.
Executive summary:
Hangers Cleaners’ competitive advantage, mission, and Key Success Factors (KSFs) are three tasks used to design business strategy. The purpose of this report is to align the importance of designing business strategy in MAS.
Hangers Cleaners’ mean of competitive advantage
A competitive advantage is used to support customers with either the greatest value
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They would be expenses, revenue budgets, purchases budgets, and production budgets. Budgeting would need to be flexible.
While other local dry cleaners have told him that their year-over-year revenue is flat or down as much as 25 percent, Mr. Runyan said his revenue grew 2 to 3 percent in 2015 and his profits quadrupled, largely as a result of closing the unprofitable location. They usually had special prices for customers. For example, they had had 20% off for new customer when they order the service last 2015.
Variance Analysis would be of limited use – what is the “output of a university? A student? An item of Research? How would “standards” for inputs be determined for these outputs against which variances could be calculated? E.g. what is the equivalent of “direct material” per student? A direct labour hour per student output?
You could discuss the usefulness of Cost Allocation and techniques in relation to developing budgets for Variance Analysis. It would be difficult to use traditional cost allocation techniques because of the problem in defining output, and inputs per unit of output. You could use the example of the Counselling Centre (a Kaye West Support Centre) to illustrate this
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How would you allocate discuss the difficulty in deciding on cost drivers for some would the cost drivers be for some
CVP analysis – may be useful for faculties to determine break even points in, say, numbers of students (but not for Support Centres as they have no revenue as such).
Target costing at a faculty or university level may be useful to determine cost budgets (remember fees at US universities are flexible, however they need to be very competitive, so target costing may well be relevant – Faculties could “work backwards” to determine target costs, based on a given fee structure).
Capital budgeting techniques would be critical, especially as part of the strategic planning process. It would be critical to include non-financial data in these decisions (i.e. the final decision should not be made solely on quantitative grounds – not a practice used by RMIT it seems). http://www.studocu.com/en-au/document/rmit/accounting-behaviour-and-organisations/tutorial-work/tutorial-work-topic-1/304457/view?auth=0&auth_prem=0&prem_doc=1
Activity-based costing (ABC) is a costing method that is usually used as a supplement to a company’s usual costing system, and is therefore used for internal decision-making. It is designed to inform managers of costing information for decisions (strategic and others) that potentially affect capacity and consequently “fixed” as well as variable costs. In addition, ABC can also be used to pinpoint activities that would benefit from process improvements.
Cy-Fair’s Business and Financial department develops the budget for school administrators. Once the budget summary has been developed the Principal then can decide within the budget how he would like to spend the money given by the district. Certain areas of the budget are to be spend on specific items, for example the budget for “GT/Horizon Supplies” can only be spend on GT instructional needs. On the other hand the budget for “Instructional Supplies” is more flexible. Primary example the after the Principal analyzes what are his campus needs, he then may decide on the materials he would like to spend the money on as long as it supports the needs of his campus. Although the principal is limited on how he
As Human Resource Manager for our organization, it is imperative that you understand the current discussions surrounding the company’s budget issues. There are several terms used to describe cost. Hopefully this memo will provide you a better understanding of the terms used when discussing our budget. The terms of importance include, but are not limited to: fixed, variable, direct, indirect, sunk, marginal and total cost.
To stay competitive in this industry this report has given us some key factors for companies to follow and meet to be successful in this com...
The costing system is a system that is used throughout businesses that offer a service. “A standard costing system uses standard costs and quantities of all three types of manufacturing costs: direct materials, direct labor, and factory overhead” (Blocher 2016 p. 97). Companies utilize the costing system to monitor the actual product usage compared to prior usage. Contractor use this system when bidding on jobs; once they collect specific instruction for the requested job they factor in the amount of material, labor, and other overhead costs then provide a quote for the assignment. “Strategic cost management is deliberate decision-making aimed at aligning the firm's cost structure” (Anderson & Sedatole 2003). Red Lobster and Kroger are examples
Barr, M., & McClellan, G. (2011). Budgets and financial management in higher education. San Francisco, CA: Jossey-Bass.
Suggested cost management, planning and scheduling techniques would help in controlling costs and schedule problems.
Detsky, & Laupacis state that a cost effective analysis, “requires allocating a fixed budget across all competing programs and is specifically aimed at ...
for market size, trends, company goals, spending, return on investment, capital expenditures, and funding required.
A company's budget serves as a guideline in planning and committing costs in order to meet tactical and strategic goals. Tactical goals such as providing budgetary costs for daily operations, and strategic objectives that include R&D, production, marketing, and distribution are all part of the budgeting process. Serving as a guideline rather than being set in stone, the budget is a snapshot of manager's "best thinking at the time it is prepared." (Marshall, 2003, p.496) The budget is a method in which to reign-in discretionary spending, and will likely show variances between what costs have been anticipated and what costs are actually incurred.
Making business decisions involves choosing between alternative courses of action. Many factors affect business decisions, yet analysis typically focuses on finding the alternative that offers the highest return on investment or the greatest reduction in costs. Some decisions are based on little more than an intuitive understanding of the situation because available information is too limited to allow a more systematic analysis. In other cases, intangible factors such as convenience, prestige, and environmental considerations are more important than strictly quantitative factors. In all situations, managers can reach a sounder decision if they identify the consequences of alternative choices in financial terms. This unit
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
"College Accounting Coach." Process Costing-Definitions And Features(Part1) « Process Costing « Cost Accounting «. Feb. 2007. Web
Hansen, D., Mowen, M., & Guan, L., Cost Management: Accounting & Control 6th ed., Mason, Ohio: South-Western
...pplied. Cost estimation and analysis could ultimately determine major decisions in both the business and political worlds today, and play a crucial role even in our day to day lives. Through activity based costing one is able to see what areas need improvement and also whether or not a business will be successful after considering all the factors. These tools are very powerful in drawing wise conclusions from cost analysis and can be a priceless tool to have even in the field of engineering.