The Impact Of Traditional Enterprise On Financial And Budget Issues ( Economic Value )

The Impact Of Traditional Enterprise On Financial And Budget Issues ( Economic Value )

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Social enterprise is an organization with a clear social mission that aim to financially self-sufficient. Most of its revenue come from the primary activity of trading goods or services. Social businesses should realize who their target market is, what goods or services they should trade, why it is important in the environment, and how their strategy can accomplish their objectives. Commercial approach is important for social businesses to meet their target market needs, also maximize profit for social returns.
Traditional enterprise or ordinary business has profit making motive, shareholder accountability, and profit redistributed to shareholders, while social enterprise has mission motive, stakeholder accountability, and income reinvested in social programs or operational cost. The significance in traditional enterprise will be on financial and budget issues (economic value). Social enterprise focuses on social benefits (social value), however, need external or self-generated funds in order to achieve financial sustainability. Both types have a value to acquire sustainability equilibrium.
Management accounting and costing system will depend on the organizations activities. Traditional business usually use modern costing system called activity based costing, as it recognize a range of factors that can vary the costs of production. Social enterprise commonly use traditional costing system that assume production volume will be the only factor to change the costs of output.

ICare should use operation costing system in their organization. Operation costing represents two methods, which are job costing and process costing. With job costing, the direct material costs are accumulated by batches of manufactured eyeglasses and conv...

... middle of paper ...

... beginning work in process inventory and the cost per equivalent unit. ICare work for non-profit organization.
Activity based costing is the best way to allocate non-manufacturing costs, such as the costs of Vision Entrepreneur franchisee program (VEs). To calculate this expense, iCare should know the cost driver of this program in the beginning of this organization. In this procedure, the limitation of VEs is not

As iCare’s funders need to know the overhead costs in the business, process and activity based costing will be a great system to calculate the manufacturing overhead and non-manufacturing costs.
Operation costing is suitable for Icare as the business meets the needs of high volume batch manufactures, which in this case made in the batches of 100 and produce a small type of similar product using repetitive production processes (5 strength of eyeglasses).

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