Why would management take extra effort to ensure approximate budgets for direct labor, direct materials, and manufacturing overhead? Please provide relevant information and terminology to support your response?
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Why would management take extra effort to ensure approximate budgets for direct labor, direct materials, and manufacturing
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- What are the objectives of a cost management information system?The actions listed next are associated with either an activity-based operational control system or a traditional operational control system: a. Budgeted costs for the maintenance department are compared with the actual costs of the maintenance department. b. The maintenance department manager receives a bonus for beating budget. c. The costs of resources are traced to activities and then to products. d. The purchasing department is set up as a responsibility center. e. Activities are identified and listed. f. Activities are categorized as adding or not adding value to the organization. g. A standard for a products material usage cost is set and compared against the products actual materials usage cost. h. The cost of performing an activity is tracked over time. i. The distance between moves is identified as the cause of materials handling cost. j. A purchasing agent is rewarded for buying parts below the standard price set by the company. k. The cost of the materials handling activity is reduced dramatically by redesigning the plant layout. l. An investigation is undertaken to find out why the actual labor cost for the production of 1,000 units is greater than the labor standard allowed. m. The percentage of defective units is calculated and tracked over time. n. Engineering has been given the charge to find a way to reduce setup time by 75 percent. o. The manager of the receiving department lays off two receiving clerks so that the fourth-quarter budget can be met. Required: Classify the preceding actions as belonging to either an activity-based operational control system or a traditional control system. Explain why you classified each action as you did.How can support department and joint cost allocation affect production employee performance evaluations?
- What is the role of cost management with respect to the objective of continuous improvement?Explain why the Accounting Department should be responsible for producing quality cost reports.Describe the concept of a cost center and, using a specific organization, give an example of how this might be used to achieve the strategic goals of the organization.
- Discuss how financial data prepared on the basis of variable costing can assist management in the development of short-run pricing policies.Cost management information should be timely and accurate. Which of these attributes is mostimportant? Why?The analysis of standard cost systems begins with the development of standards for direct materials, direct labor, and manufacturing overhead. Discuss standard costs and indicate how they can be used by management in planning and control. Why is it important to consider the relationship among cost, quality, and selling prices when establishing standards for direct materials?
- Why are top management support and cross-functional involvement crucial when attempting to implement an activity-based costing system?Is a standard cost an estimated cost? What is the primary objective of employing standard costs in a cost system? > What is a budget? > What is the difference between ideal and practical standards? Which standard generally is used in planning? > What is meant by the term management by exception? > What are some advantages of using standard costs? What are some disadvantages?Why do we require product, task order, and process cost data?
