Case study costing systems and cost control

V, 4 C y Inventory Management: The case ties together many of the concepts of inventory management including economic order quantity EOQjust- in-time JIT manufacturing, the relationship between production and job cost sheets, and backflush costing. It also relates management of materials inventory with management of finished goods inventory. Unfortunately when some students study the different aspects of inventory management such as EOQ, safety stock, and backflush costing they treat these topics as discrete, unrelated topics although the topics are actually all tied together into one inventory management system.

Case study costing systems and cost control

Login The analysis uses a number of examples to highlight the significant differences in costs between the two systems, and the Impact that these variances have on the cuisines. It is concluded that the new system does provide a definite improvement over the existing one, based on the benefits perceived from its introduction versus the implementation costs envisaged.

The benefits include more effective cost control and performance measurement, precise stock valuation and more accurate profitability analysis. This would result In better decision-making on Issues related to key product markets, profit margins, product Introductions and deletions, as well as cost reduction.

General advice is also provided as to the extent to which further breaking down of he department into a larger number of cost centers would be useful, and the reasons behind objections by members of staff to the new proposal. Analysis of Existing costing system The current system uses a single average hourly charge to allocate labor and overhead costs to the valve department.

This rate is being calculated on a monthly basis by dividing the sum of the accumulated labor charges and department overheads by the number of labor hours worked. Job costs are determined by multiplying this single rate by the time each Job spends In the department.

Data for the calculations are derived as follows: Total labor hours from timeshares. Labor charges are calculated by section and then added up to provide the total monthly labor charge for the department. Examples of suitable bases would be the total floor area of the valve department to allocate bills or rent and rates, building insurance and depreciation; or machinery power rating to allocate electricity bills.

Further allocation of overheads by section is not performed under the existing system. It also allocates inaccurate costs incurred by the valve department in servicing other departments. The issues described above result in: Concerning overheads, the new proposal suggests a two-stage apportionment by settles, I.

Case study costing systems and cost control

Slung ten Uninominal Stetsons as ten appropriate cost centers to wanly costs are allocated, rather than Just the overall department. This would be performed using a suitable allocation base for each overhead cost, once again using the same reminisces previously followed to apportion overheads on a department basis.

Overhead charge rates would then be calculated for each section by dividing total overhead costs per section by the corresponding labor hours.

Activity Based Costing vs. Traditional Steps, Results Compared

Total cost per hour for each section would then be obtained by adding the labor rate to the overhead rate for the section in question. Perceived Benefits of the Proposed System Breaking down costs by section rather than simply by department I.

Further level of detaildefinitely provides a better understanding of the cost structure, and represents an improvement for the following reasons:Integrating activity-based costing and environmental cost accounting systems: a case study ‘Integrating activity-based costing and environmental cost accounting systems: a case study’, Int.

J.

Business and Systems Research, Vol. 4, No. 2, pp– Analysis of Existing costing system The current system uses a single average hourly charge to allocate labor and overhead costs to the valve department.

Case study costing systems and cost control

This rate is being calculated on a monthly basis by dividing the sum of the accumulated labor charges and department overheads by the number of . Case study: Manufacturing Supply Chain Logistics & Inventory Control A specialty chemical company with worldwide operations serving the electronics, surface finishing, and decorative industries engaged Daniel Penn Associates to improve its supply chain logistics and inventory control systems.

What is Activity-Based Costing?

food cost control. "Inemploying cost-controltechniques and cost accounting techniques, a manager should remember that the purpose is to find out what the costs are, whetherthey are out ofline (with the budget), and, ifso, where they are out ofline.

Corrective action canthen be taken" (Keiser & . Lorson Manufacturing Company Case Study Executive Summary Lorson Manufacturing Company is actively seeking to implement tighter cost control measures in an industry that is largely governed by prices.

Activity-based costing attempts to measure the costs of products and services more accurately than traditional cost accounting. Companies move to Activity -Based Costing to better understand the true costs of goods and services.

Case study: on costing systems and cost control | Case Study Template