...Q1: explicit costs and implicit costs concepts Explicit Cost Explicit cost is defined as the direct payment which is supposed to be made to others while running business. This includes the wages, rents or materials which are due in the contract. The explicit cost is the expense done in business which can easily be identified and accounted for in the business at any stage. The explicit cost represents the out flows of cash in clear and obvious terms. When any out flow of credit occurs in a business, it should be identified and should be accounted for immediately. Explicit cost is defined as the business expanse which is recorded with the passage of time. When cash starts out flowing from any business, it can cause the profit generation to the bottom line of a business. As a result of this, the direct contrast affects the expanses and the less tangible expanses are curtailed at once. This can help the business to be stabile. Implicit cost Implicit cost in economics is the situation when no actual payment is required to be made. It is the opportunity cost that is equal to what that has to be given up by a firm for using factors that it neither hires nor purchases. Implicit cost is the cost that is the consequence of using the assets, instead of lending, selling or renting them. The income that is forgone from making a choice of not to work known as the implicit cost. Implicit costs show the difference between economic profit and accounting profit. the total revenues less total...
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...John Molson School of Business Strategic Management and Cost Management Concepts April 8, 2010 Section G Table of Contents Introduction 2 1. Overview of Cost Management and Strategy 3 2. Implementing Strategy 5 3. Basic Concepts 10 Conclusion 14 References 15 Appendix I: Product & Period Costs 18 Appendix 2: Balanced Scorecard 19 Companies are constantly trying to improve their business and the quality of their products. While Marketing and Operations Management are two departments that aid in improving a company’s business, the accounting department plays a major role in this transformation as well. Considering the managerial aspect of accounting, a lot of what it takes to improving ones business is cost management and strategy. Strategic and cost management are essential to any business as they provide the foundation for determining problems and improving quality. Strategic and cost management concepts can be broken down into three parts: the overview of strategies that can be used, the ways to implement these strategies and the cost concepts that can be used to manage costs. 1. Overview of Cost Management and Strategy There are several cost and strategic techniques that can be used to improve a company’s overall position. These techniques, however, are within broader topics, such as the business environment, management techniques and competitive strategy. Firstly, a changing...
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...STRATEGIC MANAGEMENT AND COST MANAGEMENT CONCEPTS Introduction The concepts of cost management and strategic management are the foundations for managers. The growing pressures of global competition and technological innovation have made cost management more critical and dynamic than ever before. Now cost management has moved towards a broader strategic focus than that of product costing. This so-called strategic cost management needs to facilitate strategic management in order to allow the firm to retain its competitive advantage. In order to implement this, benchmarking, value chain, balance scorecard and SWOT analysis should be undertaken. A firm should then identify its strategic positioning in the market: how it will sustain a competitive position. Furthermore, the strategic role of cost concepts will also be described in relation to product/service costing, strategic decision-making (cost driver analysis), planning/decision making and control/feedback purposes. Costs are now more complex than ever since large companies like Proctor & Gamble have a large product portfolio, and costs have become a vital element of a firm’s strategy. In order to understand these concepts fully, we will relate them to real businesses; in particular, we will analyze these concepts with relation to the McDonald’s corporation. Strategic Management Strategic management is the conduct of drafting, implementing and evaluating cross-functional decisions that will enable an organization...
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..."USEFULNESS OF COST VOLUME PROFIT ANALYISI AS AMANGERIAL Concept" By samya Alakhdar , Dr . Moade Shubita , NYIT –AMMAN –JORDAN FALL-2011. Key words :managerial accounting , cost accounting , CVP. o "USEFULNESS OF COST VOLUME PROFIT ANALYISI AS AMANGERIAL CONCEPT" 1 DR.MOADE SHUBITA "USEFULNESS OF COST VOLUME PROFIT ANALYISI AS AMANGERIAL Concept" By samya Alakhdar , Dr . Moade Shubita , NYIT –AMMAN –JORDAN FALL-2011. Key words :managerial accounting , cost accounting , CVP. TOPICS TO COVER: ABSTRACT INTRODUCTION PROBLEM ASSUMPTION UNDERLYING CVP ANALYSISI THE CONTRIBUTION MARGIN. CONTRIBUTION MARGIN INCOME STATEMENT DEFINE THE BREAKEVEN POINT WHAT IS THE C.M RATIO. THE IMPORTANCE of UNIT CONTRIBUTION MARGINE DETERMINATI SOME APPLICATIONS OF CM “WHAT IF “ANALYSIS ON OF TARGET INCOME AND TAXES MOS- MARGINE OF SAFETY CHOOSING THE COST STRUCTURE TO DECREASE COST ULTIMATELY DEGREE OF OPERATING LEVERAGE DEGREE OF OPERATING LEVERAGE IMPORTANCE FOR MANAGERS SALES MIX . CASE TO STUDY. LIMITATION OF CVP CONCLOUSION REFERENCES 2 DR.MOADE SHUBITA "USEFULNESS OF COST VOLUME PROFIT ANALYISI AS AMANGERIAL Concept" By samya Alakhdar , Dr . Moade Shubita , NYIT –AMMAN –JORDAN FALL-2011. Key words :managerial accounting , cost accounting , CVP. ABSTRACT: In order to cope with many planning decisions managers use cost volume profit analysis , They find it an extremely useful measurement in a variety of ways . The present...
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...additional space. The dialysis center should not suffer all the cost. Moving the dialysis center makes more sense because they can increase their revenue if they could take on more patients. The Outpatient Clinic increased their capacity thus should pay the costs of this consumption of the usage of 25% increase. Question 2 Yes. they should be charged the actual cost of the new facility because they are using the new facility. They were spending $300,000 allocating 20,000 square feet. Now they are spending $100,000 extra for an entire building. The outpatient clinic assumed the additional cost for the expansion of space they will be using as well. All departments’ costs would increase since the dialysis center is out of the building and not sharing the indirect costs for the facility use and other general indirect costs. Question 3 No, this only designates the money for the building and facility itself others costs. This is not including inflation, depreciation, insurance, and other fees. There are also advantages of the new building which includes the parking structure and easy access ability, newer equipment and facility therefore less maintenance required. Even though the building has a useful life over 20 years. On the 21st year it will be mortgage free however there still be other general indirect costs that makes up $270,000 of costs as well, these costs will only increase due to inflation and cost increase. Question 4 The revenue the pharmacy is making from...
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...Solving a Numerical on Concepts of Costs Given the quantity and total fixed and variable costs, calculate the remaining costs to complete the following table: Units of Output (Q) | TFC | TVC | TC | AFC | AVC | AC | MC | 0 | 100 | 0 | 100 | N/A | N/A | N/A | 5 | 10 | 100 | 50 | 150 | 10 | 5 | 15 | 3 | 20 | 100 | 80 | 180 | 5 | 4 | 9 | 2.3 | 30 | 100 | 103 | 203 | 3.33 | 3.43 | 6.76 | 1.7 | 40 | 100 | 120 | 220 | 2.5 | 3 | 5.5 | 3 | 50 | 100 | 150 | 250 | 2 | 3 | 5 | 5 | 60 | 100 | 200 | 300 | 1.67 | 3.33 | 5 | 15 | 70 | 100 | 350 | 450 | 1.43 | 5 | 6.43 | | TC = TFC + TVC TC0 = 100 + 0 = 100 TC10 = 100 + 50 = 150 TC20 = 100 + 80 = 180 TC30 = 100 + 103 = 203 TC40 = 100 + 120 = 220 TC50 = 100 + 150 = 250 TC60 = 100 + 200 = 300 TC70 = 100 + 350 = 450 AFC = TFC/Q AFC0 = 100/0 = Cannot divide by zero AFC10 = 100/10 = 10 AFC20 = 100/20 = 5 AFC30 = 100/30 = 3.33 AFC40 = 100/40 = 2.5 AFC50 = 100/50 = 2 AFC60 = 100/60 = 1.67 AFC70 = 100/70 = 1.43 AVC = TVC/Q AVC0 = 0/0 = Cannot divide by Zero AVC10 = 50/10 = 5 AVC20 = 80/20 = 4 AVC30 = 103/30 = 3.43 AVC40 = 120/40 = 3 AVC50 = 150/50 = 3 AVC60 = 200/60 = 3.33 AVC70 = 350/70 = 5 AC = AFC + AVC AC0 = N/A + N/A = N/A AC10 = 10 + 5 = 15 AC20 = 5 + 4 = 9 AC30 = 3.33 + 3.43 = 6.76 AC40 = 2.5 + 3 = 5.5 AC50 = 2...
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...Polarity Management of Cost and Quality Dustin Klinger Kaplan University Polarity Management of Cost and Quality Polarities are interdependent pairs that support a common purpose yet tend to be contradictory of one other (Polarity Partnerships, para. 1). Some examples of polarities include: stability and change, individual and team, long and short term, autocratic and participatory and my topic, cost and quality. Any of these pairs are known to counter the other. In my case, it is important to note that when quality improves, cost generally increases and vice versa. Throughout this paper I will discuss managerial approaches to utilize these two concepts to your advantage without ever overlooking either of them. It is important to embrace the fact that there are polarities everywhere we turn and instead of trying to fight against them, we should develop their concepts to make us more complete. Larry Hirschhorn has argued that in order for managers to become proficient in managing polarities, they must develop a set of “rules of thumb” for when they encounter different circumstances. They establish these rules with the hopes of somewhat standardizing their way of thinking as well as how to allocate resources for each instance. The guidelines are generally developed to recognize patterns and opportunities. Hirschhorn recommends managers create a 2 x 2 table to help illustrate this concept and to categorize its different states. Each axis would include a “hi” and...
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...recognition, and measurement. The Boards will give priority to addressing issues that are likely to yield benefits to the Boards in the short term, that is, cross-cutting issues that affect a number of their standards-level agenda projects. Therefore, the first step is to identify and prioritize those cross-cutting issues. Possible examples that the staff have suggested include the meaning and role of reliability; the definition of liability; the meaning of probable; the effect of conditions, contingencies, or other uncertainties; the unit of account; and accounting for contractual rights and obligations, as explained further below. Initially, the Boards will focus on concepts applicable to business entities in the private sector. Later, the Boards will consider the applicability of those concepts to other sectors, beginning with not-for-profit entities in the private sector. The Boards agreed to put the converged framework into a single document,...
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...Accounting 10 Key concepts of accounting Done by-Bemnet A.Mamo ID number-B0129FSFS0813 School of Business and Law 10/15/2013 Contents * Introduction……………………………………………. 2 Going concern……………………………………….. 3 Consistency……………………………………………. 3 Prudence……………………………………………….. 4 Accruals…………………………………………………. 4 Objectivity……………………………………………… 5 Realization…………………………………………….. 5 Dual aspect……………………………………………. 6 Materiality…………………………………………….. 7 Money Measurement……………………………. 7 Timeliness……………………………………………… 8 * Conclusion………………………………………………. 9 * References………………………………………………. 10 Introduction Accounting generally can seem to be a practical subject that would be very simple to focus on only the applications of procedures and techniques. But it is far more than just a bunch of calculations, until we can identify and interpret our production of the figures, the calculations are pointless. It also measures the works of a business in financial terms and provides various financial statements and reports for various transactions the business agrees (e.g., buying and selling goods) assumed the business. In organizing financial statements, accountants use certain fundamental concepts when constructing financial accounts and statements. Traditionally there are four main concepts; 1) Going...
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...TOPICS Choose one (1) of the follow two passages. These passages are also available as separate Word documents and PDFs posted to week 13A of the Moodle course site. PASSAGE 1 Downloading Movies from the Internet for Free is Wrong! Adapted from: “Downloading music from the internet” by Dr. Asher Meir from The Jewish Ethicist. http://www.besr.org/ethicist/downloadmusic.html It is wrong to download copyright protected movies from the Internet for free using peer-to-peer (P2P) file-sharing using systems like BitTorrent. Movies are similar to other public goods like bridges or roads. They cost a lot to create, but once they're around many people can enjoy them at low cost. Just as the government supports bridges by giving builders a concession to collect large tolls, even though your trip costs them a minimal amount, so it supports movie production by granting a copyright which enables the film maker and producer to collect from viewers. Downloading a copyright protected movie for free from the Internet is like making a detour around the toll booth. Even if you don't get a ticket, you've taken a free ride on someone else's investment. Our Sages viewed paying tolls as a prime example of the citizen's duty to obey the law, and emphasized the importance of avoiding even the appearance of evading this duty. And while it is true that if everybody downloads copyright protected movies for free from the internet, eventually the copyright may be impossible to defend...
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...What is a conceptual framework? Why is a conceptual framework necessary in financial accounting? .A conceptual framework establishes the concepts that underlie financial reporting. A conceptual framework is a coherent system of interrelated objectives and fundamentals that are expect to lead to consistent standards'. A coherent system of concepts that flow from an objective. The objective identifies the purpose of financial reporting. The other concepts provide guidance on (1) identifying the boundaries of financial reporting; (2) selecting the transactions, other events, and circumstances to be represented; (3) how they should be recognized and measured; and (4) how they should be summarized and reported. What is the primary objective of financial reporting? The objective of general-purpose financial reporting is to provide financial information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors in making decisions about providing resources to the entity. Those decisions involve buying, selling, or holding equity and debt instruments, and providing or settling loans and other forms of credit. Information that is decision-useful to capital providers may also be useful to other users of financial reporting, who are not capital providers What is meant by the term “qualitative characteristics of accounting information”? Qualitative characteristics of accounting information that distinguish better or (more useful)...
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...1. Give examples of needs, wants and demands that Build-A-Bear customers demonstrate, differentiating each of these three concepts. We understand a need as a basic part of the human design resulting in the state of felt deprivation. So from the article, it can be said that the Build-A-Bear consumers have a basic need of self-expression or creation. Each child that comes into a store has a distinct need to construct a bear, fueled by their own imagination. The article touches on the notion that each kid leaves, “[with] a product that they have created”. In addition, other needs that emerge are choice, playtime, free-will, individuality, stimulation, and bonding. I believe that bonding is more for the parents than the child. It fulfills a need to connect with their child by creating an experience which they can all share: “Parents love Build-A-Bear just as much as the kids do”. These needs lean into the wants, which is finding that specific place where their imaginations can run wild, i.e. make the end product. They choose what style of animal, stitch them, pick the clothes, name them, and when everything is finished, receive a birth certificate. These wants begin to take shape and ultimately form into the demands of the consumer. Build-A-Bear patrons now seek a very specific product that delivers value and satisfaction. And how Maxine Clark meets their expectations successfully is by introducing a trendy line of accessories, new store locations and popularized characters...
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...EXECUTIVE SUMMARY A few concepts that I chose from chapter 10 to focus on are executive succession: insiders versus outsiders, problems in retrenchment, managing diverse cultures following an acquisition, and total quality management (TQM). Strategy implementation is an important step that requires staffing and directing and puts strategy into action. According to McCarthy 'strategy implementation may be said to consist of securing resources, organizing these resources, and directing the use of these resources within and outside the organization.' The concept executive succession, is an integral part to a company. Whether to hire an outside or inside manager is better for replacement within a company depends on the circumstances of the company. If a company is doing well, then hiring someone from the inside would improve performance. If a company is on thin ice, hiring an outsider can save the company. Studies have shown that hiring someone from the inside results in better performance than hiring someone from the outside. I've learned that steps for top-management succession is exceptionally critical to a company and can stabilize its performance from sinking below average. A great CEO needs the experience, skills and expertise. Before my research and analysis, I believed that right CEO is one who's been working for the company for long time because of the amount of knowledge captivated during his/her years. However, that's not always the right choice because of circumstance...
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...(a) A number of accounting concepts and conventions have been used by the accountant as a guide in preparing the accounts. These concepts and conventions have been derived over the years from the general accounting practices. Critically discuss the purpose of accounting concepts and conventions and its importance and contribution towards preparing the accounting reports. Purpose of Accounting Concepts The main aim for accounting concept is to maintain the uniformity and consistency in accounting records. These concepts constitute the very basic and premise of accounting. All the concepts have been created and developed throughout the years from experience and consequently they are all around acknowledged tenets. Accounting supposition and concept offer the bases in preparing, presenting and displaying even in interpreting general-purpose financial statements. There are some important accounting concepts that support the readiness and preparation of any accounting arrangement or financial statements such as Going Concern Concept, Consistency Concept, Prudence Concept, and Accruals Concepts. For example, Going Concern Concept is a company or organizations will not be going to bankrupt unless there have a confirmation and evidence to the contrary and this is supported by accountants. Purpose of Accounting Conventions An accounting convention refer to regular and common practices which are all around followed in recording and exhibiting accounting data and information...
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...Guillermo Furniture Store Concepts Paper Guillermo Furniture Store in Sonora, Mexico is the largest manufacturing company in the area ("GFS Scenario," n.d.). Guillermo Navallez, the owner, is now facing the challenges of competition. With competitors on the rise, Guillermo Navallez needs to evaluate current processes and determine where “change or improvements” are required to remain competitive and financially stable. This paper will explain at least four finance concepts and how they relate to the scenario for the Guillermo Furniture Store. Finance Concepts The first concept noticed in this scenario is the Principle of Self-Interest Behavior. This principle states that people tend to act or do what is best for them. The concept relates to the Guillermo Furniture Store scenario because Mr. Navallez is not considering expanding by acquiring or merging with another company for various reasons. Mr. Navallez fears expanding or merging would drain overhead costs, increase management responsibilities, and negatively affect family time (Emery, Finnerty, & Stowe, 2007). By not considering expansion or merger Mr. Navallez could put his business future in jeopardy which is an example of opportunity cost. Another concept noticed is the Principle of Two Sided Transaction. This principle states that there are two sides to every transaction (Emery et al., 2007). The concept relates to the scenario by Mr. Navallez becoming a distributor for his second competitor, who operates...
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