...Cost Allocation in Multiagent Settings Author(s): Madhav V. Rajan Source: The Accounting Review, Vol. 67, No. 3 (Jul., 1992), pp. 527-545 Published by: American Accounting Association Stable URL: http://www.jstor.org/stable/247976 Accessed: 13/12/2008 09:19 Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at http://www.jstor.org/page/info/about/policies/terms.jsp. JSTOR's Terms and Conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at http://www.jstor.org/action/showPublisher?publisherCode=aaasoc. Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. JSTOR is a not-for-profit organization founded in 1995 to build trusted digital archives for scholarship. We work with the scholarly community to preserve their work and the materials they rely upon, and to build a common research platform that promotes the discovery and use of these resources. For more information about JSTOR, please contact support@jstor.org. American Accounting Association is collaborating with JSTOR to digitize, preserve and extend access to...
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...Introduction There are various strategies that are utilized to control budgets.Through managing budgets organization put themselves in better positions for the financial forecasts. The strategies include the following • Zero based • Activity based • Performance based • Cost variances and benchmarking Zero based budgeting is where expenses are analysed in the organization and the need and cost for each is justified.This strategy of budgeting results in efficient allocation of resources since its based on needs and benefits rather than history. It helps managers to find cost effective ways to improve operations. Activity based costing is the gathering of operating cost data which are associated with specific activities such as maintainance. Under activity based budgeting resource allocation is based on relationship between activities and cost. The most distinct advantage of this type is greater precision in determining costs in cases where departments or products need to be tracked. Performance based budgeting is the practice of developing budgets on a relationship between program funding levels and expected result from that program, allocation of resources are based on their potential results. Performance based budgeting focuses on strategic objectives, performance measurement and effectiveness. One advantage of PBB is that employees perform better since they will be aware that high performing departments will continue to receive funding...
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............................................ HR Planning and Budget Approval Budget is the basis of human resource planning. A budget is a plan for controlling the use of funds over a period of time. HRP should be done within the limits of the budget. There is no use in formulating an excellent plan which cannot be implemented because of financial constraints. Managing a human resources department involves budget planning and execution like any other company department. Budget is the basis of human resource planning. HRP should be done within the limits of the budget. There is no use in formulating an excellent plan which cannot be implemented because of financial constraints. HR Budgeting is a powerful financial tool that can estimate the expenditures made by the HR vertical. This strengthens and allows the HR to control the cost rather than letting it control the HR initiative. The budget is drawn parallel to the goals of the organisation. If the organisation expands and requires to register a double digit growth in terms of its strength, it percolate to apportion funds in different areas including recruitment, retention, up-skilling, global mobility management, etc. The allocation of funds would be governed by the HR Strategies. The decision-makers in an organisation remain the main players to approve the budget. The recommendations and inputs are taken from different sources including operation, marketing, logistics and every other vertical within the organisation. Macro...
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...represented by CPPIB). • The GPFB is essentially a sovereign wealth fund, funded with petroleum revenues and integrated with the government’s fiscal budget. There are no specific long-term liabilities to service. The CPPIB is not a sovereign wealth fund, does not serve a government budget and its funds (at a contribution rate of 9.9%) come from employers and employees in Canada. Therefore, the CPPIB has future liabilities in the form of pension payments. • The CPPIB employs a total portfolio approach in which investment decisions are made by allocation of underlying risk characteristics across various investments. In doing so, it does not restrict its allocation to any asset class, as long as the risk/return benefit from an investment justifies its deviation from the Reference Portfolio. The GPFB however functions as a typical pension fund, where allocations of funds are across asset classes and regions. The portfolio would be rebalanced when specific asset classes deviated from a benchmark, hence restricting the percentage asset allocation of the portfolio. • The GPFB has only recently started an allocation of funds to real estate with the rest of the portfolio invested in fixed income and equity. The CPPIB, on the other hand, is more aggressive in its investments in illiquid assets, having gradually increased its allocation to infrastructure, private equities and real estate, which formed approximately 30% of the portfolio as of 2011. 2. Do you agree that the Norway Fund...
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...ativeBudget Analysis: The present Budget of Bangladesh for the year FY14-15 has been presented at a time when the Bangladeshi economy is heading towards a high growth trajectory, albeit certain challenges such as elevated inflation, high Current Account Deficit (CAD), and moderating growth of industrial production, lack of capital investment, poor level of power & energy, low level of liquidity, etc. At the current juncture, what was required from the Budget was to address the issue of inflation and support growth momentum, while maintaining the focus on fiscal consolidation and continuing ahead on the reform agenda. Increased allocation of planned resources towards infrastructure projects along with the proposals to direct foreign funds and private saving towards infrastructure sector will unlock much of the growth potential of the sector. Although the continued force on infrastructure along with power & energy, agriculture and education sectors is expected to provide significant impetus to economic growth in the medium-term, measures to control inflation in the immediate future were missing in the budget announcements. On the fiscal deficit front, the budgeted fiscal deficit is 5% of GDP for FY14-15. This indicates government will face lot of trouble in near future. This can be reduced through increasing Tax revenue, reduce debt service liability and etc. Budgeted Expenditure for FY14-15 For FY14-15, total expenditure is budgeted to increase by 15.9% to 250,506...
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...Abstract The study highlightedchallenges affecting the water sector in Limpopo Province, identified water service organisations (WSOs), assessedthe degree of congruence between the challenges and capacities of WSOs, and finally proposeda water management decision model for the area. Water challenges were (a) scarce resource availability and inadequate storage, (b) some dam never filling up, (c) poor resource knowledge of water managers, (d) lack of stakeholder participation in resource decision making, and (e) poor allocations to rural communities. The main WSOs were Department of Water Affairs-DWA (congruence rating=2.00) and water service authorities (WSAs), namely: Mopani District Municipality-MDM (congruence rating=2.15), Vhembe District Municipality-VDM (2.15) and Polokwane Local Municipality-PLM (2.15). The degree of congruence was high (2.75) between challenges and strategies, moderate (2.45) between strategies and tasks and low between allocation and use of human resources (1.50), making it the most significant constraint to WSOs addressing water challenges. Key words:Congruence, water challenge, water service authority, organizational capacity, decision model 1. Introduction, Congruence Model Periodic droughts and population growth have placed burdens on water supply and...
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...Preparing Project Budgets for Business Cases Technical guide The Secretary Department of Treasury and Finance 1 Treasury Place Melbourne Victoria 3002 Australia Telephone: +61 3 9651 5111 Facsimile: +61 3 9651 5298 www.dtf.vic.gov.au Authorised by the Victorian Government 1 Treasury Place, Melbourne, 3002 © Copyright State of Victoria 2012 This book is copyright. No part may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968. ISBN 978-1-922045-92-8 Published August 2012. If you would like to receive this publication in an accessible format please telephone 9651 0909 or email mailto:information@dtf.vic.gov.au Contents 1. Background 1 1.1 Context 1 1.2 Purpose – developing and managing project budgets 2 1.3 Scope of application 2 1.4 Structure of this guide 3 1.5 Related guides and frameworks 3 1.6 The need for an accurate project budget 4 2. Elements of a project budget 5 2.1 The headline elements of a project budget 5 2.2 Successful financial planning 9 2.3 The need for a whole-of-life approach 10 2.4 ‘Poor project planning’ risks are not project risks! 10 2.5 Delivering to budget 11 3. Foundations for good project budgets 12 3.1 Better business cases and better project budgets 12 3...
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...Introduction Marketing & Promotional Mix Promotion Budget Allocation Advertising Sales Promotion Personal Selling Decision Summary Introduction – (Main Char) • Demographic Characteristics: – – – – Gender: Female Age: 25 & above Household size: 3 or more persons Occupation: Skilled and Unskilled labor (Blue Collar) • Geographic Char: – St. John’s metropolitan area • Benefits Sought: – Strong high quality – Bagged tea in “Boxed tea” Introduction - (Previous Decisions) • Team 1, Planning: – Entering the market with a new brand named “Bentley Fresh Brew Tea” • Team 2, Product Strategy: – Blend: lower than the market brands – Amount of tea: 1 Cup Bag – Package size: Medium 60-72 bags • Team 3, Pricing Strategy: – Price: 2.49 Marketing Mix Variables that marketing managers can control in order to best satisfy customers in the target market 1. Product 3. Promotion 2. Price 4. Place Marketing Mix Promotional Mix “Promotion is all about companies communicating with customers” “It is no longer enough for a business to have great products” 1. 2. 3. Advertising * Personal Selling * Sales Promotion * 4. 5. 6. Public Relation Direct Marketing Publicity The Objectives • Firm Objective: – Increase Market share By 5% within two years • Advertising Objective: – Establish a 70% product awareness among Blue Collar Females by end of the first year Budget Allocation Methods 1. Percentage of Sales 2. Fixed amount...
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...Health Care Budget: Financial Management Practices Andrew Ojo HCS/577 University Of Phoenix Health Care Budget: Financial Management Practices Budget involves pulling resources together to achieve a specific goal. According to Gapenski (2006), budgeting is an offshoot in a planning process. A basic managerial accounting tool use in holding planning and control functions together is referred to as set of budgets (p. 255). Most entities and organization create budgets as a guide for controlling its spending, predict how much profit, and it expenditure as they progress toward a set goal. One major setback manager or budget developer encounter is trying to design a future, a process that cannot be created with the precision just right. This article discusses some financial management practices considered most effective in creating and monitoring an operating budget. It also highlights some least effective financial management practices in creating and monitoring an operation budget. Most Effective Financial Management Practices in an Operating Budget Creating and monitoring an operating budget needs a careful consideration of so many factors, one of such factors is managing the finances. To do this, here are some of the most effective practices many organizations adopt in creating and monitoring budgets; * Having a corporate strategy Evaluating the progress of a budget is dependent on expenses and how resources are allocated. Because of this singular fact, linking...
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...BBVA Compass: Case Study Analysis Executive Summary BBVA Compass, the fifteenth largest bank in the United States, is operated by BBVA bank in Spain. They entered the US market in 2004 and expanded through mergers and acquisitions. It is positioned as a regional bank across seven states. They are planning to stay in the same geographical area, and become one of the top ten banks in the United States. With the beginning of the financial crisis in 2008, and the peak by 2010 almost all banks were going through a tough period. Government regulations on fees and consumers were leaning towards spending less positioned the banks in a difficult situation, including BBVA Compass. With their decreasing marketing budget, the bank had less than $50 million in 2011 to achieve several different marketing goals, and the money had to be used in an efficient way. On top of these they also had other problems like going against the norm and spending a substantial amount on TV and online, drop of brand awareness after adopting a new name, low conversion rates and ad network’s target market duplication. The recommended plan of action would be increasing the level of online presence by focusing more on social media channels and digital marketing, and focusing more search engine optimization. The bank should also work with the media agency to avoid ad duplication to target markets. Introduction BBVA Compass is the fifteenth major bank in the United States with $49 billion in deposits...
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...Q 1: The overhead allocation rate using the 1987 model year budget was 437%, while the official overhead allocation rate used in the 1987 model year strategy study was 435%. The difference was because the official overhead allocation rate was based on actual labor costs and overhead expenses, when the budget overhead allocation rate was calculated on budget labor costs and overhead expenses. Q2: There was a slight change in overhead allocation rate from 1987 (437%) to 1988 (434%). However, the rate rose significantly at 1989 (577%), and went down a little at 1990 (563%). The main reason for the increase was because at the end of the 1988 model year, oil pans and muffler-exhaust systems were outsourced. Direct labor costs for those two components then fell to 0 at 1989 and 1990, since the reduced labor were transferred and paid by the union, and this was no longer a plant burden cost. Therefore, direct labor went down 46% from 1988 to 1989, when total budget overhead just dropped 28%. Q3: Q4: The product costs reported by the cost system were not appropriate for use in the strategic analysis. This cost accounting system used a single cost pool, and 435% of direct labor was used to allocate total overhead. However, direct labor was not compatible with the characteristics of certain overhead. For instance, overhead 8000 was depreciation, and depreciation should have been allocated to machine hours rather than labor cost. What’s more, setup overhead 11000 was not closely related...
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...Situation/Background Analysis Paramount is a global consumer products company that is the current market leader in the global non-disposable razor market, a position it has held for more than 50 years. As of 2009, the company had $13 billion in worldwide sales and $7 billion in gross profits and revenues. Of that revenue, non-disposable razors and refill cartridges accounted for $170 million in revenue and $92 million in gross profit, with operating profit of $26 million. Paramount has two disposable razor products, the Paramount Pro, placed in the moderate segment of the product market and the Paramount Avail, a value offering in the market. The two combined make up 23.3% of the company’s share of the industry. Additionally, the shaving market is divided into three categories of “shavers”, each with unique needs from their razor. These are: maintenance shavers, social/emotional and aesthetic shavers. Recently, Paramount developed a new non-disposable razor, Clean Edge. With a new design, the Clean Edge offers scientifically proven, superior performance as it utilizes a vibrating technology to stimulate hair follicles and lift hair from the skin, which allows for a more thorough shave. Paramount is now faced with two options in introducing the Clean Edge razor in the market. With its innovative new features, Clean Edge will be priced in the “super premium” segment of the market. Competitor Overview Paramount’s competition consists of both direct competitors...
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...Finance (the VP) was informed that the CY 2000 budget was cut by the Senate. Details of the budget show that there is a decrease for the Maintenance and Other Operating Expenses (MOOE) for both the academic programs and the UP system administration (UPSA), as well as for the six (6) autonomous campuses of UP, including UP College of Baguio. Academic Programs & UPSA Autonomous Campuses CY 2000 403,561,000.00 250,000,000.00 653,561,000.00 % 62% 38% CY 1999 602,124,000.00 313,801,000.00 915,925,000.00 % 66% 34% Decrease (198,563,000.00) (63,801,000.00) (262,364,000.00) % Decrease -33% -20% -29% While reviewing the CY 1999 MOOE allocation, she determined that allocating it based on the number of students alone is not an efficient way to do so. Hence, she called on the Chancellors of the different autonomous campuses and the Dean of UP Baguio to discuss with them the reduced budget and how will the reduced budget for autonomous campuses be allocated more effectively. Each Chancellor gave his/her own allocation method, taking into consideration the specific needs of his/her campus. Moreover, the VP knows that aside from the Chancellors, other parties are also involved in the budget allocation, such as the Congress, which is politically-driven. The VP also asked the officers from the Budget Office as to how the allocation was done in the previous years. She determined that the MOOE allocation was done using the following assumptions: a...
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...a total budget of $10,000. Constraints • Only cash will be used. • $3000 in a savings account for the vacation and another $7000 in a certificate of deposit that would not mature until the start of the second week of our vacation. • Travel by air to Florida. • Stakeholders include husband, mother, daughter and son. • Non-refundable tickets with one stop. • First class two bedrooms • Eating three good meals a day was particularly important and saving money by eating fast food could spoil the vacation and the medical costs could easily exceed the savings on food. • Using a Cadillac or a Lincoln for a week in Florida. • Spending two days in travel, two days lounging around the hotel or resort, and ten days at the theme parks. • There were two or three theme parks that both the kids were interested in visiting and they wanted to “do it all.” • $30 limit on souvenirs for the immediate family. Assumptions • Assume a “moderate risk” with a $500 contingency reserve. • $7000 will definitely mature by the expected date without any banking/otherwise issues. • The cash in hand is a safe option with no chances of theft. What is not Included • No tour guide • No laundry at hotel Risk Management Plan Methodology • Meetings • Brainstorming • Delphi technique Roles and Responsibilities • Risk management team includes husband, mother, daughter and son. Risk Categories • Internal risks : inspection of personal car, budget break down and allocation according...
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...Bridgeton Assignment 1. The overhead allocation rate used in the 1987 model year strategy study at the Automotive Component & Fabrication Plant (ACF) was 435% of direct labor dollar cost. Calculate the overhead allocation rate using the 1987 model year budget. Why do you get different numbers? 2. Calculate the overhead allocation rate for each of the model years 1988 through 1990. Are the changes since 1987 in overhead allocation rates significant? Why have these changes occurred? 3. Consider two products in the same product line: Product 1 Product 2 Expected Selling Price $62 $54 Standard Material Cost 16 27 Standard Labor Cost 6 3 Calculate the expected gross margins as a percentage of selling price on each product based on the 1988 and 1990 model year budgets, assuming selling price and material and labor cost do not change from standard. 4. Are the product costs reported by the cost system appropriate for use in the strategic analysis? 5. Assume that the selling prices, volumes, and material costs for the 1991 model year will not change for fuel tanks and doors produced by the ACF of Bridgeton Industries. Assume also that if manifolds are produced, their selling prices, volume, and material costs will not change either. a. Prepare an estimated model year budget for the ACF in 1991 (1) if no additional products are dropped. (2) if the manifold product line is dropped. Explain any additional assumptions you make in preparing...
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