... Inventory Valuation Overview Learning Team B Zhra Ghavam, Rochelle Ingram, Chris Staphylaris, and Glorina Tukes QRB/501 31 January 2013 Instructor: David Libhart Inventory Valuation Overview The inventory a company holds often accounts for a significant portion of all assets with a direct correlation to the balance sheet. Inventory includes assets intended for sale, assets in production, and assets that will be used for future production of goods. A company’s ending inventory can be calculated by adding the value of any beginning inventory with net purchases then subtracting the cost of goods sold. The equivalent mathematical representation is: Ending Inventory = Beginning Inventory + Net Purchases - Cost of Goods Sold (Inventory valuation, 2010). While there are numerous industry recognized standards for a valuation of inventory, three of the most common valuation systems include First-In, First-Out – FIFO, Last-In, First-Out – LIFO and Just-In-Time – JIT valuation systems. First-In, First-Out Goods processed or received by an organization are placed in holding as First-In, First-Out; this inventory system is used to track product for use and revenue gained. In the FIFO inventory valuation system, assets or inventory received first are the first ones to be used...
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...Costing System Landau Company should best represent Landau Company’s Monthly Income Statement? Objectives: 1. To cite Pros and Cons of the chosen costing system 2. To choose and adapt a new costing method that better manages the cost of Landau Company’s Monthly Income Statement Areas of Consideration: 1. The significant Increase of sales in July over June. 2. Lack of control over long run costs that can bankrupt a company. 3. Landau’s margin on products for the months of June and July. 4. The company is looking for a new approach for internal managerial purposes. Alternative Courses of Action 1. Variable Costing System Pros * Provides benchmark on the profitability of manufactured products * It simplifies the bookkeeping of the company * It helps in establishing a responsible accounting in the company from which it identifies what the costs should be, who are the responsible personnel and whether costs are still under control. * Reduce time consuming efforts of allocating fixed overhead to individual products * Advantageous in making periodic management decision for the use in internal reports * Profit for a period is not affected in the changes in inventories Cons * Variable costing is usually prepared on a monthly basis. The information in the reports may not be used or too insignificant for the next accounting period. * Variable costing cannot produce reliable tax reports or any external reports such as the government. ...
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...Eunice Eng Yoke Fang PBS1311031 Case Study (Galvaset) Company Background: Information Provided: Direct Labour Rate = $ 20 per hour Expected Production Level = 50 000 units Labor Hours Required = 200 000 hours Activity (Cost Driver) | Budgeted Costs for 2010 | Cost Driver Used as Allocation Based | Cost Allocation Rate | Material Handling | $ 325 000 | Number of parts used | $ 0.25 per part | Cutting & Lathe Work | $ 2 340 000 | Number of parts used | $ 1.80 per part | Assembly & Inspection | $ 5 000 000 | Direct labor hours | $ 25.00 per hour | Units Produced | Direct Materials Costs | Number of Parts Used | Direct Labor Hours | 3 800 | $ 142 000 | 83 600 | 17 180 | Question a: ABC Costing Activity | Total Time | Cost-Driver Rate | Total Cost | Material Handling | 83 600 | $ 0.25 | $ 20 900 | Cutting & Lathe Work | 83 600 | $ 1.80 | $ 150 480 | Assembly & Inspection | 17 180 | $ 25.00 | $ 429 500 | Total | | | $ 600 880 | Direct Labor Cost = $ 20 x 17 180 hours = $ 343 600 Direct Material Cost = $ 142 000 Total Manufacturing Cost = $ 600 880 + $ 343 600 + $ 142 000 = $ 1 086 480 Cost per unit = $ 1 086 480 3800 units = $ 285.92 per unit Question b: Traditional Costing Predetermined Overhead Application Rate: Predetermined Overhead (Labor per unit) = $ 325 000 + $ 2 340 000 + $ 5 000 000 200 000 hours = $ 38.325 per hour Total Overhead...
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...of the organization. Analyzing financial statements consists of using various methods (statistical tools) including comparative statements, schedule of changes in working capital, common size percentages (analysis), fund analysis, trend analysis, and ratio analysis. The purpose of this paper is to review the financial statements of one domestic, and one global organization from the Financial Times 500. The two companies for review are the McDonald’s and Samsung organizations. The data provided in the financial statements will convert into a ratio analysis. Common size analysis, and accounting analysis limitations are tools for review. The pros and cons of each of these statistical tools will also be discussed. To understand the importance of statistical tools, a review of ratio analysis, common size analysis, and accounting analysis limitation will be the starting point for this paper. Ratio Analysis Ratio analysis is the most powerful tool of financial analysis (Accounting for Management, 2012, para. 1) used to evaluate the significance of financial statement data. Ratio analysis is the calculation and comparison of ratios used to monitor and analyze the performance of a firm or organization. Historical trends and of ratios are used to provide important data regarding a company’s financial condition, operations, and ability to attract investors. Pros and Cons of Ratio Analysis The pros...
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...Costing Methods Paper Amy Buckley University of Phoenix Bellevue Campus ACC561 April 2012 Instructor: Solomon Seyoum Costing Methods Paper Understanding and selecting the optimum method of cost accounting is vital to a company’s success and sustainability. Two types of costing methods are available: the traditional cost accounting method or the activity based cost system. Each delivers pros and cons; therefore each company may choose one or the other. The traditional method matches the indirect costs to the volume based products, the hours of direct labor, or the hours of machine production hours (Accounting Coach, 2012). Activity based accounting products eat up activities and lead to consumption of resources. Activities are cost drivers and may not lead to a large number of products being produced. Therefore; distributing costs fall under the following: taking an order, customer challenges, and implementation of new hardware. This provides the company with a clear understanding of: the arrival of a profit, the outflow of money, and the departments of cost reduction (BusinessDictionary.com, 2012). Traditional costing methods versus an activity based cost system, a choice Super Bakery Inc. would review again. Strategies Super Bakery Inc. launched approximately 30 years ago into the food industry. Breaking into the market was slow and challenging; therefore the company developed four strategies to rise above the competition. Super Bakery selected...
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...Comparing IFRS to GAAP ACC/290 7-14-2015 Howard Pickering Comparing IFRS to GAAP As International business increases, those with financial responsibilities should be well versed in the two primary accounting methods: GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards). The Financial Accounting Standards Board set the GAAP which is primary used in the United States and the IFRS is used in several other countries. If the United States where to every switch to IFRS, they would need to get a good understanding of the difference and acknowledge the similarities. This will only make for better business decisions. “The IASB and FASB are working on a project that would rework the structure of financial statements. Specifically, this project will address the issue of how to classify various items in the income statement. A main goal of this new approach is to provide information that better represents how businesses are run. In addition, this approach draws attention away from just one number—net income. It will adopt major groupings similar to those currently used by the statement of cash flows (operating, investing, and financing), so that numbers can be more readily traced across statements.” (Wiley, 2013) IFRS 2-1: In what ways does the format of a statement of financial or position under IFRS often differ from a balance sheet presented under GAAP? The GAAP requires accounts to be listed in a specific order based on liquidity...
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...ABSTRACT Different software packages will be outlined with purpose. Extensive research about all packages needed is included. Each package detail with the systems pros and cons will be outlined and discussed in order to provide the appropriate software to meet our company’s needs. Introduction There are many software packages that are needed to properly operate businesses. In order to perform particular tasks, specific specialized software is needed. Material Requirements Planning Among the many operating software systems, one of the most important is the Material Requirements Planning (MRP) system. Material Requirements Planning is the system that manages the process of production planning and inventory. This system uses a technique of inventory, expected receipts, and bill of materials. This system also uses the Master Production Schedule (MPS) to determine the material requirements. There have been four main benefits of having a MRP system in your business. These benefits include, but are not limited to, better responses on customer orders, faster responses on market changes, improve utilization of facilities and labor, and reduced inventory levels (Heizer, J). Capacity Requirement Planning The Capacity Requirement Planning (CRP) is a method that many businesses use to determine the available production capacity. It will start off by assessing the schedule of production that the company has planned. It will then analyze...
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...entry-level accounting software available on the market Intuit’s QuickBooks Pro and Sage’s Peachtree Pro are still two of the most popular accounting software specially designed for the needs of small businesses. Both provide excellent solutions to many of the accounting challenges faced by small businesses that use double entry accounting. QuickBooks Pro and Peachtree Pro are promoted as software designed for users with little or no accounting knowledge. Although very similar, there are key elements that differentiate one from the other. For the small business owner ease-of-use, efficiency, security, systems compatibility and operability, vendor support, options to expand and upgrade, and cost feasibility are essential criteria that need to be met. Software Comparison QuickBooks Pro is easy to use and offers the user help in setting up the company, selecting a chart of accounts, and recording transactions in the proper place. Functions are grouped to help direct the user to what is available in a particular category. The menus are simple to understand and offer the user representational icons for what they want to do. For example, a check looks like a check and so on. The homepage offers the user easy navigation through shortcuts allowing information to be pulled in different ways. Like QuickBooks Pro, Peachtree Pro has a user-friendly interface. Peachtree Pro, on the other hand, is slightly more complicated to use and may require some knowledge of accounting. For...
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...FINANCIAL ANALYSIS PROJECT ACCOUNTING 202 Purpose: To allow for you to apply the concepts that we have studied to real world companies and to give you an opportunity to enhance your Internet research and financial statement analysis skills. Instructions: Select a publicly traded company for analysis. Your primary selection criterion should be a) the company is of interest to you (e.g., you want to find out more about the company, b) your ability to obtain a current annual report on the company using the internet, and c) the company's appearance in an article of a reputable news organization (article cannot be older than January 2012). Let me know if you are completing this individual or as a team (supply names) and the company chosen by February 26. Provide a brief critique as to why an individual would be interested in buying the stock of the company and why an individual should not buy the stock. If you are completing this as a two-person team, one person should adopt the “pro” and the other person the “con”. If you do the project by yourself, you will need to present and support both pro and con arguments. Use information in articles and your analysis of the annual report as the primary basis for your arguments. Include in your research the following background information on the company. Where the company is incorporated Describe what the company does or what products its sells, etc. In your analysis...
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...with the people on Wilcox’s department deem to be insignificant in providing an income statement that would reflect the economic state of their business. Silver quoted that from his experience, if sales went high the profit will also rise. This led Silver perplexed. Wilcox’s retrospect on recent meeting at Institute of Management Accountant. The Controller of Winjum Company had introduced the firm’s variable costing method, which charge Fixed Overhead To net income as a period expense and treated only variable cost as inventoriable product cost. Also stress that, variable costing caused income to move with sales only while full absorption costing both sales and production volume are affected. Wilcox, recast the June and July Income Statements and Balance sheets using variable costing method, he then presented it to Terry who responded positively and concluded that July was a better month than in June. Silver made a proposal to the committee for the adoption of variable costing system for monthly internal income statements. The controller supported the new method knowing it may eliminate the time-consuming efforts of allocating fixed overhead to individual...
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...(1) The article on global accounting convergence by Hail, Leuz, and Wysocki (Part 1) examines several factors to consider regarding the potential adoption of IFRS by the United States. Overall, based on the article, do you think the adoption of IFRS by the United States is a net gain for the US marketplace? Give three reasons to support your position (be specific). Please include specifically what groups will be affected and why IFRS would be better or worse than US GAAP. 1 2 I believe that adopting the IFRS would be a net gain for the United States. Many countries have already moved to adopt these standards. As of 2011, over 120 countries were using IFRS as their main accounting standard system. IFRS has the potential to facilitate cross-border comparability, increase reporting transparency, decrease information costs, reduce information asymmetry and thereby increase the liquidity, competition and efficiency of markets (Choi & Meek, 2005). * By adopting the IFRS, the country's businesses would be presenting financial statements on the same foundation that foreign companies would. This would make comparison between global competition much easier. It would also make it easier on the companies based out of the U.S. that do business globally, because now they would only have to present their financial statements based on one set of standards, rather than multiple sets. Currently, the U.S. operates off of GAAP, so those businesses with subsidiaries overseas have...
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...dependent supplied base, distribution system and dealerships. Special care needs to be taken to address the issue of unique dependency of our Tier 1 suppliers. The management of Tier 2 and Tier 3 suppliers would be more suited by the standard procedures used by Dell. If we could find a solution to all the obstacles of virtual integration at Ford, it could make our supply chain run smoothly with the best inventory solutions and overall performance. Managers will be able to overcome the complex and faulty manual process of forecasting and procuring parts which result in reduced OTD, thus decreasing the costs and enhancing customer satisfaction. Issues Identification • Inaccurate forecasting • Supply chain based on outsourcing dependent on large supplier network • Ineffective communication in supplier network • Long Cycle Times • Dealer network structure • Following the traditional “Push” model Environment and Root Cause Analysis Ford’s Supply Chain is based on Vertical Integration and Outsourcing strategy, this has created a complex supply chain, increasing inventory and OTD (Order to Delivery Times). The reorganizational efforts to date; JIT, TQM have not reduced the OTD – Order to Delivery time. This has resulted in...
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...ACCOUNTING H525: MANAGERIAL ACCOUNTING AND CONTROL Winter Quarter 2004 INSTRUCTOR: Professor D. L. Jensen 428 Fisher Hall jensen.7@osu.edu (I check my e-mail several times daily and will respond ASAP) 292-2529 at office (Please leave recorded message; if I'm not in, I'll return your call.) 488-8177 at home (Please leave recorded message; if I'm not in, I'll return your call.) Office Hours: By appointment or chance COMMUNICATIONS CONSULTANT: Ms. Rama Ramamurthy 640 Fisher Hall ramamurthy.3@osu.edu 292-7397 Office Hours: REQUIRED TEXT MATERIALS: Anthony and Govindarajan. Management Control Systems, Eleventh edition. Homewood: Irwin, Inc., 2004 (abbreviated A&G) Supplementary materials (abbreviated S) are sold in a package by CopEz. Some supplementary items may be distributed in class or made available on the Internet. OPTIONAL MATERIALS FOR REFERENCE: Horngren, Charles T., George Foster, and Srikant M. Datar. Cost Accounting: A Managerial Emphasis. Eleventh edition. Upper Saddle River, NJ: Prentice-Hall, 2003 (or another cost accounting text) Kaplan, Robert S., and Robin Cooper. Cost and Effect: Using Integrated Cost Systems to Drive Profitability and Performance. Cambridge, MA: Harvard Business School Press, 1998. Kaplan, Robert S., and David P. Norton. The Balanced Scorecard: Translating Strategy into Action. Cambridge, MA: Harvard Business School Press, 1996. ...
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...Accounting Education 11 (4), 365–375 (2002) Derrick’s Ice-Cream Company: applying the BCG matrix in customer pro tability analysis M A LC O LM SM I T H * Division of Business and Enterprise, University of South Australia and Leicester Business School, De Montfort University, UK Received: August 2001 Revised: October 2001; June 2002 Accepted: July 2002 Abstract This case highlights the differences in the pro tability possible when different customers are in receipt of substantially the same product. It provides the opportunity to develop a customer portfolio, along the lines of the Boston Consulting Group (BCG) portfolio matrix, as part of a customer pro tability analysis. Keywords: customer pro tability, BCG matrix, delivery policy, portfolio pro le, purchasing pattern, inventory holding The case Derrick’s Ice-Cream Company is located in modern premises and manufactures and distributes 30 different ice-cream product lines from its suburban base in the UK. The products are distributed by Derrick’s own eet of refrigerated trucks to six major wholesale distributors. Annual sales are currently around the £10m level, distributed among the wholesalers as indicated in Table 1. Derrick’s control about 35% of its metropolitan market, but this shrinks to less than 10% in outlying areas where there are many small competitors. Derrick’s will usually hold up to four weeks of stock in their central cold stores to meet the distribution requirements of their six major customers...
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...Limited Liability Company or partnership is when owners are called members and have limited personal liability for any debts or actions that may take in the LLC. The business is owned by more than one person and may include individuals, corporations, or other LLCs that have a more flexible and benefit through taxation. A Corporation has shareholders and is separate from their owners. Corporations are formed by submitting Articles of Incorporation to the state in which they may be doing the business. Corporations are also taxed separately from their owners at the corporate tax rate and the debts and liabilities are also separate from the owners. Although all of the partnerships are essential to any business, there are pros and cons of how each are handled on a day- to- day operation of a business. For that reason, as a business owner, you have to take in account certain factors that you wish to obtain such as: the vision regarding the size and nature of your business, the level of control you wish to have, expected profit (or loss) of the business, and the tax implications of the different ownership structures. As an advantage, a sole proprietor is the least expensive form of ownership to organize,...
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