6.Activity based costing/Target costing Mechanism for determining selling prices. It is a cost management tool. TATA tries to manufacture a car at Rs. 1 ,00,000. – is a typical example for target costing. 42. Stages of target costing 1. Determine the target price which customers will be prepared to pay for the product 2.Deduct a target profit margin fro the target price to determine the target cost 3. Estimate the actual cost of the product 4.If estimated actual cost exceeds the target cost
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Journal of Money, Investment and Banking ISSN 1450-288X Issue 6 (2008) © EuroJournals Publishing, Inc. 2008 http://www.eurojournals.com/finance.htm Costing the Banking Services: A Management Accounting Approach Jordi Carenys Professor at the Management Control Department. EADA Business School EADA, c/o Aragó 204, 08011 Barcelona, Spain E-mail: jcarenys@eada.edu Tel: 934 520 844; Fax: 933 237 317 Web: www.eada.edu Xavier Sales Professor at the Management Control Department. EADA Business School
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com/how_2317586_improve-liquidity.html), and in the meet long-term financial obligations and business longevity, solvency (http://www.ehow.com/info_8752952_solvency-accounting.html). Banks pay close attention to borrowing liabilities before granting a loan to evaluate the how much the company owes and who the existing creditors are. Liability trends are gauged to ensure the bank is not over-extending itself to its customers. Assets are a prime factor in a bank’s lending decision as it represents the resources the borrower
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2000), pp. 1-9. This article points out that oversimplifications of fixed and variable costs can result in the standard costing system not being used or, if used, can lead to bad decisions. That is, misclassifications of cost behavior patterns make variance analyses “paper tigers.” For variance reporting to be useful, financial managers need to develop cost models that reflect how costs actually behave. Discussion Questions: 1. Describe the implications for variance analysis of analyzing a semi-variable
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Control Lecture 4: Cost system refinement: Activity‐based costing; Process Costing Reading: Horngren Chapter 7 (Ch 5 in 14th edition); and Ch 8 to p 276 and pp281‐283 (Ch 17 14th edition) Note: the FIFO method will not be examined in this course and nor will Hybrid (Operation) Costing , therefore you do not need to read the pages that relate to these topics. 1 Salters Pty Ltd, a specialised equipment manufacturer, uses a job order costing system. The overhead is allocated to jobs on the basis of direct labour hours
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INTRODUCTION TO COST MANAGEMENT Activity-Based Costing and Management After studying this chapter, you should be able to . . . 1. Explain the strategic role of activity-based costing 2. Describe activity-based costing (ABC), the steps in developing an ABC system, and the benefits and limitations of an ABC system 3. Determine product costs under both the volume-based method and the activity-based method and contrast the two 4. Explain activity-based management (ABM) 5. Describe how ABC/M is used in manufacturing
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5-7 The Buckeye National Bank (Activity-Based Costing in the Service Sector) ABSTRACT: The U.S. Bureau of the Census projects that by 2006, the service sector will employ 74 percent of the workforce. This case illustrates why a major segment of the service sector—banks—needs accurate cost information to make strategic decisions, and how more refined accounting systems help fulfill this need. Buckeye National Bank is a hypothetical bank that has suffered falling profits despite a shift in
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MANAGEMENT Activity-Based Costing and Management After studying this chapter, you should be able to . . . 1. Explain the strategic role of activity-based costing 2. Describe activity-based costing (ABC), the steps in developing an ABC system, and the benefits and limitations of an ABC system 3. Determine product costs under both the volume-based method and the activity-based method and contrast the two 4. Explain activity-based management (ABM) PART I 5. Describe how ABC/M is used
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5 Cost Allocation and Activity-Based Costing Systems L E A R N I N G O B J E C T I V E S After studying this chapter, you will be able to 1. Explain the major purposes for allocating costs. 2. Explain the relationship between activities, resources, costs, and cost drivers. 3. Use recommended guidelines to charge the variable and fixed costs of service departments to other organizational units. 4. Identify methods for allocating the central costs of an organization. 5. Use the direct, step-down
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