industry wise price cuts in the pump business, which is Wilkerson’s major product line, has badly affected the company’s margins (Gross margin below 20% as against a planned gross margin of 35%). The firm has identified the need to investigate its costing mechanisms and determine their credibility comparable to those exercised elsewhere in the market. The need of the hour for Wilkerson is to identify the proper mix of its product line to regain its profitability. Wilkerson is a quality leader, but
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1. What does the term cost management mean? Who in the typical firm or organization is responsible for cost management? = Cost Management is the process of effectively planning and controlling the costs involved in a business. The one who’s responsible for cost management is management accountant. 2. List the four functions of management. Explain what type of cost management information is appropriate for each. = 1. Strategic Management. Cost management information is needed to make sound
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ensures the integrity of the organization is not jeopardized. The managerial account should be confidential about the financial matters of an organization. This confidential information should be utilized for the organization and not personal gain. Activities that can cause conflicts of interests should be refrained from. It is important for the managerial accountant to have integrity. The last important factor is credibility. The managerial accountant should ensure relevant information is reported to
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Costing Methods: Super Bakery ACC 561 Costing Methods: Super Bakery, Inc. Super Bakery, Inc. has a strategy in place that is in place to add maximum value to the company all the while making investments that are minimal. The company initiated an outsourcing strategy; instead of a multifunctional organization by taking activities that were selling, manufacturing, warehousing, and shipping. The outsourced companies will be combined and this will
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CHAPTER 5 Activity-Based Management Chapter Outline A. Cost Management Challenges — Chapter 5 presents three questions to be answered in this chapter. 1. Is activity-based costing (ABC) enough by itself to improve efficiency? Can cost managers ensure that an organization will meet its efficiency goals merely by measuring costs more accurately by using ABC? 2. Does the cost manager’s responsibility end with making recommendations for improvements? Are the
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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 E-mail: xsales@eada.edu Abstract The present study aims to outline the characteristics of the cost systems used in banking institutions
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Costing Methods Tony Zazzarino University of Phoenix Costing Methods Super Bakery Incorporated is a nationwide bakery that supplies bakery items to schools. Super Bakery is a virtual corporation that performs only strategic parts of the business, and the other activities are outsourced. The company wanted to the maximum value with little investment in operating functions. The company has reviewed the initial strategy to increase the profit
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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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Costing is used in business accounting strategies as a way of determining the cost of manufacturing a product in relation to the revenue generated by that product. Costing systems determine the overhead of production and then allocate those overhead costs to a business’ products. There are two common methods for allocating these indirect costs to products. Both of these methods assess overhead costs and then attach these costs to products based on certain cost drivers. A cost driver is any component
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Solution to the Wilkerson Case Igor Baranov Executive Summary Taking into account the difference among product and high proportion of overheads, Wilkerson should abandon its existing cost system and move to activity-‐based costing. The profitability analysis indicates that the company earns healthy margins on pumps and valves. However, the margin of flow controllers at actual usage of capacity is negative. Wilkerson
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