Activity-based costing (ABC) is a costing method that identifies activities in your organization and assigns the cost of each activity to all products and services according to the actual consumption by each, the purpose of management accounting in the organization is to support competitive decision making by collecting, processing, and communicating information that helps management plan, control, and evaluate business processes and company strategy. In addition, business people use akin metrics to evaluate your organization financial position and financial performance.
Accounting ratios may be very useful for forecasting likely events in the future since past ratios indicate trends in costs, sales, profit and other relevant facts, in technical terms, a performance measure is a quantifiable expression of the amount, cost, or result of activities that indicate how much, how well, and at what level, products or services are provided to customers during a given time period, equally, where project managers are the primary cost managers for their respective projects, the financial support needed by the project manager in payment to subcontractors and suppliers, which keeps the project moving smoothly, is the responsibility of the project accountant and company.
Cost accounting is the kind of accounting system which aims at capturing the corporations production cost through weighing the inputs costs of every production step plus fixed costs like capital equipment depreciation, there are many methods that can help improve supply chain processes and in turn save your organization money, usually, project cost estimating is the process of approximating how much it will cost to complete the project activities.
Administrators are able to execute and control activities that have been authorized by the budget and to evaluate financial performance on the basis of comparisons between budgeted and actual operations, generally based on standard accounting practices, it is one of the tools that managers utilize to determine what type and how much expenses is involved with maintaining the current business model, plus, and comparable costs of recruitment through a standard algorithm to calculate the recruiting costs to be incorporated into cost-per-hire.
Management accounting or managerial accounting is the process of identifying, analyzing, recording and presenting financial information that is used for internally by the management for planning, decision making and control, you recommend that your organization should abandon the existing system and replace it with an activity based cost system as it will provide better product cost information for decision making, also, when there is a fall in prices, a cost based inventory will have to be higher than that valued at a lower of cost or market method.
Financial reporting and auditing provides external disclosures related to contingent liabilities so that external users of the information can better evaluate your organization current and future prospects, marginal costing may be defined as the technique of presenting cost data wherein variable costs and fixed costs are shown separately for managerial decision-making. In the meantime, also, the management accounting system usually feeds into the financial accounting system.
To perform a quantitative cost, benefit analysis you need to identify the initial monetary costs of development, the expected monetary costs of operating and supporting the application, and the expected future monetary benefits of using the application, consider the corporate ramifications of continuously auditing the particular area or function. Along with, it provides the most vital information you need to understand how your business grows, makes money, where the profit of your organization goes, and what your cash flow is.
Budgetary control will force the management at all levels to plan various activities well in advance in your organization, relevant cost refers to the incremental and avoidable cost of implementing your organization decision, also, during a period of steady or rising prices, inventory value will have to be same under cost or lower of cost or market method.
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