StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Redesigning Cost Systems - Essay Example

Cite this document
Summary
Traditional Standard Cost Systems (SCSs) in manufacturing organizations have been criticized for not including the quality variation and placing to much emphasis on price and efficiency. It has received further criticism concerning use of volume variances to measure capacity and disregarding overproduction and inventory buildup…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER93.7% of users find it useful
Redesigning Cost Systems
Read Text Preview

Extract of sample "Redesigning Cost Systems"

Download file to see previous pages

It seems to cause competition and arguments between departments. They argue over who was to blame for unfavorable variances when using traditional systems. Push through productions is productions that use large amounts of raw material and partially finished products. The materials or products are moved from one process to another. The preferred method, "pull through" production, is replacing this old method. The products are in work cells or similar workstations. An employee in a cell can operate several types of equipment.

An order can be processed quickly within the cell. The "pull through" method is preferred because it decreases cycle time and holds on orders. The inventory is not overloaded with this method either. One group is responsible for the product as a whole. This decreases the chance of defects. The best way to make standard cost systems more dynamic is to update the variances. Variances in raw materials can be updated by adding a quality variance. This will allow the materials that were produced, but not used, to be factored into the equation.

The efficiency variance factors the difference between the weight of the material used and the standard weight used for total production. The traditional method uses the weight of good production instead of total production. Another way to add variances is to split up the volume variance into market size and market share variances. A good way to deal with orders that are completed but not shipped is the Finished Goods Variance. If a sales order could not be filled for any reason, it results in loss of opportunity.

To use this as a factor there is a Sales Order Variance. Other ways to add dynamics to the standard system are to use best performance records for a variance on past performances. This is a highly motivating tool for businesses. Benchmarking tracks the performance of competitors. This is another motivating tool. This competition will also encourage a better product for consumers. Another way to use dynamic standards is through moving cost reductions. This decreases the standard cost by a certain percent each period.

Target cost is another method used to make a product viable in today's market. By setting a price before production, manufacturers can find ways to lower the cost until it reaches the target. The reports on SCSs need to be accurate to be viable. A team atmosphere avoids conflict and encourages employees to be responsible. A team using a work cell arrangement and variances on reports will be less likely to be in conflict and in return be more productive. The final way to improve SCSs is to use it in relation to ABC.

When a company has many indirect costs, ABC results produce better pricing. If combined, ABC can be used for indirect costs or analysis of indirect costs and SCS can be updated and used for direct costs or financial records. 4. Considering the suggestions made in this article, in contrast to the chapter presentation of standard costing, which ideas make the most sense to you and whyI like the idea of using the SCS in conjunction with ABC. I make sense to track both direct and

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Redesigning Cost Systems Essay Example | Topics and Well Written Essays - 750 words”, n.d.)
Redesigning Cost Systems Essay Example | Topics and Well Written Essays - 750 words. Retrieved from https://studentshare.org/miscellaneous/1504208-redesigning-cost-systems
(Redesigning Cost Systems Essay Example | Topics and Well Written Essays - 750 Words)
Redesigning Cost Systems Essay Example | Topics and Well Written Essays - 750 Words. https://studentshare.org/miscellaneous/1504208-redesigning-cost-systems.
“Redesigning Cost Systems Essay Example | Topics and Well Written Essays - 750 Words”, n.d. https://studentshare.org/miscellaneous/1504208-redesigning-cost-systems.
  • Cited: 0 times

CHECK THESE SAMPLES OF Redesigning Cost Systems

Budget Management Analysis - Facility Redesign

Other items that will be purchased include new computers, furniture, and communication systems that will be installed at the nurses' lounge.... The capital purchase to be discussed is a facility design that is posed to cost the hospital more than $5000.... he estimated budget for redesigning the facility is presented in the table below: Item Estimated cost($) Architecture's fee 1500 Constructor's fee 2000 Construction materials 3000 Purchase of new items 4000 Total 10,500 It is assumed that the facility to be redesigned is the general ward that holds patients with less severe medical cases and therefore the facility does not entail numerous complexities....
6 Pages (1500 words) Research Paper

The Systems Approach Businesses

The author of the present research paper "The systems Approach Businesses" brings out that systems approach represents a line of thought within the management field that stresses the interactive nature and interdependence of both the internal and external factors within an organization....  A food outlet has three core areas that ought to function well to attain its potential for success, namely: production and procurement systems that encompass all those functions....
6 Pages (1500 words) Research Paper

COST ACCOUNTING SYSTEM DEVELOPMENT PROPOSAL

Costing systems and Performance Measures:In order that the costing system is effective so as to support the management control systems, a consideration of various financial and non-financial performance measures is undertaken to introduce the costing systems.... This so because the functions of the management control systems is not only to collect the information but also to act upon an analysis of such data and information to steer the organization towards success....
2 Pages (500 words) Essay

The Negative Effects of Poor IS Planning

Flaws in the planning process lead to Information systems that lower the organization's capacity to meet deadlines.... This is… The information systems may be poorly planned, failing to cater for some of the operations that may require extra time to be Poorly planned information systems also increase the costs of operation or else the customer requirements may not been met.... Moreover, poor planning also leads to the existence of information systems in the organization that are not in use, not because they are spoiled but because the organization does not need them (Benaroch, 2002)....
5 Pages (1250 words) Essay

Stakeholder in the Information System

nbsp; … Stakeholders, in system analysis, incorporate duties such as stimulating information systems to provide proper customer services and management and operations of the organization (Lejk and Deeks 15).... If you were a systems analyst in the college investigating wireless access, list a non-technical and technical user who you would consult as part of your investigation.... A non-technician user, to information systems, mainly deals with the nontechnical part of the system and who I could be maintained (Lejk and Deeks 27)....
4 Pages (1000 words) Assignment

Redesigning the Current Electronic Stethoscope Design

The project aims at redesigning the electronic stethoscope design to fit the growing technological advancement in terms of size and efficiency.... This project aims at redesigning the electronic stethoscope by reducing its size and improving its sound system.... The objectives are including an electronic wireless system for sound transmission and adding a second microphone to the current electronic stethoscope....
6 Pages (1500 words) Research Paper

Activity-Based Cost Systems

On the other hand, the activity based costing systems is advantageous since it saves the patient the challenges faced when the conventional method of costing is used.... This helps to estimate the… In most cases, particularly the conventional way, the cost of nursing is included in the charge of the hospital accommodation.... This brings an extra cost for those who use fewer amounts of these services.... This implies that, the emergency services some times may be of low standards and this leaves the patient on the losing end in terms of cost....
10 Pages (2500 words) Book Report/Review

Best Methods for Designing User-Centered Web Systems

… Masters route: MSc Web Services DevelopmentSystematic review: What Are The Best Methods For Designing User-Centered Web systems?... esearch Proposal: Designing User-Centered Web SystemBest Methods For Designing User-Centered Web systems Author: Masters route: MSc Web Services DevelopmentSystematic review: What Are The Best Methods For Designing User-Centered Web systems?... esearch Proposal: Designing User-Centered Web SystemBest Methods For Designing User-Centered Web systems Author: Christopher DubeWord Count: 1560Keywords used: user-centered web systems, websites, joint website development, best user-centered websites....
6 Pages (1500 words) Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us