the operating statement Essay example
Undergraduate
Essay
Finance & Accounting
Pages 4 (1004 words)
Download 0
Name Professor’s Name Course Date Irrespective of what business one is involved in, the major aim of most businesses is to make profits and managers are the custodians of the same to the owners. Profits can be made when sales are increased hence a rise in sales revenue…

Introduction

Variable costs are costs are those, which vary with the level of activity while fixed costs are those, which are constant irrespective of the level of activity. However, the increase or decrease of fixed costs is not related to the level of activity alone as they may though change over a period. Variable costs on the other hand are directly related to the business activity; they include costs such as those for raw materials and inventory. They vary in the sense that the more of each you need in production the more the costs will increase (Czopek 2004). When the budgeted of these costs is more than the actual, then the discrepancy is termed as an adverse and a control measure must be put in place in actual/real time (Czopek 2004). The operation statement will therefore help the management in identification of each of the costs, when they are favorable as well as when they are adverse and formulate the control mechanisms for normal operations. As there is no single direct way or strategy of cost management and control, the mangers will be forced to examine the whole business strategy and make a determination of how to achieve a cost reduction without interfering with the business operations. Variable cost control Variable costs will rise with expansion in production and fall when production falls; this is quite useful for effective decision-making. ...
Download paper
Not exactly what you need?

Related papers

Financial Statement Analysis
A provision for warranty should be provided for at 2% and any changes is taken to the profit and loss account. An account should be maintained that has this figures and if there is returns then the actual amount and changes in the provision is taken to the profit and loss account. b. Calculate K2’s warranty expense for 2008. Opening balance 8,430,000 Provision 2% of 1,934,700,000 38, 694,000 47,…
Economic Value Added (EVA) Statement
EVA is one such performance measurement tool that captures the financial profit and shareholders wealth. “EVA subtracts the cost of capital from the net operating profits after tax (NOPAT) generated in the business. It is a measure of the residual income from the income statement after accounting for the cost of the balance sheet” (Economic Value Added, 2007). How can Economic Value Added…
Application of Financial Statement
According to Smith (2009), every time people balance their checkbooks to their bank statement, an aspect of accounting is applied. Similarly, every time people balance what they have spent and gained in family’s needs or business, they apply the fundamentals of the income statement. In addition, when individuals consider what they have given as a credit to others and what they have received as…
Question: Using the statement of accounts and published performance information for two companies of your choice operating i
Despite a tough market, Marks and Spencer was able to make progress on a number of fronts. Sales rose by 2%. These results were in line with the strategic goals of the company. Significant improvements were made in Marks and Spencer’s U.K business in that the company was able to enhance its stores and products. In addition, Marks and Spencer was able to strengthen its brand name (Marks and…
Statement of Smith Ltd
According to the annual financial reports of Smith Company the year 2012, the current ratio recorded was 1.6 (Warren, Reeve, & Duchac, 2012). This clearly indicates that the firm’s ability to meet its short-term obligations with time has improved thus, the firm remains liquid and has the ability to meet its short-term financial obligations within a short duration of time. As a result, it is wise…
financial statement analysis
The company aims at creating a great guest love hotel with over 6,76000 hundred rooms in approximate 4600 hotels in one hundreds countries (Intercontinental Hotel Group, 2013). Additionally, the directors report indicates that Intercontinental Hotel and Group provide employment to more than345, 000 people globally for instance, in 2011 the company provided employment opportunities to more than…
management acounting
220.5 (A) W7. Material M7 usage variance = (2,100 ?0.68) – 1,470) ?1.75 =?73.5 (A) W8. Direct labour rate variance = (7.2 ?525) – 3,675 =?105.0 (F) W9. Direct labour efficiency variance = (2,100 ?14/60) – 525) ? 7.2 =?252.0 (A) W10. Variable overhead expenditure variance = (2.1 ?525) – 1,260 =?157.5 (A) W11. Variable overhead efficiency variance = (2,100 ? 14/60) – 525) ? 2.1 =?73.5 (A)…