This chapter explores absorption and activity-based costing. It notes the importance of overheads when costing products. The chapter uses equations to calculate a simple blanket overhead rate and a simple activity-based cost. It uses absorption costing methods to fully cost out a range of products. The chapter also cites the limitations of traditional costing methods. It includes the under recovery and over recovery of overheads costs which are indirect costs to a business that cannot be linked directly with a product. Towards the end, the chapter includes the process of going through costs being collected by manufacturing departments by referencing cost allocation, apportion, and reapportion of indirect costs.
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Absorption and Activity-Based Costing
Sam’s Cost Conundrum
Mary Carey and Cathy Knowles
Accounting is made up of two main parts. Part One covers financial accounting. It starts off by looking at the cash budget. It then moves on to the statement of profit or loss. It also looks at balancing the basics. It then turns to company finance and accounts. It also considers the capital structure and investment ratios. The second part is about management accounting. This part discusses costs and break-even analysis, absorption and activity-based costing, and budgeting. It also examines pricing and costs, short-term decision making, investment appraisal techniques, and measuring and reporting performance.
This chapter describes the basics of the financial accounting system. It examines the principles underlying the three most important outputs of the system: the statement of financial position, the statement of comprehensive income, and the statement of cash flows. The chapter also looks at the internal dynamics of the accounting system—double-entry bookkeeping and year-end procedures—to facilitate understanding of these financial statements. Assets, liabilities, equity, income, and expense are the five elements of an accounting system. The chapter then introduces an imaginary business, the Pizza Business, as an example. It accounts for fourteen basic transactions and other events in the financial statements of the Pizza Business using the accounting equation, the terminology of debits and credits, and numerous explanations of key principles.
Accounting for Business contains two parts. Part One is about financial accounting. Chapters include examinations on the statement of financial position, the income statement, cash flows, and ratio analysis. Part Two looks at cost and management accounting. This part includes chapters on costing, relevant costs, marginal costing, decision-making, budgeting, and capital investment appraisal.
Accounting for Depreciation and Bad Debts
Smart Sports is Called to Account
This chapter explores accounting for depreciation and bad debts. It highlights the importance of depreciating non-current assets through the straight-line and the reducing-balance methods of providing. Next, the chapter explains the need for providing for bad and doubtful debts. It describes the process of a final adjusted statement of profit or loss and a statement of financial position. The chapter also points out the limits of a statement of financial position by citing historical costs, estimates, judgements, and mining assets. It looks into key accounting concepts such as the entity concept, the money measurement concept, the matching concept, the prudence concept, and the consistency concept.
15. The Administration of Corporations
This chapter studies the various forms of business organization that are available to those who trade. It focuses on the types of trading structures available, how they are established, and provides an overview of the implications of each form of business organization. It should be noted that there is no one model that will suit every individual or every business model. It is very much the decision of the individual—having assessed the business, what they wish to do with it, and how they see it continuing in the future—to determine the form of enterprise chosen. Being aware of the consequences for the business organization is crucial in making this decision.
2. The administration of the law
This chapter examines the administration of the law under the English legal system. It aims to clarify how, and by whom, the law is administered. It identifies the structure, jurisdiction, and composition of the various courts, and also discusses how the tribunals system fits into the administration of the law. In addition, the chapter looks at less formal approaches to dispute resolution, such as alternative dispute resolution. This chapter describes the duties and responsibilities of the different members of the legal profession including the judiciary, the law officers, barristers, solicitors, legal executives, and paralegals. It also considers the appellate procedure.
Advertising Across Cultural Borders
This chapter looks into advertising to different cultures. It lists the basic sources of various cultural assumptions ranging between sources of culture, cognitive organization, and cultural expressions. The chapter uses Hofstede’s dimensions and definitions framework on cultural values citing power distance, individualism/collectivism, uncertainty avoidance, masculinity/femininity, and long-term orientation as dimensions. It also includes the different approaches to communication, which are divided between high-context culture and low-context culture. Moreover, the chapter explores other cultural dimensions such as Schwarz’ Universal Value Structure. It highlights how culture impacts the process and effectiveness of advertising and brand perceptions.
This chapter shows how algebra is a form of shorthand which is used to express complex statements clearly and concisely and how symbols are used to denote unspecified or variable numbers. It begins by presenting the rules of algebra and ways of manipulating algebraic symbols. Then it introduces the various operations for fractions. The chapter then considers the basic understanding of powers and roots and the application of algebraic rules for manipulating them. Finally, the distinction in logic between a necessary and a sufficient condition is reviewed explicitly.
This chapter begins by looking at whether or not it can be claimed that new forms of work organization have emerged in recent decades. It analyzes different forms of working, managing change, and technology, including the Japanese model of management. It also explains how the Japanese model was perceived in the 1970s and early 1980s as a new way of improving productivity and competitiveness, how real that was, and how well it translated into Western organizations. The chapter documents some of the key changes that are widely celebrated and discussed in the management literature. It critiques how much change has actually happened in terms of work organization in the last two or three decades.
Analysing Global Industries
This chapter discusses the concepts and tools used to analyse global industry. It acknowledges that a specified set of products and geographical boundaries are needed to achieve a satisfactory market. It explains how a more highly concentrated market is correlated to the concentrated power in the hands of a few firms to manipulate prices, the quantity and quality of goods and services, and the terms and conditions of the sale. The chapter also looks at the Porter Five Forces model as a means to analyse industries. It highlights that firms sometimes make strenuous efforts to avoid price competition through the establishment of cartels and systems of price leadership. Moreover, the chapter cites the significance of product differentiation as a major element of competitive strategy and entry barriers in other industries. It adds how complementary products are included as the sixth force of the Porter model.
Analysing the macro-economic environment
This chapter analyses some key features in the macroeconomic environment and how these features may affect a business. The chapter begins with an introduction to the macroeconomic environment. It considers the elements of the macroeconomic environment such as Gross Domestic Product (GDP), unemployment, exchange rates, and inflation and how they can have a profound impact on a business' costs and revenues. The chapter emphasizes how changes in this environment can affect a business' staffing decisions, inventory levels, product development, marketing strategy, and financial planning. Methods to use in mitigating challenges posed in changes in the macroeconomic environment is also extensively discussed.
This chapter tackles the meaning and techniques of analysis and the identification of meaningful patterns in data. It distinguishes between qualitative and quantitative data analysis. Transcripts and computer software are features of qualitative analysis; on the other hand, quantitative processes imply preparation, checking, editing, and coding. The coding of open-ended questions is examined in some detail. The chapter covers measures of dispersion, averages, and significance testing. Univariate, bivariate, and multivariate analyses are explained, as are procedures for tabulation weighting and grossing.
This chapter revises the basic concepts of numbers and operations with them. It looks at positive and negative numbers, fractions, decimals, and percentages. It also reviews powers, such as squares and cubes, and square roots and cube roots. Basic operations of addition, subtraction, multiplication, and division, as well as finding powers and roots are reviewed and how these operations are performed with pen and ink only, and with the aid of a calculator.
This chapter looks into the considerations involved in asking questions for structured interviews and self-completion questionnaires. It details the advantages and disadvantages of using closed questions versus open questions for survey research. While open questions have certain advantages, closed questions are typically preferable for a survey, because of the ease of asking questions and recording and processing answers. The general rule of thumb in designing questions is that researchers must always be mindful of research questions and avoid ambiguous terms. Moreover, vignette questions can be used to investigate the normative standards of people. The chapter highlights the importance of piloting and pre-testing questions to clear up problems in question formation.
Assessing Country Attractiveness
This chapter focuses on the process of assessing the attractiveness of countries. It starts with an explanation of how firms tend to follow the process of internationalization through exporting and the establishment of overseas subsidiaries. The chapter lists the reasons for foreign indirect investment (FDI) such as market access, lower production cost, and access to resources. It recognizes China as the leader in scouring raw materials in the world. The chapter explains how firms screen other countries for export and import via their attractiveness of new markets and production locations. It mentions numerous commercial organizations specializing in country and marketing analysis.
This chapter focuses on assets. Businesses have all sorts of assets: buildings, shop fittings, trademarks, shares in other businesses, inventory, receivables, cash, etc. To qualify as an asset, a resource must meet the three key requirements of the asset definition: it must give rise to a right, the right should have the potential to produce economic benefits, and the business must control the resource. To be recognised as an asset on the business's statement of financial position, an asset must meet the recognition criteria of relevance and faithful representation. Many intangible assets are not recognised as assets because they do not satisfy the recognition criteria. As a result, the statements of financial position of businesses with large investments in intellectual property generally omit their biggest assets. This is a challenge for financial analysts and other users of the financial statements.
Associates, joint arrangements and statements of cash flow
This chapter examines the accounting methods required when an investor exerts partial influence over its investee company. It considers the techniques of accounting for associates and joint ventures in the consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, and the consolidated statement of financial position by the equity method. The accounting for other joint operations is also discussed. In addition, the techniques for the preparation of a consolidated statement of cash flows are included to complete the consolidated financial statements. The chapter also discusses the equity method of accounting and its future.
Attitude Theory and Behaviour Change
This chapter evaluates attitude theory and behaviour change. It begins by defining the concept of attitudes as used in consumer marketing. The chapter then outlines the main components of the tri-component model, and goes on to consider the hierarchy of effects. Theoretical perspectives including balance theories, motivational theories, and multi-attribute expectancy-value theories are then discussed in depth. The chapters goes on to differentiate between compensatory and non-compensatory models and looks at how they can be used in consumer decision-making. Finally, the chapter explains the various approaches to attitude change, including persuasion models such as the elaboration likelihood model.
Audience and advertising research
This chapter discusses audience and advertising research. It provides the purposes and shows the importance of audience and advertising research. Media measurement surveys dictate the amounts paid to buy advertising space; they also offer ready-made segmentation to marketing managers. Audience research offers guidance for media owners on what is of interest to readers, viewers, or listeners. The chapter addresses newspapers, magazines, radio, television, the internet, outdoor, and cinema. It also looks at how research can provide some indication of advertising effectiveness. Various measures are enumerated, including impact, emotional involvement, brand recall, image, comprehension, reactions, associations, recognition, appeal, and persuasiveness. The chapter concludes with what must be considered in the publication stage of the research.