Cost method Research Paper Example | Topics and Well Written Essays - 500 words

Cost method - Research Paper Example It is crucial for managers to comprehend the merits and demerits of the two systems to satisfy the needs of their business operations. The budget presented entails schedules that raise various concerns leading to the recommendation that the company should switch to the activity-based costing system of accounting. The first concern is the quarterly budget that in my opinion requires further subdivision to generate quarters. Mainly, cycling takes place in temperate weather conditions. Buying materials for bicycle production for the start of sales hikes demand therefore, requires the producer to incur a quarter before the demand. Another concern regards accounts that remain uncollectable. The master budget for the company is not specific it its cash budget line. It closely refers to the uncollectable receivables. Variable factors in this context emanate from economic features among them limited sponsorship and thus resulting in wrong accounts (Gazely & Lambert, 2006). From the budget, the company is setting aside a budget for 140 bikes inclusive of labour costs. It is appropriate to cut down on the level of production of extra parts in the inventory. The viability of any business can be measured by how the company effectively utilizes its resources while plummeting unnecessary costs hence Competition Bikes Inc. should strive to avert extra discretionary costs. The method of distributing manufacturing overhead by activity-based costing (ABC) to products is efficient compared to the traditional method of costing. Precisely, activity-based costing assigns the right percentage of resources to particular products. While monitoring and allocating organizational costs to products and objects, activity-based costing remains a more sophisticated and logical method as opposed to the traditional costing system (Bragg, 2001). It is possible to distribute

Product market cyclicality exerts a powerful influence on a car Essay

Product market cyclicality exerts a powerful influence on a car assemblers sales, value added, cash flow and profit performance - Essay Example Not only this it also contains automobile machinery and vehicle-care products, accessories, environment friendly and safety tools, garage and repair equipment, sample and colorant, grease & lubricants, machines deal with gasoline, wheels, and much more. Travelling and transportation of goods farther and faster than before are made possible only by automobile. It has unbolted wide scope and market for commerce and trade. The automobile industry directly influences the economies and wealth of many countries around the world. The manufacture of automobile uses great quantities of iron, steel, aluminum, and natural rubber. Moreover several other industries such as energy, security, assurance, roadway design and civil productions support the automobile industry. All these industries are cyclical businesses. The business environment is improving nowadays. As requirement increases, revenues go up and similarly with this, the companies come across it worth their time and money to practice capacity building plans. The Product market is one in which products are sold to companies instead of to customers. The product market comprises of items like raw materials, machines, and tools and is concerned with acquisition by company for their own use which may consecutively be used to produce items for the customer market. Cyclical is something that happens periodically, i.e. on a regular basis. Cyclicality is a very common frequent subject matter in the field of investment. Cyclicality is something that many small business owners may face. Stocks cyclicality generally means that stocks follow the common macroeconomic circumstances. A cyclical stock is one that characteristically implements fine when the economy is excellent and performs badly when the economy is fragile. Cyclicality is defined in a dictionary as â€Å"of or denoting a business or stock whose income, value, or earnings fluctuate widely according to variations in the economy or the cycle of the seasons† So far small business holders can only take action in order to reduce cyclicality and strengthen their income streams. A business can be moved into black by becoming creative, flexible, and open to new challenges. A business holder can take charge and make sure her firm's success by presenting new services, promoting skillfully, o r practicing new personal speculations. The automobile industry is a powerfully cyclical industry. For the macro-economy, its performance is frequently a lead indicator. It is very perceptive to causes, for instance product raw material input pricing (metals, plastic, glass etc), interest rates (most sales are economized, and the automobile businesses has high operational resources requirements), energy pricing, etc. As the industry goes down, the value-chain also goes downward with it. The automotive market is extremely cyclical. It depends on customer expenditures mainly and to a certain extent on purchaser sales inducements. The consumer demand for automobiles and automotive production is unfavorably affected by economic factors, for instance rising fuel costs. This could also adversely influence our overall sales and overall revenues. If automotive sales and production is declined; it would cause a possible decline in sales to vehicle manufacturers, and the result of this situat ion is a decline in results of operations and economic condition and hence in business. In the past, due to modification in common financial conditions and customer inclination, the automotive industry has been illustrated by periodic