Provide management accounting information
- What are some key features of organizational policy and procedures that apply to:
Overheads costing systems?
There are several procedures that organizations have put in place to help manage overhead costs. These procedures include:
Evaluate the company’s need- this is a process done by many organizations to decide on what they want and eliminate the unwanted requirements that increase costs.
Making smart hiring decisions- in an attempt to reduce indirect costs, companies tend to hire individuals that have multiple strengths and can work on different projects rather than many employees for various projects.
Going paperless-the great way for business to decrease or cut costs is by going paperless. Organizations have realized that essential documents can be stored in the disks and cloud and that all contracts can be signed electronically hence reducing the use of paperwork.
Labor costing systems?
Companies have come up with several ways on how to manage labor costs more effectively. These ways include the following:
Keeping schedules error-free- organizations are better able to avoid more labor costs and plan budgets more effectively by ensuring accurate scheduling.
Reducing employee turnover- reductions of employee turnover and retaining talents helps the companies cut a large portion of their labor costs.
Forecast scheduling needs- organizations have put this policy in place to ensure that poor forecasting that leads to inaccurate schedules that leads to unnecessary costs. Automating non- critical tasks- this is an action taken by organizations to ensure that employees’ workload is automated to bring down labor costs while maintaining efficiency and quality.
- When preparing budgets, what are the five key principles and practices that should be followed? Provide an explanation of each one.
Budget principles and practices are general guidelines set to be adopted by the board during the budget process. There are several principles set to improve the probability of preparing a meaningful budget. These principles include
Transparency and accountability
When making a budget, all the relevant data regarding the budget should be provided by the government or organizations. The capital portion and the revenue of the budget should be kept separate for the sake of clarity and transparency.
Accuracy
This principle, therefore, implies that the finance ministry or department, with the help of the relevant data from other departments, formulate budget estimates that are accurate and precise.
Fiscal discipline
It implies that the prepared budget should be balanced and be able to display congruence between income and expenditure. The budget should be managed by credible, transparent, and predictable limits of fiscal policy.
The principle of Inclusiveness
The budget should be comprehensive and inclusive of diverse budget estimates. It should include all the government revenues and expenditures from all departments, and thorough debate, be held to ensure all factors are put in place.
Flexibility
This principle states that the budget should be made flexible, so that in case the purpose for which it was intended changes during the financial year, it should be restated. The management should always be able to compare the actual level of operation with the expected level of performance and do what is necessary.
References
Cherrington, D.J. and Cherrington, J.O., 1973. Appropriate reinforcement contingencies in the budgeting process. Journal of Accounting research, pp.225-253.
Tommasi, D., 2013. The budget execution process. In The international handbook of public financial management (pp. 285-311). Palgrave Macmillan, London.
Acosta, J. and West, P., Pfizer Inc, 2004. Database system and method for managing labor costs against indicators. U.S. Patent Application 10/765,706.
Johnson, H.T. and Loewe, D.A., 1987. How Weyerhaeuser Manages Corporate Overhead Costs [2]. Strategic Finance, 69(2), p.20.