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The Contribution Margin due to a Limiting Factor in the Presence of Several Sales Options: Actuality Is Not Always As It Appears at the Beginning of the Analysis
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1. The Accountant's Role in the Organization. 2. An Introduction to Cost Terms and Purposes. 3. Cost-Volume Profit Analysis. 4. Job Costing. 5. Activity-Based Costing and Activity-Based Management. 6. Master Budget and Responsibility Accounting. 7. Flexible Budgets, Variances, and Management Control: I 8. Flexible Budgets, Variances, and Management Control: II. 9. Inventory Costing and Capacity Analysis. 10. Determining How Costs Behave. 11. Decision Making and Relevant Information. 12. Pricing Decisions and Cost Management. 13. Strategy, Balanced Scorecard, and Strategic Profitability Analysis. 14. Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis. 15. Allocation of Support Department Costs, Common Costs and Revenues. 16. Cost Allocation: Joint Products and Byproducts. 17. Process Costing. 18. Spoilage Rework, and Scrap. 19. Quality, Time, and the Theory of Constraints. 20. Inventory Management, Just-in-Time, and Backflush Costing. 21. Capital Budgeting and Cost Analysis. 22. Management Control Systems, Transfer Pricing, and Multinational Considerations. 23. Performance Measurement, Compensation, and Multinational Considerations.
The objective of this paper is an effort to view the possibilities of integrated use of target costing, activity based costing and Kaizen concept in the internal value chain as the central link of the entire chain. The idea is to stimulate the company management to think about the costs, position they take in the structure of price cost and their influence on forming the sales price since it is very important to produce right product for the consumer, of desired quality and functionality but along with as low production costs as possible. It is therefore needed to construct the right design of a product and provide its production at the shortest possible time along with as low costs as possible which will impact the efficiency of the entire value chain.
A transition for a green economy has encouraged companies to use new tools which promote internal corporate entrepreneurship, increase the competitiveness and achieve sustainable results. This article presented a theoretical discussion of how the Life Cycle Assessment (LCA) can presents as an entrepreneurial tool for modern business management and green innovation. Studies of LCA were analyzed showing benefits and applications in the areas of strategic planning, production, process of development of products, search and development, social and environmental responsibility, and marketing. As for green innovations, there were analyzed studies of innovations in products, processes and services. The tool assists in making sustainable decisions, fortifies the management of the business processes, the management of operations and the promotion of greener innovations.
The environment for today's cost estimator and analyst is certainly very challenging. Computerization, software, robots, composites, uncertainty, and inte grated systems all challenge the applicability of our existing tools and techniques. These Proceedings serve to document some of the completed and on-going re search in the dynamic world of costing. This document is published in conjunction with the first Society of Cost Es timating and Analysis (SCEA) National Conference, held in Boston, MA, June 19-21,1991. It serves to foster and promote cost research, and to provide a forum to report these findings in furtherance of public interest. This volume is the third of the series. The first and second were published in conjunction with the 1989 ICNNES Joint Conference in Washington, D.C., and the 1990 ICNNES Joint Conference in Los Angeles. My thanks to our Editors, Professor Jane Robbins and Dr. Roland Kankey; our Managing Editor, Mr. Frank Hett; the Program Chair, Ms. Ann-Marie Sweet; and all those who contributed. R. R. Crum, President Society of Cost Estimating and Analysis PREFACE We wish to thank the professionals who submitted papers to us for review. As any editor will indicate, you cannot review or publish papers that are not sub mitted. The articles in this Proceedings successfully completed the referee process. Each of these authors was rewarded by an additional cycle of minor changes, word processing, and express mailings.
Three target-costing processes which disciplines the product development process to help ensure that only profitable products are launched, are presented. Leading Japanese manufacturers have used target costing systems to their advantage and western companies are introducing this proactive cost management method to discipline their product development processes. Target costing and value engineering provide considerable payoffs to early adopters. The company that can most rapidly reduce costs of new products without having to compromise on quality and functionality will gain market share and experience economic success.
The article presents a menu analysis methodology that is compared to menu engineering and the Miller matrix. Cost/margin analysis uses item food cost percentage and weighted dollar contribution margin to develop a sales mix that will both minimize the overall food cost percentage and optimize sales revenue and gross profit return. Previous methods of menu analysis have treated food cost percentage and dollar contribution margin in a mutually exclusive manner. This has resulted in biased interpretation of the data. Cost/margin analysis displays the food cost and contribution margin graphically and clearly identifies the menu items that are helping or hindering the revenue-cost-profit objectives. This information allows the menu to be designed to improve forecasting and cost control techniques.
In an attempt to improve the design of products and reduce design changes, cost, and time to market, concurrent engineering or life cycle engineering has emerged as an effective approach to addressing these issues in today's competitive global market. As over 70% of the total life cycle cost of a product is committed at the early design stage, designers are in a position to substantially reduce the life cycle cost of the products they design, by giving due consideration to life cycle cost implications of their design decisions. Increasing recognition of cost competition has spurred the development of methodologies such as design for manufacturability, design for assembly (DFA), design for producibility, design for maintainability and design for quality, in the design for 'X' realm. Although these methodologies have for the most part proven successful in reducing cost, the design evaluation criterion in most of these methodologies is not cost. Therefore methodologies and tools are needed to directly pro
Especially in the last two decades of an increasingly-competitive business environment, dwindling resources and an ever-increasing need to obtain value for money in all areas of corporate activity, it has become essential that all available resources be used optimally (Griffith, J. W. and Keely, B. J., Cost Engineering, 1978, September/October, 165–168). Physical assets form the basic infrastructure of all businesses and their effective management is essential to overall success. It has thus become essential to plan and monitor assets throughout their entire life cycle, from the development/procurement stage through to eventual disposal. Life cycle costing∗ is concerned with optimising value for money in the ownership of physical assets by taking into consideration all the cost factors relating to the asset during its operational life. Optimising the trade-off between those cost factors will give the minimum life cycle cost of the asset. This process involves estimation of costs on a whole life basis before making a choice to purchase an asset from the various alternatives available. Life cycle cost of an asset can, very often, be many times the initial purchase or investment cost (Hart, J. M. S., Tetrotechnology Handbook, p. 22, HMSO, London, 1978; Hysom, J. L., Journal of Property Management, 1979, 44, 332–337). It is important that management should realise the source and magnitude of lifetime costs so that effective action can subsequently be taken to control them. This approach to decision making encourages a long-term outlook to the investment decision-making process rather than attempting to save money in the short term by buying assets simply with lower initial acquisition cost. It is suggested project managers should familiarise themselves with what the approach involves, to better appreciate how they might then contribute to the enhanced quality decision making which it makes possible.
There are many approaches to study the environmental and sustainability aspects of production and consumption. Some of these reside at the level of concepts, e.g., industrial ecology, design for environment, and cleaner production. Other approaches are based on the use of quantitative models, e.g., life cycle assessment, material flow accounting and strategic environmental assessment. This paper focuses on the development of a framework that is able to incorporate different models for environmental analysis, with the option of a broader scope that also includes economic and social aspects, thus covering the three pillars of sustainability. This framework builds on the ISO-framework for life cycle assessment, but takes a broader view, and allows us to move from micro questions on specific products, via meso questions on life styles up to macro questions in which the entire societal structure is part of the analysis.
This paper integrates elements from the theory of agency, the theory of property rights and the theory of finance to develop a theory of the ownership structure of the firm. We define the concept of agency costs, show its relationship to the ‘separation and control’ issue, investigate the nature of the agency costs generated by the existence of debt and outside equity, demonstrate who bears these costs and why, and investigate the Pareto optimality of their existence. We also provide a new definition of the firm, and show how our analysis of the factors influencing the creation and issuance of debt and equity claims is a special case of the supply side of the completeness of markets problem.The directors of such [joint-stock] companies, however, being the managers rather of other people's money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own. Like the stewards of a rich man, they are apt to consider attention to small matters as not for their master's honour, and very easily give themselves a dispensation from having it. Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company.Adam Smith, The Wealth of Nations, 1776, Cannan Edition(Modern Library, New York, 1937) p. 700.
Ten LCC-oriented environmental accounting tools suggested as useful in environmental decision-making have been identified. However, their implementation in the building industry seems to be limited, which opens up for a conceptual discussion. The purpose of this article is to discuss theoretical assumptions and the practical usefulness of the LCC approach in making environmentally responsible investment decisions. LCC's monetary unit and extended scope may speak in favour of using LCC but LCC fails to handle irreversible decisions, neglects items that have no owner and does not consider costs to future generations. Moreover, LCC does not take into account the decision makers’ limited ability to make rational decisions under uncertainty. LCC's practical usefulness is constrained by its oversimplification to a monetary unit, the lack of reliable data, complexity of the building process and conceptual confusions. To handle these inconsistencies in future development of environmental decision support tools three research solutions are proposed.
Sustainable development requires methods and tools to measure and compare the environmental impacts of human activities for the provision of goods and services (both of which are summarized under the term "products"). Environmental impacts include those from emissions into the environment and through the consumption of resources, as well as other interventions (e.g., land use) associated with providing products that occur when extracting resources, producing materials, manufacturing the products, during consumption/use, and at the products' end-of-life (collection/sorting, reuse, recycling, waste disposal). These emissions and consumptions contribute to a wide range of impacts, such as climate change, stratospheric ozone depletion, tropospheric ozone (smog) creation, eutrophication, acidification, toxicological stress on human health and ecosystems, the depletion of resources, water use, land use, and noise-among others. A clear need, therefore, exists to be proactive and to provide complimentary insights, apart from current regulatory practices, to help reduce such impacts. Practitioners and researchers from many domains come together in life cycle assessment (LCA) to calculate indicators of the aforementioned potential environmental impacts that are linked to products-supporting the identification of opportunities for pollution prevention and reductions in resource consumption while taking the entire product life cycle into consideration. This paper, part 1 in a series of two, introduces the LCA framework and procedure, outlines how to define and model a product's life cycle, and provides an overview of available methods and tools for tabulating and compiling associated emissions and resource consumption data in a life cycle inventory (LCI). It also discusses the application of LCA in industry and policy making. The second paper, by Pennington et al. (Environ. Int. 2003, in press), highlights the key features, summarises available approaches, and outlines the key challenges of assessing the aforementioned inventory data in terms of contributions to environmental impacts (life cycle impact assessment, LCIA).
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