Case study: on costing systems and cost control

Lorson Manufacturing union Case Study Executive Summary Lorson Manufacturing Company is actively seeking to implement tighter be influence measures in an industry that is largely governed by prices. The purpose of this plow is to indue and analyse a new costing form proposed by Mr. Jan Lorson for the valve section of the company, and comp atomic egress 18 it to the be body, in gear up to judge whether to go forward with its implementation. The analytic thinking uses a cast of examples to highlight the significant differences in be between the ii systems, and the impact that these variances have on the business. It is cogitate that the new system does provide a definite melioration over the existing one, based on the benefits perceived from its submission versus the implementation cost envisaged. The benefits include more(prenominal) effective cost control and action measurement, precise stock valuation and more accurate gainfulness analysis. This would r esult in better decision-making on issues think to headstone product markets, profit margins, product introductions and deletions, as surface as cost reduction. General advice is also provided as to the finis to which further disruption guttle of the department into a bigger number of cost centres would be useful, and the reasons behind objections by members of staff to the new proposal.

Analysis of exist Costing System The new system uses a single bonnie hourly sprout to allocate labour and overhead costs to the valve department. This rate is organism calculated on a periodic basis by dividing the sum of the accumulated labour charges and de! partment overheads by the number of labour hours worked. Job costs are determined by multiplying this single rate by the clock time each(prenominal) job spends in the department. Data for the calculations are derived as follows: * heart and soul labour hours from timesheets. Labour hours are actually put down separately... If you want to get a full essay, order it on our website: OrderCustomPaper.com

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