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Introduction:
It is an obvious fact that accounting and finance are two different things and the provisions of both of them, are totally change with each other. Accounting is the name of recording and interpreting the data accordingly at a place, while finance in the name of accumulating the funds at a perfect place in total. The provision of both accounting and finance are vital for an organization in total, as both of these things are essential for the long run productivity of an entity is concerned. We are currently, located in the era wherein the stance of productivity of an organization is more than important in total (Weston, 2008).
The real financial competitiveness of an organization could be easily found with the help of accounting based techniques. There are two different kinds of accounting, which predominantly are, financial accounting and cost accounting. Financial accounting is all about recording and interpreting the financial data of the company, while cost accounting is used to assess the cost of the company accordingly. Cost accounting not only used to assess the in line cost of thing, but it is also used to visualize the thing accordingly. There are certain methods of costing, which should be used for the same purpose in total. The main perspective of this assignment is to analyze the effectiveness of costing and make a certain spreadsheet, from which a company can analyze the effectiveness of a project accordingly with analyzing the cost of the same as well. There are two different parts of the assignment that need to be analyzed and covered in this particular analysis in total.
Explain clearly your proposed overhead allocation approach and why you believe it to be more effective than the previous one
Every business tries to enhance its productivity from different standpoints and angle and every standpoint deems extremely important from the viewpoint of an organization in total. Analysts analyze an organization from different angles and with the help of different methods and tools. All of these tools are essential to analyze and assess the level of financial based initiation from different angles in total (Jack & Meredith, 2011).
It is now become vital for a company to value their shareholders in a manner that their level of confidence would increase or enhanced considerably. Value of the shareholders could be increased with the help of high financial figures or give them enough confidence about all the latest happenings of the company in total. When it comes to organizations, then there are certain things which deems extremely valuable and important and among them, the name of shareholders is one of them. It is important for an organization to take different economic and strategic decisions for its shareholders at the right time, because it is important for them to analyze the things perfectly. This is an obvious fact, no organization could increase its financial belongings, without decrease down its cost completely, because high cost initiation is basically a thing hindered between financial competitiveness and organization. Minimizing the cost, means minimizing the expenses, both which are operating and non operating as well. With the help of cost based efficiency, an organization could become extremely effective as well as proactive as far as generating net income is concerned and minimizing the operational cost of the company. Under the head of cost, there are three different things, which predominantly are direct labor, direct material and overhead cost. Obviously, an organization could not decrease the level as well as amount of direct labor and direct material, because both of these things are not effective from any standpoint, but the cost of overhead could be decrease accordingly with the help of taking some bold and effective decisions on time.
This particular project is all about analyzing the overhead cost effectively with some of the major formulas. In the overhead cost, mentioned below analytical provision could be found all along
Comment on the key findings from the new overhead allocation system
Organizations always made to earn economic profit with taking effective and timely decisions for the sake of the entity as a whole. In order to attain the growth, organizations have to consider number of things and systems from which they can allocate the cost effectively and resultantly would increase the financial belongings of the company as a whole. This particular method which is all about analyzing the overall allocation cost system of the company is extremely perfect because it is also have the element of absorption based costing as well, along with the other costing tool in total (Jack & Meredith, 2011).
The key findings lies in the fact that, this particular tool could be changed because it is made on the customized way from which any person could change accordingly. The efficacy of this particular model lies in the fact that how effectively it is managed and allocated the operational cost of a company accordingly and comprehensively. A person could easily manipulate or change the figure of a single variable and all of the things are interlink with each other, which would certainly devastate the entire financial structure. The excel sheet also has the tendency to show the things with graphical representation and with the help of changing of variable, this thing would be done effectively at the same time, which would certainly enables a company to not to take such decisions into account which are not at all feasible for the entity as a whole.
Discuss any limitations that you think the new approach still has
Everything has some sort of benefits and limitations as well and when it comes models, like financial models, HR models and marketing models, the essence of limitation is a common thing, due to which the credibility of all of such models would have been decreased heavily of a company. The main limitation of this particular approach is that, it is might happen that the user would not identify the place, where they have to put the figure or completely remove the formulas embedded in the sheet. It might be happened, that the company might not get able to generate their desired sales, then it would become extremely difficult for the operational department to decrease the operational cost and resultantly increasing the financial belongings of the company.
Conclusion
It is an obvious fact that whatever an organization does is to increase the financial belongings accordingly, and in order to accomplish the same thing, there are certain decisions which have to consider by an organization accordingly (Brigham, 2013). There are number of methods which could be used for the same purpose and among them, the name of Capital Budgeting is one of them.
Lots of organizations around the globe are now using the same tool to assess the financial belongings of an organization in total because this particular tool would be used for enhancing the financial based competitiveness of an organization (Coombs, 2002). The utilization of capital budgeting certainly gives a fair chance to the companies to assess and value their financial belongings in a manner that it could generate positive income is concerned. When it comes to organization then analyzing and taking effective decisions could be extremely important for their future consequences (Coombs, 2002). The main perspective of this assignment is to analyze the effectiveness of costing and make a certain spreadsheet, from which a company can analyze the effectiveness of a project accordingly with analyzing the cost of the same as well. From the entire analysis, it is found that it would become economically as well as strategically competitive for the company to stay focus with the same thing for a long span of time.
References
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