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

Cost method - Research Paper ExampleIt 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 discordant concerns leading to the recommendation that the phoner should switch to the activity-based costing system of accounting. The first concern is the dopely budget that in my opinion requires further subdivision to pay off 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 scene 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 get hold of 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 businesslike 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 innovative and logical method as opposed to the traditional costing system (Bragg, 2001). It is possible to distribute