Cost Accounting Employees Productivity

Question: Describe about the Cost Accounting for Employees Productivity . Answer: 1 (i) Faster processes in itself is a major requirement of every organization. Computerized systems are being installed in the organizations to increase more productivity of the employees. Nowadays, organizations are more interested in investing in computerized software rather than investing in human capital. This has led to increasing in the speed of the work being done both in the administration as well as engineers by the existing employees with the fear of losing their job being done (Vanderbeck, 2013). More advanced and improved technology for producing goods of higher quality at a lower rate is being built by the engineers. With the process time getting reduced, the organizations have the benefit of increased production, innovation which means the engineers have more time to explore a new methodology for improving the quality of the product or developing more products which can increase the sales of the organization and also help in increasing the profits (Charles, 2012). The administration can, on the other hand, help the management in giving more accurate reports based on the activities of the company to the management which would help them in making more accurate decisions regarding the ongoing or upcoming process of the organization. This would help the organization to become more competitive in the market as it will be in a better position than others to take decision earlier and faster. 1(ii) Only increasing the production quantity of an organization will not help it in increasing the profits or making a huge change in the quantity being sold. In todays competitive environment, each organization is trying to install improved system whether it is related to technology or computer related software to increase productivity with the existing labor being employed. However, the major concern is quality (Robinson Last, 2009). Only quantity is not going to solve the problem, quality plays an important role. Since multiple products are available in the market with almost same features and the customers are almost paying the same price for the same, the only factor which can be distinguished is quality. Hence with the decisions of the management, when the management is investing so much in technology it would definitely need the result with an improved quality. When the work is automated, employees have more time with them to invest in the work which they previously used to manual ly; hence quality reports or quality products become a prerequisite for any organization because it will help the organization to stand in a different position than others in the competitive market (Shim Siegel, 2009). 1(iii) Competition in todays world is a major challenge for anybody whether it is an individual or an organization. Everybody is trying to be first. Nobody has the time to wait and watch. Hence with the faster process being implemented and with the shortage of time there is no time left nor in the hands of the labor neither in the hands of the people handling administration to just wait and look into the work done by them. Hence the chances of errors are being increased thoroughly. With the lesser time in hand and the customized technology of which no check can be maintained it obviously means that there are higher chances of mistakes which can be made. Since there is nobody to check the data being entered or in the middle of the process when the data is being processed, with the end result there is always a higher chance that the output received may be wrong or might be containing an error in it (Larry Christopher, 2012). Though the need of the hour is an increase in the speed, however, t he practical difficulties should be understood by the management and just not goes by the vague picture of technology. 2. The key reason behind the ascertainment of the managers bonus based on generated profit is that this can possess a direct influence on their performance. In other words, if the managers of a company have performed really well, and if the companys performance is weak, then the bonus payable to the managers will have to be disregarded as weak company performance clearly signifies low generated profits. Although the company establishes such systems to motivate their team, yet factors like the poor economy or massive competition can impede the attempts of managers. Furthermore, when the bonus is based on generated profits, prior preference is given to these profits and not the managers performance (Lanen et. al, 2008). This can result in the dissatisfaction of managers because the performance of the company is attributable only to its generated net profits. Considering the given case, it is observable that the manager of Adelaide has failed to provide necessary efforts and as a result , the company could not generate profit, and therefore no bonus. On the other hand, the manager of Brisbane observes growth in the net profit and hence becomes eligible for the bonus. This clearly indicates that the role of a manager towards the companys net profit depends on various factors, and if such factors are not considered aligned properly, then their attempts can go wasted. In other words, a manager may be able to work efficiently but there are several other factors, which determine the net profits of a company and these factors can diminish or waste the managers attempts (Venanci, 2012). Therefore, there must be a contradistinction between the managers performance and the profits of a company. On a whole, such concept of bonus based on profit can clearly generate several problems within the company and can result in the dissatisfaction of managers. 3. Favorable material variance suggests cost efficiency procurement by a company. Thus, in relation to the given case, such variance depicts that Dream Housing Limited has earned profits in excess of what was expected or incurred lesser expenses than what was expected (Needles, 2011). A favorable variance for revenues can be assessed to ascertain whether it was the outcome of higher than planned greater quantities, selling prices, or a more favorable combination of products sold. In the same way, a favorable material variance for expenses can be evaluated to recognize the cause of lesser expenses. An unfavorable labor variance implies that the cost of labor was more than what was expected. Such information is very beneficial in the planning procedure of the development of future budget periods, as well as providing a feedback on the major loopholes in the business giving rise to such unfavorable labor variance, and initiating corrective measures as a whole (Horngren Frost, 2012). In the evaluation of production costs and variances, management can get ample amount of relevant details that can play a key role in enhancing the operational effectiveness of the company. In other words, management can understand the production tendencies and various procedures applied by the company in the efficient utilization of its resources (Horngren Frost, 2012). Besides, variances are a beneficial process through which management can understand whether the company has operated effectively or not. In other words, the adverse variance can necessitate corrective measures by the company while a positive or favorable variance can portray efficient functioning. Thus, whether a company is performing accordingly or not, variances can play a key role and be of immense help to the management. 4. Display of variable cost Details Budget A Budget B Variable overhead Rs. 60000 Rs. 75000 Variable selling and administrative expense Rs. 60000 Rs. 60000 Direct Materials Rs. 260,000 Rs. 3,60,000 Direct Labor Rs. 40,000 Rs.60,000 Total (I) Rs. 4,20,000 Rs. 5,55,000 Units in total (II) 20000 30000 per unit cost ( I/II) Rs. 21 per unit Rs. 18.50 per unit As seen by the computation that the ascertainment of variable cost by the senior management is lower while that of the lower and middle management is higher. Moreover, the expenses pertaining to selling and administration display the same. 4 (ii) from the presentation and preparation of Budget A it is indicated that bottom-up approach I followed by the lower and middle management. Such evidence indicates that the management is at home with the cost (internal) and conflicts. As the operational activities are taken care of by the lower and middle management, therefore the material cost stands on a higher basis. The material cost is forecasted by them and they are solely responsible for the increase in cost if it happens in future. For this purpose, they consider the variances and differences. It is imperative for the organization to have costs on the greater side so that a fuller development takes place. 4 (iii). The superior level of management purposes to increase the profit amount and sales of a company. Furthermore, such management is well known to the arrangement of labor, completion of work, obtaining of material, and grouping of other variable overheads, but in the budget procedure, only the unfavorable situations are evaluated. This signifies that the management possesses a well-defined explanation of the financial environment as it focuses on a greater prospect. Furthermore, it is also well known of how much products are saleable in the market and their cost of production. This offers an effective conception that the management pursues an effective understanding of sale of products (Needles Powers, 2013). 4 (iv) It is the primary goal of an organization to operate in such a way that has the potential to garner maximum profits by establishing an alliance betwixt the middle and lower level of management (Spiceland et. al, 2011). Both these level of management can play a significant role in the process of production. The top management estimates production at Rs 18.5 per unit while the lower level of management reports at Rs 21 per unit. This indicates that such lower management must concentrate on production enhancement of Rs 2.5 per unit. Moreover, the top management anticipates at 30000, which indicates gained profits. Thus, it is clear that coordination betwixt management results in profitable opportunities. References Charles, T.S 2012, Cost Accounting: A Managerial Emphasis, Pearson Education Horngren, C T Foster, G 2008, Cost Accounting: A Managerial Emphasis: United States Edition Lanen, W. N., Anderson, S Maher, M. W 2008. Fundamentals of cost accounting, NY: Hang Loose press. Needles, S. C 2011, Managerial Accounting, Nason , USA: South-Western Cengage Learning . Needles, B. E. Powers, M 2013, Principles of Financial Accounting. New York Press Robinson, M., Last, D 2009, Budgetary Control Model: The Process of Translation. Accounting, Organization, and Society, NY Press Shim, J. K Siegel, J G 2009, Modern Cost Management and Analysis, Barron's Education Series Spiceland, J., Thomas, W. and Herrmann, D 2011, Financial accounting, New York: McGraw-Hill/Irwin University Press Vanderbeck, E J 2013, Principles of Cost Accounting, Oxford university press Venanci, D 2012, Financial Performance Measures and Value Creation , State of art . New York: Springer. Larry M. W Christopher J. 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