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Evaluation of overhead allocations

Article Abstract:

The experience of Simmonds Precision's Engine Systems Division (ESD) is used to illustrate the importance and value of developing cost accounting systems that capture product costs in a quickly changing environment. Both product line and cost center allocations allow for use of multiple bases, but they share the disadvantage of the amount of time needed to build and maintain cost information. Decisions on what type of allocations and bases a firm will use will vary, based on how management defines information types and the cost of the information. The base employed by ESD to allocate indirect costs is reviewed, with special emphasis on ESD's status as a government contractor.

Direct costing, Simmonds Precision Products Inc.

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Rx for better management: critical success factors

Article Abstract:

Hospital management accountants can control and manage costs more effectively by using the critical success factor approach. Managers identify goals and how those goals relate to the hospitals'. Once goals have been established, managers and management accountants can determine jointly the type of accounting information needed by and from the managers. Financial statements are not really useful for department managers, and may be misleading. The accounting report most frequently used by managers is the budget report that compares actual costs with budgeted costs; this comparison can be made more valuable by adjusting the budget to the level of volume attained.

Hospitals

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Competitor cost analysis at Caterpillar

Article Abstract:

Managerial accountants must be able to provide their companies with information about the costs and strategies of competing companies. Competitor cost analysis was an essential part of Caterpillar Inc's factory modernization program. The ideal competitor cost analysis should develop accurate product cost estimates based on the competitor's production costs, cost structure, and product line. Sources of information include sales literature, annual reports, and SEC reports. This information can be used to create cost estimates and aggregated product cost differences.

Competition (Economics), Caterpillar Inc., Business intelligence, Competitive intelligence

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