Cost Accounting Essay
1.Flexibility is said to be the hallmark of modern management accounting, whereas standardization and consistency describe financial accounting. Explain why the focus of those two accounting systems differs.
Financial accounting is more about the bigger picture—it evaluates the finances of the organization as a whole, using historical, quantitative, monetary, and factual data. It is more formal and requires the use of GAAP. The information financial accounting provides is more suitable for external users such as investors, creditors, and the SEC. Meanwhile, the information obtained from managerial accounting is more for internal users such as managers and employees. This type of accounting is focused on the parts of the organization to see how the operations of the organization help generate income (or create deficits). Additional data than the ones used in financial accounting are included (e.g., nonmonetary, qualitative, current as well as predictive), which are typically more informal. The users then utilize the information and review the cost benefits in order to make plans for the company’s future.
2.Why are legally binding cost accounting standards more critical for defense contractors than for other entities?
Defense contractors are subject to more critical standards due to government contracts, which are usually awarded on a low-bid basis. In order to generate comparable bids, standards are needed to establish uniformity and consistency. Without those legally binding standards, the bidding companies may include different costs in their bids, thus making it difficult if not impossible to compare their bids.
3.Why is a mission statement important to an organization?
A mission statement is a clear explanation of the organization’s purposes and aims as well as how it uniquely fulfills the customers’ needs with services and/or products. The statement helps the organization to formulate a strategy in meeting its objectives.
5.What is a core competency, and how do core competencies impact the feasible set of alternative organizational strategies?
A core competency is what an organization seeks to have, excelling at something that no other organization can do as well and gaining the ultimate competitive advantage over the other organizations.
If the organization does not possess a certain core competency that is needed for one of their strategies, then it would be difficult if not impossible for the organization to execute the strategy. Whatever plans an organization has, it should make sure that they have the appropriate set of core competencies in order to successfully carry out those plans. Otherwise, they would have to come up with a different strategy.
9.How does workplace diversity affect organizational culture? Include in your answer a discussion of both the potential benefits and the potential difficulties of hiring workers with diverse backgrounds.
Having workers with diverse backgrounds may result in dealing with communication issues, varying work ethics, having to accommodate the practices of different belief (e.g., holidays, times of prayers, special dietary restrictions, dress codes), changes in the trend of tardiness and absenteeism. The more diverse a workplace becomes, the more it needs to change the work culture in order to represent that diversity.
Having diversity in the workplace can be positive since it may lead to less prejudices, a better ability to cover the work schedules since not everyone celebrates the same holidays, and generating new ideas. On the other hand, diversity could cause difficulties such as varying speeds of the workers, complicated work schedules, and oppression of one particular group of people.
14.What ethical issues might affect a U.S. company considering opening a business in Venezuela?
Issues of corruption are much more common in Venezuela than the U.S. and this can affect the company’s business. Since Venezuela is not one of the countries that signed the Anti-Bribery Convention, the company has no assurance that the business or even the government practices over in Venezuela would be fair and honest. Having to deal with corruption on the business as well as the political levels on top of the cultural differences may be too much for the U.S. company to handle if it opened a business there.
Exercise 1-23: You are the manager of a small restaurant in your hometown. a.What information would you obtain for making the decision of whether to add quiche and rack of lamb to your menu?
I would look at how much it costs to make the quiche and the lamb, whether I have the core competency for making those foods, and the demographics of my hometown.
b.Why would each of the information items in (a) be significant?
I need to know whether or not I would be able to make profits from selling the quiche and lamb if the costs of making them are higher or lower than the potential income from selling them. If I can afford to buy the ingredients, it would not matter at all if I do not have a chef that is skilled in making the quiche or lamb. Selling subpar quiche or lamb would not benefit my business. Also, the reason why I need to know details about the people living in the area such as their race and cultures, average incomes, etc. is so that I can estimate how popular having those food items on my menu would be. If they would not be that popular with the locals, then I would not be able to sell enough to make a steady profit.