The Engineers Concern about the Overhead Rate Going Up and Up in Assignment

The Engineers Concern about the Overhead Rate Going Up and Up in Managerial Accounting - Assignment Example A single hour of the labor carries an additional burden amount of $1,500 (Wagener, 2010). Moreover, the underlying labor cost contributes up to five percent of the prevailing cost of the product thus making it the main propeller of the all the cost of Fabricator Inc. Since one cost is utilized as the main pricing standard and in the case of the Fabricator Inc they use labor, their main concern that the underlying set standard might be cumbersome to accomplish (Warren, Reeve, Duchac, & Warren, 2012). Therefore, lost labor in its entity is inadequacies as an example is depicted by the prevailing management as either poor pricing or production (Warren, Reeve, Duchac, & Warren, 2012). Even though overhead is fundamental and normally demanded the production process, bid pricing that is mainly driven by labor as the standard would eventually be more expensive. The most effective means would be utilizing activity-based costing because Fabricator Inc mainly specializes in executing underlying customer orders and every order is unique and possesses different requirement. Utilizing single overhead rate is thus not acceptable (Wagener, 2010). The engineer has also mentioned that the standard was being worked around by the corresponding design engineering thus rendering the prevailing standard utilized by Fabricator Inc unreliable (Kaplan & Anderson, 2007). The engineer meant that high job cost standard for the project biding might infrequent the prevailing project managers mandated by pricing a job forbid when he said that a relatively large overhead rate is a disadvantage to the company in terms of placing bids and seeking new business (Lal & Srivastava, 2009). Any errors in the estimate for the labor hours would definitely possess massive implications in the operation of the company (Warren, Reeve, Duchac, & Warren, 2012). Moreover, miscalculation or rather a failure by few hours  could definitely imply that the company would either be losing the bid or correspondingly be losing money in case the job is acquired.  

Thornton's Strategic Choices Essay Example | Topics and Well Written Essays - 4500 words

Thornton's Strategic Choices - Essay Example 18 References 21 (Words 4997) 1. Introduction The identification of successful strategies is a key challenge for managers worldwide. Usually, the ability of managers to locate strategies that are able to respond to organizational needs is differentiated, according to the personal skills and perceptions. Also, each organization’s external environment is likely to affect, more or less, the progress of strategies of the particular organization. In this context, the establishment of an effective strategic management framework can help an organization to increase its efficiencies and stabilize its market position. Kew and Stredwick (2005) note that three are the key elements of all strategic management frameworks: ‘the strategic analysis, the strategic choice and the strategic implementation’ (Kew and Stredwick 2005, p.205). The first of these elements, i.e. the strategic analysis addresses the following two issues: ‘which is the organization’s current pos ition and where the organization wants to go’ (Kew and Stredwick 2005, p.205). At the next level, the strategic choice refers to the need for the identification of appropriate strategic options, as appropriate, for responding to the organization’s needs, as they have been identified through the strategic analysis process (Kew and Stredwick 2005). ... In 2011, the firm’s employees were estimated to 4,205 (Thornton, company website, investor relations 2012). The firm’s turnover in 2011 was estimated to ?218.26m, slightly increased to the turnover of 2010, which was estimated to ?214.55m (Thornton, company website, investor relations/ financial summary 2012). The firm’s performance during the last five years indicates that the organization has been able to face effectively the market challenges. Indeed, the turnover of the firm from 2007 up to 2011 has been changed, as presented in the table in Figure 1 below. Turnover of Thornton from 2007 to 2011 2007 ?185.99m 2008 ?208.12m 2009 ?214.80m 2010 ?214.55m 2011 ?218.26m Figure 1 - Turnover of Thornton from 2007 to 2011 (Source: company website, investor relations/ financial summary 2012) According to the figures presented in Figure 1 below, the organization has managed to achieve a continuous growth. However, if reviewed more carefully, the organization’s pe rformance has not been improved the last five years. More specifically, the organization’s profits have been significantly decreased in 2011, if compared to 2007, as also revealed through the table in Figure 2 below. Profits of Thornton from 2007 to 2011 2007 ?5.21m 2008 ?6.07m 2009 ?3.60m 2010 ?4.35m 2011 -?0.25m Figure 2 – Profits (after tax) of Thornton from 2007 to 2011 (Source: company website, investor relations/ financial summary 2012) At the same time, the number of the organization’s employees has been decreased in 2011, as compared to 2010; in 2010 the firm’s employees were 4,377 while in 2011 they were reduced to 4,205 (Thornton, company website, investor relations 2012). Also, problems in regard to the alignment