As a manufacturing company our Production Budget is fairly complicated, as we need to take into account multiple projects running at the same time with each having three stages of inventory accounts; raw materials, work in process (WIP) and finished goods (FG). This creates a large number of asset accounts that manufacturing needs to determine “transfers to” and “transfers from”. In our business we use dollar values in the calculation of these transfers (demand) rather than volume, as our products are very large (up to $25 million) and project durations are extensive (up to two years) in length.
Our finished goods inventory asset account demand is based on the “cost of goods sold” derived directly from the pro forma income statement. Our …show more content…
In my industry our projects have long lead times, which make it difficult to quickly adjust things based on KPI (key performance indicators). In contrast, a company that makes millions of individual units per day can identify changes in their KPI and make adjustments hour by hour if it is warranted in order to maintain their production schedules.
Costing methods allow management to understand their current state and make decisions regarding; manufacturing levels, pricing, investments, and even help them to develop strategies for dealing with competition. In manufacturing there are two approaches used commonly for costing; Process Costing (used in most high volume production) and Job Order Costing (used in customized manufacturing and small volume …show more content…
These reports are maintained by our cost accountant and are reviewed each week by the Project manager, Project Engineer and Operations Manager to verify project budgets and timelines. These reports are presented to the executive team on a monthly basis as part of an overall financial review of the company. As shown in these examples, costing, budgeting and quality control are three areas that I utilize managerial accounting in every day in my current position as the Operations Manager.
With the focus of Managerial Accounting being to identify, interpret, measure and communicate both information and data relevant to help the organization pursue and achieve its goals, you can see from these specific examples how it helps me to meet the expectations of my job. Cost Accounting goes beyond just the reporting of information and the collection of data, but it also helps me to make important (sometimes time sensitive) decisions that affect our profit margin and keep us competitive in a very tough
Our finished goods inventory asset account demand is based on the “cost of goods sold” derived directly from the pro forma income statement. Our …show more content…
In my industry our projects have long lead times, which make it difficult to quickly adjust things based on KPI (key performance indicators). In contrast, a company that makes millions of individual units per day can identify changes in their KPI and make adjustments hour by hour if it is warranted in order to maintain their production schedules.
Costing methods allow management to understand their current state and make decisions regarding; manufacturing levels, pricing, investments, and even help them to develop strategies for dealing with competition. In manufacturing there are two approaches used commonly for costing; Process Costing (used in most high volume production) and Job Order Costing (used in customized manufacturing and small volume …show more content…
These reports are maintained by our cost accountant and are reviewed each week by the Project manager, Project Engineer and Operations Manager to verify project budgets and timelines. These reports are presented to the executive team on a monthly basis as part of an overall financial review of the company. As shown in these examples, costing, budgeting and quality control are three areas that I utilize managerial accounting in every day in my current position as the Operations Manager.
With the focus of Managerial Accounting being to identify, interpret, measure and communicate both information and data relevant to help the organization pursue and achieve its goals, you can see from these specific examples how it helps me to meet the expectations of my job. Cost Accounting goes beyond just the reporting of information and the collection of data, but it also helps me to make important (sometimes time sensitive) decisions that affect our profit margin and keep us competitive in a very tough