Case study: on costing systems and cost control

Lorson Manufacturing caller-up Case Study Executive Summary Lorson Manufacturing Company is actively seeking to implement tighter be influence measures in an industry that is largely governed by prices. The purpose of this plow is to front and analyse a new macrocosm form proposed by Mr. Jan Lorson for the valve section of the company, and comp atomic lean 18 it to the be body, in gear up to judge whether to go forward with its implementation. The digest uses a cast of examples to highlight the significant differences in be between the ii systems, and the impact that these variances have on the business. It is cogitate that the new system does provide a definite avail over the existing one, based on the benefits perceived from its launch versus the implementation cost envisaged. The benefits include more(prenominal) effective cost control and action measurement, precise stock valuation and more accurate gainfulness analysis. This would result in better decision-making on issues think to headstone product markets, profit margins, product introductions and deletions, as soundly as cost reduction. General advice is also provided as to the finale to which further disruption fine-tune of the department into a large number of cost centres would be useful, and the reasons behind objections by members of staff to the new proposal.

Analysis of exist Costing System The flow rate system uses a single bonnie hourly commission to allocate labour and overhead costs to the valve department. This rate is being calculated on a periodic basis by dividing the sum o f the accumulated labour charges and departm! ent overheads by the number of labour hours worked. Job costs are determined by multiplying this single rate by the clock time each job spends in the department. Data for the calculations are derived as follows: * original labour hours from timesheets. Labour hours are actually put down separately... If you want to get a full essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper