Accumulating too much commercial debt can be crippling for your business organization and may even lead to bankruptcy. Instead of welcoming financial ruin, you should always try your best to finesse your business finances so that you don’t let debts mar the growth of your organization. Even though there are some business organizations that take […]
Static budgets are prepared for a single, planned level of activity. Performance evaluation is difficult when actual activity differs from the planned level of activity.
Budgeting is complex comprising inflow and outflow items. As in a market driven economy sales play the determinative role for the survival of a company, budget will also start from sales planning. Accuracy is important because sales are an important base for calculation of other budget components.
Budget Definition and its Purpose Budget a detailed plan, expressed in quantitative terms, that specifies how resources will be acquired and used during a specified period of time.
The most popular and traditional pricing strategy in Moldova is price setting based on Total Cost. Since resources were spent on manufacturing, the producer considers that price should include incurred costs plus a standard profit margin. The traditional pricing approach consists of adding a standard fixed extra charge (e.g. +20% + 25%), determined in accordance […]
Product Portfolio Optimization (PPO) includes the following elements: — Determination of the rational composition of the product portfolio; — Analysis of customers demand for individual products; — Consideration of limits on production capacity, working capital, and customer demand;
The Cost of Goods Sold account, found on the Income Statement, indicates the costs associated with the quantity of units sold during the period. The Balance Sheet account Inventory represents the costs associated with the quantity of unsold units at the end of a period.
The Cost-Volume-Profit analysis is a tool to visualize relationships between revenue, costs, and income. It is the central element of the Variable Costing Model. The Cost-Volume-Profit Chart demonstrates the relationship between Volume and Costs, and therefore, Income.
Costs should be divided into two basic categories: — Fixed or Variable — depending on whether the costs change with variations in production volume;
Cost Management means (1) knowledge of where, when and what company resources are used, (2) forecast of where, for what and what amount of additional financial resources are necessary, and (3) ability to ensure the highest possible efficiency level of resource use. Cost Management is the ability to save resources and maximize their efficiency.
