June 8, 2010 7 Comments
I didn’t make these, but Nida has kindly made a summary for software engineering and asked me to publish it, so here it is! Read more of this post
March 25, 2010 Leave a comment
Moving on from the last post, let’s talk more about how budgets work and what they’re made of.
Standard costs are the planned cost (per unit) of products or services produced. You can also have standard revenues that work the same way. Read more of this post
March 24, 2010 1 Comment
Preparing budgets is what happens right after making long term strategic plans. Budget adjustment sometimes occurs after variances are observed.
A budget is pretty much three smaller budgets that combine to make a ‘superbudget’ of sorts:
Budgeted balance sheet
Budgeted income statement
Budgeted cash flow statement
Budgets have 5 main benefits:
We’ll talk now about how a budget is made and then go through an example or two. Read more of this post
If you have a business you want to make sure that you price your products and services appropriately. Your prices should be consistent with the business strategy and also linked to the cost of producing the product or service.
Two pieces or terminology to remember:
You’ve probably heard of supply and demand before. The basic premise here with supply and demand is that if you sell lots of a product you can afford to reduce the price per unit, and conversely if your sales are low you’ll have to increase the price. Read more of this post
ABC stands for Activity Based Costing. It has a few benefits, such as:
It’s fairly simple to the more traditional costing methods we’ve looked at already, but with a key difference: ABC looks at activities as a way of accumulating costs, instead of the old method of using cost centres. So with ABC the costs will be driven by: Read more of this post
In previous posts we’ve addressed what full costing is and how overheads can be applied in different ways. Now it’s time to talk about how the overheads can be sorted into departments.
Think about a medium to large sized business. They are often separated into departments, for example, sales, customer service, manufacturing etc. So what if, when a product’s cost is calculated, the overheads were allocated depending on how long the product spends in a certain department?
Instead of departments, we’ll refer to the different business areas as cost centres. There can be two types of these: Read more of this post
March 14, 2010 Leave a comment
There are plenty of people who doubt that we live in a globalised society. There are 9 main points to their arguments. This post will outline each of the points in turn.
The most famous text to give this argument is ‘Globalization in Question‘ by Hirst and Thompson. One of their main points is that international trade has been around in history for a while and isn’t new. You might they say have a point. Spices and fabrics and things of that nature have been shipped all over the world for centuries. The banana was first brought to Britain in the 1800s. Read more of this post
March 13, 2010 Leave a comment
Globalisation (Note: You might see it spelt with a ‘Z’.. American spelling) is pretty much the spread of a uniformity that eliminates cultural nuances and creates a standardisation.
Think about 40 years ago. If you lived in the UK, were out and wanted a hamburger, the only available fast food chain was Wimpy, famed for it’s horribly named ‘Bender Burger’. But basically, that was the only place you could go. And it was innately British: The food came with a knife and fork, and on a plate. I wasn’t born back then but I can only assume it completed the British theme by having the food brought to you by a comically rude waiter who is inexplicably upper class. Basil Fawlty was probably involved. But what I’m trying to get at is that it was definitely a British thing. Read more of this post
February 23, 2010 2 Comments
In our list of ways to define cost, we’re onto number 3:
February 11, 2010 Leave a comment
If you have an activity, and it has high fixed costs compared to it’s variable costs, then that activity has high operating gearing.
When operating gearing (OG) is high, a small change in sales will have a much bigger effect on profit, so you can say that profits are more sensitive to activity volume when OG is high.