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With the exception of $4,400 per month depreciation expenses, all operating expenses and purchase are on open account and are paid in the month following their incurrence. Co. operates two plants that produce and sell a single product. Shown below are the operating results of both plants during the current year, the company’s first year of operations.

In terms of strategic management, middle level managers draw attention as a segment which plays a role in competitive strategies and tries to be more effective than the formation of basic strategies. In other words, middle level managers are the new generation strategists who are stuck between competition strategies and operational efficiency. There are three different definitions / descriptions for the middle level managers. All of them, though meaningful, do not describe accurately the middle level managers. To increase the installed capacity of the factory to 12,000 units by adding plant and machinery in department at a capital cost of Rs.4crore. Any balance surplus capacity in other departments, after meeting the increased volume, to be hired out as per alternative I.

Such a manager decides on the production policies, prices, and marketing strategies. He is concerned with increasing the centre’s revenues by increasing production and/or improving distribution methods. However, such a manager does not take decisions or have control over the investment in the centre’s assets. He may make proposals for investment in the division, but the decisions about it are normally taken by the pgdm colleges in ahmedabad. A typical example of a profit centre is a division of the company that produces and undertakes marketing of different products. Thus, it is concerned both with the formation of a production strategy as well as marketing strategy.

A quite high number of the organizational managements started considering the middle level managers as an important cost factor for the organization. Frequently the removal of middle level managers under the name of restructuring or cost reduction became an important objective for the organization. Hence, several middle level managers’ positions had fallen victim to the flattening of hierarchies resulting from restructurings. Further, technology can replace several roles such as communicating strategy, performance monitoring, and providing feedback, traditionally the field of the middle level managers. Therefore, middle level managers are under pressure to justify their assets and values in the modern organizations.

Implicit Costs- These costs do not involve any immediate cash payment. Explicit Costs-These costs are also known as out-of-pocket costs and refer to costs involving immediate payment of cash. Salaries, wages, postage and telegram, printing and stationery, interest on loan etc. are some examples of explicit costs involving immediate cash payment. D) Responsibility for developing markets and vendors for the organization.

Although fixed within a relevant range of activity level but are relevant to a decision making when it is avoidable. Is normally incurred at a given level of output in the conditions in which that level of output is achieved. If financial records can yield all the necessary costing information, it is not necessary to have a separate costing department. Method of costing is used when it is desired to ascertain the cost of carrying out an operation in a department.

Overview of Cost – Corporate and Management Accounting MCQs

Third, middle level managers are trainers, since they have one to one contact with their employees. This way, they can guide the employees on an individual level and help each employee to overcome the barriers during the change. Middle level managers with the qualities of Janus do not exude the charisma of a ‘heroic’ leader’ but they are quietly to be self-confident, soft spoken, and very approachable. In the emergency situations, they succeed by keeping this active double gaze, first on their employees. The remoteness makes it easy for people to hide, and shy away. But then again, anyone has got different circumstances, so they have to be more flexible around this.

Middle level managers with the qualities of Janus increase the frequency during emergency situations which they hold for regular catch ups with the senior management. This ensures that they and the senior management both are at the same frequency, on the same page, and have the same temperature check while getting the raw message. This helps them to respond quickly to concerns from the bottom. The use of emotional intelligence can also help middle managers to solve complex problems within the organization, since it allows a different view on the situation as by only rational thinking. In general, the emotional intelligence can have an impact on the success of the organization, as far as it and rational thinking are being used equally while taking decisions and evaluating situations and people.

• Is process whereby company make assessment of particular job to know how worth is it.
• Cost which have already been incurred and which can not be reversed.
• Pet owners spend in excess of $20 billion annually industry wide on animal products, food and services.
• After conducting an informal survey of banks and other local business that offered money order services, Store 24 found most charging 99 cents for each money order transaction.
• For example, cost of direct material, cost of direct labour, etc.

S are accountable for ensuring that their cost centres function effectively and in line with the budget. Cost centres can include roles, like human resources or cleaning service, but they can be whole departments, marketing divisions, warranties and even the IT department. In activity level, technology, process or method of production, etc. Variable Costs– These costs tend to vary with the volume of activity. Any increase in the activity results in an increase in the variable cost and vice-versa. For example, cost of direct material, cost of direct labour, etc.

What is cost center profit center and investment center?

Every employee is to be aware of the fact, that the middle level manager has an essential role to fulfill. Ideally, this role is being described with the help of regular internal communications. Also, in some cases where a working level employee becomes middle level manager then there is frequently authority related issues arising and the manager in several cases lack authority and respect from co-employees. So it can be the case, that the instructions are neither accepted nor respected. Also, the relations with external people are quite important.

It is obvious, that they are conscious of the importance the middle management role contains, as they only make progress, when they do a good job. They are aware of the influence such a position can have and how exhausting and challenging work can be. Middle level managers are no longer being considered as instructors and sole knowledge carriers, but the manager of the information flow. They are responsible for a specific part of the organization and frequently positioned to force and realize changes in the department. Because of the changes towards an information society, the roles of the middle level managers now include planner, coordinator, leader, problem solver, and negotiator. For the accomplishment of these roles, certain skills and qualifications / competencies are needed in the middle level managers so that they can effectively perform these roles.

The assembly activity was further broken down for different product lines. It may be noted that some accountants do not use the term office cost at all. They prefer to use the term total cost after adding office and administration overheads and selling and distribution overheads to work cost. However, we have presumed that office and administration overheads exclusively relate to production. The selling and distribution overheads are inclusive of any office and administration overheads which may have been incurred in respect of sales.

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Its objective is to fulfill or exceed in a cost center, the manager has responsibility and authority for making decisions that affect targets while maintaining agreed revenue margins. Revenue facilities, expense facilities and revenue centers are parts of a system to manage and measure the efficiency of various items or departments of a business, according to Harvard Business School. The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied.

A https://1investing.in/ middle is a division or a branch of a company that is thought of to be a standalone entity. ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost. To calculate ROI, the benefit of an investment is divided by the cost of the investment. For the latest updates, news blogs, and articles related to micro, small and medium businesses , business tips, income tax, GST, salary, and accounting. Financial accountants collect the necessary information to submit before the authority for tax reporting and other organisations like the Securities and Exchange Commission.

• The activities or operation of each cost centre must he well defined and clearly identifiable.
• This level of management normally constitutes the thickest layer of managers in a traditional organization.
• Based on this information, calculate ROI and RI for both divisions for 20X1 and 20X2, using traceable profit.
• Decisions relating to investments corresponding to acquiring or disposing capital belongings are taken by the highest administration in corporate headquarters.
• Qualifications and leadership requirements – The leadership quality is indispensable for leading the people.

In each case, the percentage of loss is computed on the number of units entering the process concerned. Unit cost of a job is calculated.Unit cost of a process is calculated. There is normally no transfers from one job to another.Products move from one process to another. It has received an order for a new product which it is considering to manufacture. Mgt needs to first understand the costs to make and sell the S3 and CL5 lenses.

The company has the capacity to process 20,000 tons of cottonseed per year. CASE-1We have the following information regarding sales and cost structure of ABC Ltd. TDB has a 40,000-square-foot centralized baking commissary in downtown Kansas city that prepare 70% of the goodies sold. Except for slower summer months, the commissary runs 24 hours a day, seven days a week. Items consist of baked biscuits and carob-dipped goodies that can pack and ship well. Most trays hold 12 specialty biscuits each and are packed by hand.

Middle level managers see their career opportunities for getting promoted to senior management levels. Their present position allows them to gain experience in the field of leadership as well as active contribution to the success of the department. They already have the possibility to take decisions, to work on their leadership style, to encourage people, and to still pursue their own career, i.e. the promotion to the senior management position.

– the theoretical requirement regarding absolute control mustoften be compromised, since some degree of noncontrollability usually exists. – the manager is therefore usually held responsible for items over which that manager has relative control. – relative control means that the manager has control over most of thefactors that influence a given budget item. – the use of relative control as a basis for evaluation may lead tosome motivational problems, since managers may be evaluated on results that may not reflect the manager’s efforts or decisions. – most budget plans assign control on a relative basis in order todevelop and use segmental budgets.

From the perspective of the ‘function’, middle level management is defined as the coordination of the organizational daily routine activities with the activities of vertically related groups. Middle level managers are responsible for a sub-functional work flow of the department / division. They are to communicate effectively between senior management and the operating personnel.

It also describes how to act and handle matters outside the organization. The normal tasks done by the middle level managers involve the fine-tuning of the work realized by the operating personnel, as well as coordination of the project, briefing to the senior management. Coordination of all colleagues, organization of meetings, review of administrative processes within the organization, and establishment of new working processes are some of the tasks. More or less, some tasks are well known, others are not at all. Towards customers, the middle level managers also carry out an information brokerage, since they are the one responsible for the customer relationship management at a certain level.

This production plan results in Moline operating at capacity and Peoria operating at its normal volume . If you were able to reduce the production of one of the products in order to meet the demand for the others what would that product be? Assume that available direct labour hours represent the scarce resource which limits total output.