Accounting

Accounting Assignment

Impediments to effective budgeting

Major impediments to effective budgeting

Budget is a deeply done analysis of future expense and the future earnings of an individual, organization or a Country. In other words it can be said that budgeting is an educated guess of future expenses and incomes (www.civicus.org). Budgeting can be considered as a backbone in future planning of any organization weather it is a profit making organization or a nonprofit organization. If the budgeting is done accurately, the organization gets definite benefits. If the budget is not designed accurately it fails to comply with the future situation this can lead an organization to plenty of problems. There are many problems which arise with budgeting. These problems can be either internal problems or they can be external problems. While taking in to account the budgeting process the most common obstacle which occurs is of inflation. Inflation is such an element which is constantly rising. Especially the global recession had changed the status completely in several economies. Due to the constant rise in inflation it is actually difficult to design or prepare a realistic budget. The other issue faced while budgeting process is the issue of being realistic while calculating expenses and income. There is always a high possibility while budgeting when you calculate your expenses that how much you are going to spend in the coming month you can go wrong every time. This can be a de-motivating factor on occasion when one knows that he will be wrong he give up making accurate estimations. The third issue which can be taken into account is the factor of uncertainty in future. The information available regarding future is limited considering the fact that there are plenty of uncertainties which can be faced by a business organization. Again this uncertainty factor can be either external or internal.

Product Costing

Allocation of cost to Product Costing

Product costing is a kind of cost which is linked to the units of product. Relevance of allocated cost in product costing decisions is vital. The reason is there are plenty of indirect costs which take place in a production process. The fact is that these indirect costs such as administrative cost, training cost, traveling cost, computer usage cost, security of the factory cost and cafeteria cost are incurred only because of the production process. If there is no production these costs will not exist. The decision of allocating these costs to product costing is valid because in this way it helps to indentify that how these activities or these costs have benefited the organization. Transfer Pricing

Advantages and Disadvantages

Transfer pricing helps in developing healthy divisional competition. It also helps the divisions to communicate about organization's objectives and about achieving the goals. Other than this Transfer price will the organization to keep re-checking the prices offered by suppliers. This method helps the organization as a whole and on divisional basis to increase their productivity. Another benefit of transfer pricing is that it helps the company to optimize the allocation of all ...