Respond to the following questions (25 points):
1. Which publicly traded company will you use for the final project?
2. Based on publicly available information for your company, can you tell if the company uses an activity-based costing system? What advantages do you think an activity based costing system provides or would provide (if any) for this company? Explain your answer based on the characteristics of activity-based costing systems and what you have learned about your company.
3. Identify any ethical issues that might arise in this organization.
4. Consider the budgeting needs of the organization you’ve chosen. Though the company’s budget may not be publicly available, answer the following questions based on available information and your knowledge of budgets.
List three kinds of budgets you would prepare as part of an operating budget for the organization. Explain why you think each of the budgets would be included in the company’s operating budget.
Please see prior post.
An old post
1. To determine which publicly traded company to use for the final project, you can start by conducting research on various companies that you find interesting or relevant to your project requirements. Consider factors such as industry, size, financial performance, market presence, and any other criteria important to your project. Websites like Yahoo Finance, Google Finance, and Bloomberg can provide you with comprehensive information about publicly traded companies. Additionally, you can look for news articles, analyst reports, and financial filings such as annual reports or quarterly earnings reports. These sources should give you a good understanding of the companies you are considering.
2. To determine if the company you have chosen uses an activity-based costing (ABC) system, you can again gather information from sources like the company's annual reports or financial filings. Look for any mention of ABC or cost allocation methodologies. Additionally, you can explore the company's website or press releases, as they may provide insights into the company's costing practices.
Advantages of an activity-based costing system for a company include:
- Improved cost accuracy: ABC provides more precise cost allocation by assigning overhead costs based on the actual activities that drive those costs, rather than using traditional methods that may assign costs based solely on volume measures like direct labor hours or machine hours.
- Enhanced decision-making: ABC can help managers make more informed decisions by providing a clearer picture of the true costs of different products, services, or activities. This can facilitate better pricing strategies, product mix decisions, and resource allocation.
- Identification of cost drivers: ABC helps identify the activities that consume resources and drive costs within the organization. By understanding these cost drivers, management can focus on improving efficiency and effectiveness in those areas, potentially leading to cost savings.
3. To identify ethical issues that might arise in the organization, you can analyze the company's operations and behavior from an ethical standpoint. Look for any past controversies or legal issues the company may have been involved in, such as breaches of customer privacy, environmental violations, labor disputes, or unethical business practices. You can find information on these ethical issues from news articles, regulatory reports, or independent assessments by organizations like Transparency International or the Ethical Trading Initiative. Additionally, you could examine the company's code of conduct, corporate social responsibility reports, or sustainability initiatives, as they can provide insights into the company's ethical stance.
4. While the company's budget may not be publicly available, you can still consider the different types of budgets that would typically be included in an operating budget for most organizations.
Three kinds of budgets that are commonly part of an operating budget include:
- Sales Budget: This budget forecasts the revenue the company expects to generate from its sales activities over a specific period. It is typically based on sales projections, historical data, market trends, and other relevant factors. The sales budget acts as a foundation for other budgets in the operating budget, as it affects production, purchasing, and other cost-related activities.
- Production Budget: This budget outlines the amount and timing of production for the budget period. It is derived from the sales budget and considers factors such as inventory levels, production capacity, and desired ending inventories. The production budget helps determine resource requirements, labor needs, and other production-related costs.
- Expense Budget: This budget identifies and forecasts the various operational expenses that the company expects to incur during the budget period. It includes expenses such as rent, utilities, salaries, marketing expenses, and any other costs necessary for the daily operations of the organization. The expense budget ensures that the company plans and allocates funds appropriately for these essential expenses.
These three budgets are essential components of an operating budget because they help establish financial targets, align different functions within the organization, and guide resource allocation decisions.