Business – Banking – Management – Marketing & Sales

Archives for the ‘Budgeting Methodology’ Category

Indirect cost traceability

Category: Budgeting Methodology

The indirect cost which a company has to spend to keep it’s operations going are no predetermined fatality and no legacy from the past. The expense of each indirect cost item should be justified through the indirect function it has been spent for.



Planned plant capacity utilization, variable and fixed cost

Category: Budgeting Methodology

When using quantities for cost indirect cost planning (i.e. in the example 36,000 machine hours for production activity 1, 90,000 m2 for production activity 2, 180,000 kg for production activity 3, 18,000 operator hours for production activity x., these quantities have to originate from the annual production programme.



The problem of indirect cost distribution – relating indirect functions to the productive tasks performed

Category: Budgeting Methodology

Indirect costs, independent from the purpose they serve, are incurred as types of cost such as salaries, salary related contributions, energy, communication, amortization, utilities, purchased services etc.



Direct labour budget

Category: Budgeting Methodology

The direct labour costs, as a principle, are to be developed on the basis of the individual products planned to be produced. They can be developed on the basis of the products planned to be sold if no change of work-in-progress or finished goods inventory is budgeted for the planning period.



Direct material budget

Category: Budgeting Methodology

The objective of the direct material budget is to determine what direct material costs need to be incurred by the company when realizing the planned production programme.



Example for a product price calculation using the indirect cost data developed

Category: Budgeting Methodology

The example illustrates the price calculation for a mechanical part which is machine worked on the machines of productive activity 1. The cost intensity is measured through machine hours (0.05 h per item).



Ability of the system to trace indirect cost to productive activities and vice versa

Category: Budgeting Methodology

The indirect costs which a company has to spend to keep its operation going are not a predestined fact and no legacy from the past.



Planned plant capacity utilization, variable and fixed cost

Category: Budgeting Methodology

When using quantities for indirect cost planning (i.e. in the example 36,000 machine hours for production activity 1, 9,000 machine hours for production activity 2, 180,000 m for production activity 3, 18,000 operator hours for production activity 4), these quantities have to originate from the annual production programme.



The problem of indirect cost allocation to products – selection of an adequate allocation base

Category: Budgeting Methodology

A cost calculation which aims to give management adequate information to act in the market economy (where the precise knowledge of product cost is essential), realizes this allocation by choosing allocation bases which as close as possible reflect the cost intensity of the processes and of the auxiliary services which they require.



The problem of indirect cost distribution – relating indirect functions to the productive tasks performed

Category: Budgeting Methodology

Indirect costs, independent from the purpose they serve, are incurred as types of cost i.e. salaries, salary related contributions, energy, communication, amortisation, utilities, purchased services etc. In total, 58 are listed as lines on the.