AccountingManagement

Comparative Cost Advantage And Analytical Cost Data

Management needs systematic, comparative cost advantage or information as well as analytical cost and profit data to manage an enterprise. This information is needed to assist in ( analytical cost ):

Analytical Cost Data

The management of a business enterprise is based upon a structure of individuals that belong to one of three groups:

(1) the operating management group, consisting of foremen and supervisors;

(2)the middle management group, represented by department heads, divisional managers, and branch ‘managers; and

(3) the executive management consisting of the president, the executive vice-presidents and the executives, in charge of the various functions of, marketing, purchasing, engineering, manufacturing, finance and accounting.

The existence of these three levels suggests that management consists basically of people whose activities must be planned and controlled through top-level directives, decisions, and instructions. Plan and directives should be considered under the all-inclusive term “planning” and he continuous observation of the plans under “control”.

Planning refers to construction of an operating program, comprehensive enough to cover all phases of operations and detailed enough so that specific attention may be given to the program’s fulfillment in controllable segments. Control is that force which guides the business to the predetermined objective(s) by means of comparison of performance with predetermined policies and decisions. Planning is and remains basically an executive management attribute even though participation at all management levels is needed. The control phase reaches through all the levels of the management team.

Management needs systematic, comparative cost information as well as analytical cost and profit data to manage an enterprise. This information is needed to assist in( analytical cost ):

(1) setting the company’s profit goal by executive management,

(2) establishing departmental targets which direct middle and operating management toward the achievement of the final goal, (3) measuring and controlling departmental and functional activities with the aid of budgets and standards, and

(4) analyzing and deciding on adjustments and improvements to keep the entire organization moving forward in balance toward established profit and other company objectives. Comparative Cost Advantage And Analytical Cost Data can help the organization grow faster.

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