Free Worplestrop Partnership Essay Sample
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This report is prepared for the partners of the organization:”Worplestrop Partnership”. The focus of the partnership is to enable the organization formulate a proper costing and information systems through evaluation in order to be able to manage the organization effectively. The initiative would also emphasize a framework of the product and the budgetary control methodologies and systems feasible in the organization alongside recommending the most effective methodologies cited in the test. The report will provide detailed useful information concerning management decision-making in all levels. It will also give samples of routine and “on-demand” report for use by employees who may require using them. This will provide at least two sample reports from each of the three decision-making levels highlighting on vital decisions made at each of the three levels. There is an introduction that outlines the setback being resolved in the report and why it is essential. The report constitutes the body which explains and gives full details on all of topics cited above. This goes the general overview of the report on the contents and implications. It is remarkably detailed and offers some short reflex of the report. The last paragraph is about recommendations of the report writer. It will explain what possible courses of action as regarding the report.
This report is meant to examine the costs and budgetary information systems that are required of proper management of the organization. This problem is fundamental in that it gives various costing systems that may be useful to the organization. It also cites different budgetary information schemes that can be influenced by the organization in ensuring that their data, for instance, is properly handled. The report recommends the best systems to use to ensure efficiency in the organization.
The costing criteria is an information system that is employed in measuring the product costs. It should not be wasteful but rather it should minimize costs to as little as possible. The organization can use any of the following costing systems:
Traditional costing system that uses a single volume-based cost is determinant. Most often this method gives inaccurate products costs because it assigns product costs on the basis their usage of direct labor. It assumes that products cause costs and therefore every time a product is processed, a cost is assumed to have been simultaneously incurred. The constraint of this system is that for most overhead activities, proportions of activity actually consumed of the product do not correspond to any cost-motivating factor. (Marian 2010)
Activity based costing which views activities as the most vital causes of costs. It assumes that activities cause costs and also costs objects induce demand for the activities. It improves control of overheads and it is supple enough to incorporate all stages of production in determining costs of various products (Susan 2010). This is because it targets on activities as the main cost objects. There are three methods of activity based costing focusing on product costing, process costing or presentation evaluation and chain costing.
I would recommend that the firm uses the activity based system of costing since it is wider in coverage than the traditional costing system. Activity based costing system makes use of several indirect pools of costs since it focuses on many areas of costing.
Budgetary control methodologies may be as a strong tool by the organization to maximize profits (Steven 2010). The management should aim at proper planning and control in order make their profit margins higher. It is used to arrange and control activities in the running of the business. It can be defined as matching the incomes and expenditures estimates of an organization over one financial year. Methodologies of budgeting include:
Traditional incremental budgeting where current year’s estimates are adjustments of the previous year’s estimates. These adjustments arise from the business environment for instance technological changes, growth rates and inflation.
Priority based budgeting where budgetary allocations favor the most beneficial activities of the business. It channels resources to the right functions and seeks to establish most resources to flow to the business activities. It ensures allocation of resources in the most proficient way so that the firm performs only the most viable projects (Steven 2010).
Zero based budgeting which usually does not rely on history thus current year’s income and expenditure estimates do not depend on the preceding year’s estimates. It is more accurate than traditional incremental method since budget in one year is not compared or affected by the budget of any other year.
I would propose the use of priority based budgeting methodology since it favors the most beneficial activities in its allocation. It puts into consideration the uses of each activity and its significance to the organization. The activity of most importance to the organization is given the highest resource allocation.
A costing system is a type of information system. It contains many components some of which are: data, software, hardware and internal controls. Data refers to all financial information concerning the transactions of the organization which includes tax information, sales orders, and sales analysis reports just to mention. This data can be utilized to prepare financial documents of the organization. However this data must be complete for it to be used this mode.
Software is a computer program that is used to keep, remove, process and perform evaluation of the financial data. In effective software should be capable of producing most valuable output, it should be reliable to store data and retrieve it without loss and it should be safe in that data store in these programs should not allow perusal by other persons except the intended group of people. Security may be guaranteed by the use of passwords.
The hardware or information technology infrastructure is used to operate the software. This may include printers, servers, personal computers, storage space and back-up system. The hardware selected should be compatible to the software applied in the organization. Hardware should have replacing, upgrading, maintaining and servicing components.
Use of internal controls is security measures for example passwords which permits only authorized computer access. Operational decisions usually determine how business activities are actually done, for instance, the model to use to regulate quality of products in an organization, mode of delivery, specifying channels in which to direct money of the organization among others. These decisions are made when urgency is needed to execute an activity thus not giving room for consultations (Judy 1990).
Tactical decision making is the basis for long-term goals and they are made in the ordinary operations of the business. They involve enforcing various core practices that assess the achievement of the overall goals of the organization. (Peter 2006). For instance, the corporate may be intending to purchase a computer in the near future. This is termed as the tactical action specifically done to achieve that goal.
Strategic resolution on the other hand deals with visions of the business which are actually long-term. These decisions usually deal with factors in the external surroundings of the business. They answer questions like what direction the business is moving to, what operations the organization is formed to take on in, what it stands for and its identity in the society. It is also a statement to the kind of business it actually is. These decisions account for improvements and growth in the organization.
The decisions reached by the organization are dependent on the three levels of decision skills. There are various reports from each of the levels: On strategic decision making the report will be on the kind of competition the organization faces whether stiff, perfect competition or monopoly (Judy 1990). The organization will decide on and provide information concerning the type of competition for the customers. This decision helps even the prospective customer to know how competitive it is. This section questions on the vision of the firm. This decision of getting a vision is very beneficial in continuity of the of the organization.
Operational decisions making the customers’ needs to know for example, how the organization spends its money (Peter 2006). This enables employees to test the efficiency and effectiveness of the organization. The outside environment is also able to monitor the mode of quality control of the products and services provided by the business. They also require to know how the business serves their clients. This helps to evaluate performance of the organization regarding the customers’ feed-backs on the operations.
Tactical decision making often answers the question how? In what marketing strategies, for instance, the organization requires to put in place in order to attain high stocks turn-over. (David 2006). The organization also is also concerned with how to motivate its employees and they need to know this. Use of efficient marketing strategies boosts the reputation of the firm and more employees seek to be associated with it in employment. In the long-run the organization grows. The clients would desire to know the mode of motivating employees of this organization to join it or not. They seek to know the mode of processing its inputs which may also be a way of examining it.
This report has intensively provided different systems of costing and budgetary control defining and explaining how they are used. It has highlighted on the three stages of decision making in a firm by the managers and what report employees should get about the organization upon joining it. This information is also quite invaluable for the partners as owners of the organization. It has also given various decisions that managers of this organization need to take including concerning development of the cost and information systems. The report has illustrated on the reason why each decision is made or what causes the making of various decisions made in the firm. This concurs with the three levels of decision-making that is tactical, operational and strategic decision making. It highlights on different information accounting systems and their some of its components are data, software, hardware and internal controls while giving their effectiveness in an organization. All this is useful in enabling the organization to formulate an efficient costing and information system as recommended therein.
In accordance to this report, the following recommendations should be considered:
The organization should adopt costing system in its operations. This is because this model has a broader way of determining costs of various products of the organization. This will be effective in costing the information systems that the firm wishes to occur since it considers all the activities that the system will execute.
Adopt the priority based budgetary system in the organization. This is because this system gives priority to the most beneficial activity of product in the organization. This will allow the company to allocate finances for the acquisition of the costing and information systems since they are immensely useful for proper management of the organization.
Acquire all the necessary accounting information systems for the business to enhance proper storage, processing, retrieval and monitoring of the organization’s data. This will reduce loss of the data or data getting into the wrong hands and being accessed by other parties in the organization other than the intended.