Value Engineering Management Executive Summery Construction Essay

Value Engineering Management Executive Summery Construction Essay Value Management is structured and systematic process of team based decision making and professional team may involve to the workshop by decision making as per the current situation, condition or issue. VE is a speculated cost control techniques performed by an independent group of experienced professionals. The technique involves an intensive, systematic and creative study to reduce cost while enhancing reliability and performance. Most of investors enthusiastic to have best value for their investment by implementing Value management/ engineering process, through life cycle of the projects. As a result of unstable world economy and political conditions, Al Maya Resident Complex project (Including with 25 no stories and car park in three story basement) client was unable to find necessary funds required for the project. Therefore the cost of construction should reduce as much as possible. Hence it is necessary to carry out a value engineering workshop to find out possible ways to reduce the cost of construction by maintaining the required level of quality, performance and functional requirement. ACKNOWLEDGMENT INTRODUCTION Value Management is well established methodology which can use for maximizing the value for money. Value management strategies can apply at any stage of the life cycle (project from inception to the demolition) of a project. By applying value management strategies since the conception stage of a project, the client will be able to achieve a better value for his investment (money) by providing required level of quality, performance and all necessary functions. The client can carry out Value management / engineering work shops while construction is ongoing also by considering market conditions, economy conditions, political conditions, environmental conditions etc to seek better value for money by finding alternative methods, do changes as necessary etc. MAIN BODY DISCUSSION What Is the Value Engineering/ Value Management? Concept of Value Engineering When study about concept of VE, Lawrence Miles who is the founder of VE in 1940s a purchase engineer with the  General Electric Company  (G. E. C). Miles observed that many of the alternates were providing equal or better performance at a lower cost and from this changed the first definition of value engineering, as per the article of WBDG National Institute of Building Sciences by Scott Cullen (12-15-2010). Value Management Process Value Management is structured and systematic process of team based decision making and professional team may involve to the workshop by decision making as per the current situation, condition or issue. There are few stages in decision making such as; Information phase. Objective phase. Functional analysis phase. Creativity phase. Evaluation phase. Development phase. Reporting and recommendation phase. What Is the different of VE and VM? VE Consider from a tactical point of view, VM consider from the strategic point of view. In simple terms VM address WHY? And VE address HOW? What Is the Value Engineering? The Value Engineering for Wastewater Treatment Works of USA- EPA, noted in it, VE is a speculated cost control techniques performed by an independent group of experienced professionals. The technique involves an intensive, systematic and creative study to reduce cost while enhancing reliability and performance. Why Is it used? To establish the best design alternatives for Projects. To reduce unnecessary cost on the Projects. To improve quality, increase reliability and availability, and customer satisfaction. To improve schedule. To reduce risk. To identify problems and develop recommended solutions. Generally value engineering process can be apply at any point/ phase in a project, However, usually if use in early stage of the project life cycle, will have sufficient benefits on investment. There are three main stages of VEs application, those are describing as below. Planning Phase Planning stage is pre-study preparation phase of VE; there are additional benefits to be resulted from a Value Engineering Workshop. Therefore independent team can be: Review the program. Perform a functional analysis of the facility. Obtain the owner/users definition of value. Define the key criteria and objectives for the project. Verify/validate the proposed program. Review master plan utility options, Offer alternative solutions. Verify if the budget is adequate. Graph showing the potential savings from VE applications Graph 1.1 VE application This graph shows very clear VE benefits of VE application furthermore. (Extracted from Value Engineering for Wastewater Treatment Works of USA- EPA) VE Workshop Phase This is the most important phase of the VE process, generally address as VE workshop, required at least one workshop, typically 40- hour workshop session. As well as, client and designer whom they are decide the location as convenient of them. The first step is prepare of agenda including; Introduction, Briefing of value engineering, Presentation of Project design by project designer, Outline of the project Constrains, Question by VE team members for the designer, Methodology and Approach There are particular identify five-step during the actual Workshop of job plan of the VE study, as prescribed by article of Value Engineering; by Scott Cullen in WDBG program. Information Phase The Value management facilitator gives brief explanation to all participants about the value management process, project and study objectives; roles and rules of the exercise. Information about the project objectives, critical issues and constraints identified at the Strategic Diagnosis meeting, etc. Speculation (Creative) Phase Collecting of creativity ideas from each team member and analyze them to identify which idea is worthy, which one should improve to use, which one not worthy or additional study required to evaluate, etc. Judgment (Evaluation) Phase By evaluating all creativity ideas with cost benefits etc the decision making team will take the final decision about each idea / proposal to incorporate to the final report. Development Phase (Value Management Proposals) In this phase VE team prepare alternative designs with capital and life cycle cost comparison of original design and proposed alternative. And all recommendation supplements with written descriptions, sketches, basic technical information and cost summaries. Presentation Phase (Report/Oral Presentation) In this phase VE team present the summery of it s finding to the owner and designers, explaining the basic ideas of alternatives. Post Work shop phase The Value management Facilitator prepares and presents a report for key stake holders of the project which includes Summary of each phase, decisions made and actions to be taken, alternative methods and materials etc. which provide a complete audit trail. Then client and designers will consider the VE recommendations. Value Engineering Workshop Report of Al Maya Residential Complex Project Introduction This Dubai base multi story residential Complex project; Client is a one of the reputed experienced person in the Construction industry. According to the requirement of the client, he anticipate to reduce the unnecessary cost in the project if available, without touching or disturbing to the original quality, value of the project that planned at the began. This workshop was held in client office and all expenditure bared by client as own budget. Hence Value management and value engineering workshops are conducted according to the following principles: The workshop is held to reduce the cost of the project. All participants are stakeholder of the project. All participants take part and are able to put forward ideas and suggestions. The study was facilitated by Mr. Susan Ali and Mr. Smith De Silva of Sullivan of PMP Pty Ltd in accordance with the requirements of AS/NZS 4183:1994 (Value Management). Project details Type of the project Al Maya Resident Complex including with 25 no stories and car park in three story basement. Participants Client Mr./Ms Al Suwahdi Mohomad Civil Engineer (Contractor) ASCON Construction LLC Project Manager- ALEC Project Management LLC Architect- Design Group LLC MEP Designer- ASCON Construction LLC Quantity Surveyor- TEAMS Consultant LLC Safety Manger- ASCON Construction LLC Value Engineer Team- PMP Value Management LLC Location of the Project Zone 452/5, Block No.115, Emirate garden, Al Kahweenj, Dubai Duration of Construction 24 Months (18 Months remaining for Construction) Agreed Cost of the Contract AED 30.5 million agreed sum Current Issue Reduction of Unnecessary construction cost of the Proposed Resident Complex project through without touching or disturbing the required level of quality, functions and value due to lack of allocated finance. Agenda of Value Engineering Workshop Project: Al Maya Resident Complex including with 25 nos stories and car park in three story basement. Subject: Reduction of Unnecessary construction cost of the Project due to lack of allocated finance. Location: On 12th Nov. 2012 at the Park Building, Dubai. One day basis No. Events Person From To 1. Introduction Clients representative 9.00 am 9.15am 2. Briefing of VE VE Team leader 9.15 am 9.45am 3. Presentation of the Project details Designers 9.45am 10.15am 4. Tea Break 10.15am 10.30am 5. Outline the Project constrain Project Manager 10.30am 11.00am 6. Questions by Value Manger VE member 11.00am 12.00pm 7. Lunch 12.00pm 12.30pm 8. Information Phase VE member 12.30pm 1.30pm 9. Speculation Phase VE member 1.30pm 2.00pm 10. Judgment Phase All Individual members (VE members) 2.00pm 3.00pm 11. Development Phase VE member 3.00pm 3.30pm 12. Tea Time 3.30pm 3.45pm 13. Presentation Phase 3.45pm 4.30pm The VE workshop This Value Engineering Workshop occurred according to the five-stage of job plan that recommended by New Zealand standard (AS/NZS 4183: 1994). The aim of this value Engineering workshop consist of identifying unnecessary cost, developing alternatives, enabling decisions to be made without touching or disturbing the required level of quality, functions and value. Information phase Particularly in this phase of the workshop, client shared relevant information with workshop members, mainly objective of the workshop to ready all participant for ask questions, begin to develop ideas and suggestions and challenge ideas already on the table. The ideas are being to promote innovative alternatives and ideas that may lead to better value outcomes for the project. All participant were presented they ideas asking question at this stage therefore this very important stage of the VE workshop for clearly make understand of the objective further. Client Agent He explained the project background and objectives for all participants clearly, and his expectation getting of workshop finally as unnecessary cost reduction of the project without touching or disturbing the project original scope. Civil Engineer He explained the existing situation of construction and agreed with some proposals given by VE team. Such as local made sanitary fittings and accessories, wall floor tiles, etc. due all make under UK standards Project Manager He explained possibility of mange for all ideas Architect He very much concerned about change of tile and local made sanitary items, eventually, he satisfy and explain those are under similar quality of original design. MEP Designer He explained the possibility of change of lighting system inside the all room without harm to the original quality and value. Quantity Surveyor He explained cost effective for all participant ideas, Safety Manger He explained concerning the safety side for all new ideas, potential incident in future as well as some changes by recommended. Value Engineer Team They explained the their proposals Speculative phase This step of the VE workshop concerned developing creative ideas, the VE team trace all possible methods of providing the required functions within the project at a lower cost to the owner, many of the ideas were generated during the function analysis by detraining the worth of Collecting of creativity ideas from each team member and analyze them to identify which idea is worthy, which one should improve to use, which one not worthy or additional study required to evaluate, etc. Hence, all ideas given by the Value engineering team are as follows, and also the Quantity Surveyor provided possible cost saving by each idea. N Specified work items in Contract Proposed Ideas Comments Original Cost Proposed Cost Potential Savings 1. Important sanitary fittings and bath room accessories UK made as specified. locally made Similar quality instead of import from UK Cost saving, not effect to the quality. AED 4.2 million AED 3.1 million AED 0.9 million 2. 9 cement blocks for internal walls. 4 cement block for internal walls. Cost saving and not change the quality. AED 8.5 million AED 6.1 million AED 1.5 million 3. 100 Lux Normal Incandescent Lights bulbs for all rooms and out sides 100 Lux energizer bulbs instead of specified Incandescent Lights bulbs. Cost saving but the change will effect to the appearance AED 11.0 million AED 8.0 million AED 1.0 million 4. Cast in-suit concrete floor and guard wall of Car park. Precast concrete for car park floor slab and guard walls. Cost saving Possible time. AED 5.5 million AED 5.5 million 5. Electrical panel boards and accessories units import from UK. Electrical panel boards and accessory units should import from china instead of UK made. Cost saving and might not high standard with compare of UK made. AED 10.0 million AED 10.0 million 6. 9 inch thick internal block wall as specified. For all 9 inch brick internal wall should be changed to 4 inch block walls. Cost saving, AED15.0 million AED15 million All participants were noted down the ideas but not judge them at this stage. Later in the workshop all participants would be given the opportunity to judge all proposals for worth and assess whether can be implemented to archive the aim of the VE workshop, hence at the Judgment Phase each of the ideas was evaluated for worth. JUDGEMENT PHASE In this phase the whole group judged the speculative ideas for merit; the purpose being to identify ideas that are likely to reduce cost of the project. Evaluation The following table lists the ideas submitted by participants and they were evaluated in accordance with the following rating system: Each Idea has rated by each participant as how it is effecting to the time, cost and quality of the project. Then it is possible to put rates at the opportunity column according to the given points by professionals. Then the Value Engineering Coordinator can select which proposal should develop, which proposal should reject and also which proposal can directly push for the action, etc. Company: PMP Value Management LLC. Project: Al Maya Residential Complex Project,( 25 storey and Car park in basement) Held on : 05-10-2012 Table of Impact of VE workshop Summary No Description Impact Opp. Action Remarks T C Q 1. Locally made Similar quality instead of import from France made sanitary fittings accessories. 5 5 4 5 A Cost saving 2. 4 cement block for internal walls. 5 4 5 5 A Cost saving 3. 100 Lux energizer bulbs instead of specified Incandescent Lights bulbs. 5 3 3 4 R Effect to Appearance 4. Precast concrete for car park floor slab and guard walls. 5 5 5 5 D To be identify possible areas 5. Electrical panel boards and accessory units should import from china instead of UK made. 3 5 4 4 A Cost saving but should order again 6. For all 9 inch brick internal wall should be changed to 4 inch block walls. 3 5 5 5 A Cost saving but design to be done back Code of Rating Opp = Opportunity, Impact= T Time, C Cost, Q Quality Rating of Impact = 1 Possible/Low, 5-Very Possible/High Action=A (Accept), D (Develop), R (Reject) This identified ideas with the potential of cost saving or improvements to the project shall be identified for further development under development phase. DEVELOPMENT PHASE In this phase participants have the opportunity to make specific recommendations and proposals based on outcomes of the earlier phases. Workshop outcomes and a specific action plan are also produced pending the post workshop report. EVALUATION OF THE PROPOSAL The proposal was supported by participants because it: Support to local traders, Improves efficiency of lighting system, Provides safety of workmanship during the construction, Provides an alternative energy savings, and environmental safe. Issues that detract from the proposal It requires more evaluation for life cycle cost of maintain period and functioning, as well as it does not include infrastructures work review. CONCLUSION/ RECOMMENDATION Value Management strategies can apply for any stage of any project. It is very much use full to apply Value Engineering/ Management strategies since the connectional stage of a project. Also these strategies can be applying to any project till the demolition phase its, thus for the life cycle of the project. Any client can have a great value for his investments by applying Value management/ engineering strategies for his/ her investment. It is highly recommended to carry out the proposals which proposed by the vale management team and also it is highly recommended to carry out further value management workshops to find out further more possible ways to reduction the construction cost.

Cost Accounting Essay

Origins All types of businesses, whether service, manufacturing or trading, require cost accounting to track their activities.[1] Cost accounting has long been used to help managers understand the costs of running a business. Modern cost accounting originated during the industrial revolution, when the complexities of running a large scale business led to the development of systems for recording and tracking costs to help business owners and managers make decisions. In the early industrial age, most of the costs incurred by a business were what modern accountants call â€Å"variable costs† because they varied directly with the amount of production.[citation needed] Money was spent on labor, raw materials, power to run a factory, etc. in direct proportion to production. Managers could simply total the variable costs for a product and use this as a rough guide for decision-making processes. Some costs tend to remain the same even during busy periods, unlike variable costs, which rise and fall with volume of work. Over time, these â€Å"fixed costs† have become more important to managers. Examples of fixed costs include the depreciation of plant and equipment, and the cost of departments such as maintenance, tooling, production control, purchasing, quality control, storage and handling, plant supervision and engineering.[2] In the early nineteenth century, these costs were of little importance to most businesses. However, with the growth of railroads, steel and large scale manufacturing, by the late nineteenth century these costs were often more important than the variable cost of a product, and allocating them to a broad range of products lead to bad decision making. Managers must understand fixed costs in order to make decisions about products and pricing. For example: A company produced railway coaches and had only one product. To make each coach, the company needed to purchase $60 of raw materials and components, and pay 6 laborers $40 each. Therefore, total variable cost for each coach was $300. Knowing that making a coach required spending $300, managers knew they couldn’t sell below that price without losing money on each coach. Any price above $300 became a contribution to the fixed costs of the company. If the fixed costs were, say, $1000 per month for rent, insurance and owner’s salary, the company could therefore sell 5 coaches per month for a total of $3000 (priced at $600 each), or 10 coaches for a total of $4500 (priced at $450 each), and make a profit of  $500 in both cases. Cost Accounting vs Financial Accounting See also: Financial accounting Financial accounting aims at finding out results of accounting year in the form of Profit and Loss Account and Balance Sheet. Cost Accounting aims at computing cost of production/service in a scientific manner and facilitate cost control and cost reduction. Financial accounting reports the results and position of business to government, creditors, investors, and external parties. Cost Accounting is an internal reporting system for an organization’s own management for decision making. In financial accounting, cost classification based on type of transactions, e.g. salaries, repairs, insurance, stores etc. In cost accounting, classification is basically on the basis of functions, activities, products, process and on internal planning and control and information needs of the organization. Financial accounting aims at presenting ‘true and fair’ view of transactions, profit and loss for a period and Statement of financial position (Balance Sheet) on a given date. It ai ms at computing ‘true and fair’ view of the cost of production/services offered by the firm.[3] (In some companies, machine cost is segregated from overhead and reported as a separate element) Classification of costs Classification of cost means, the grouping of costs according to their common characteristics. The important ways of classification of costs are: 1. By Element: There are three elements of costing i.e. material, labor and expenses. 2. By Nature or Traceability:Direct Costs and Indirect Costs. Direct Costs are Directly attributable/traceable to Cost Object. Direct costs are assigned to Cost Object. Indirect Costs are not directly attributable/traceable to Cost Object. Indirect costs are allocated or apportioned to cost objects. 3. By Functions: production,administration, selling and distribution, R&D. 4. By Behavior: fixed, variable, semi-variable. Costs are classified according to their behavior in relation to change in relation to production volume within given period of time. Fixed Costs remain fixed irrespective of changes in the production volume in given period of time. Variable costs change according to volume of production. Semi-variable Costs costs are partly fixed and partly variable. 5. By control ability: controllable, uncontrollable costs. Controllable costs are those which can be controlled or influenced by a conscious management action. Uncontrollable costs cannot be controlled or influenced by a conscious management action. 6. By normality: normal costs and abnormal  costs. Normal costs arise during routine day-to-day business operations. Abnormal costs arise because of any abnormal activity or event not part of routine business operations. E.g. costs arising of floods, riots, accidents etc. 7. By Time: Historical Costs and Predetermined costs. Historical costs are costs incurred in the past. Predetermined costs are computed in advance on basis of factors affecting cost elements. Example: Standard Costs. 8. By Decision making Costs: These costs are used for managerial decision making. Marginal Costs: Marginal cost is the change in the aggregate costs due to change in the volume of output by one unit. Differential Costs: This cost is the difference in total cost that will arise from the selection of one alternative to the other. Opportunity Costs: It is the value of benefit sacrificed in favor of an alternative course of action. Relevant Cost: The relevant cost is a cost which is relevant in various decisions of management. Replacement Cost: This cost is the cost at which existing items of material or fixed assets can be replaced. Thus this is the cost of replacing existing assets at present or at a future date. Shutdown Cost:These costs are the costs which are incurred if the operations are shut down and they will disappear if the operations are continued. Capacity Cost: These costs are normally fixed costs. The cost incurred by a company for providing production, administration and selling and distribution capabilities in order to perform various functions. Other Costs Standard cost accounting In modern cost account of recording historical costs was taken further, by allocating the company’s fixed costs over a given period of time to the items produced during that period, and recording the result as the total cost of production. This allowed the full cost of products that were not sold in the period they were produced to be recorded in inventory using a variety of complex accounting methods, which was consistent with the principles of GAAP (Generally Accepted Accounting Principles). It also essentially enabled managers to ignore the fixed costs, and look at the results of each period in relation to the â€Å"standard cost† for any given product. For example: if the railway coach company normally produced 40 coaches per month, and the fixed costs were still $1000/month, then each coach could be said to incur an Operating Cost/overhead of $25 =($1000 /  40). Adding this to the variable costs of $300 per coach produced a full cost of $325 per coach. This method tended to slightly distort the resulting unit cost, but in mass-production industries that made one product line, and where the fixed costs were relatively low, the distortion was very minor. For example: if the railway coach company made 100 coaches one month, then the unit cost would become $310 per coach ($300 + ($1000 / 100)). If the next month the company made 50 coaches, then the unit cost = $320 per coach ($300 + ($1000 / 50)), a relatively minor difference. An important part of standard cost accounting is a variance analysis, which breaks down the variation between actual cost and standard costs into various components (volume variation, material cost variation, labor cost variation, etc.) so managers can understand why costs were different from what was planned and take appropriate action to correct the situation. The development of throughput accounting Main article: Throughput accounting As business became more complex and began producing a greater variety of products, the use of cost accounting to make decisions to maximize profitability came into question. Management circles became increasingly aware of the Theory of Constraints in the 1980s, and began to understand that â€Å"every production process has a limiting factor† somewhere in the chain of production. As business management learned to identify the constraints, they increasingly adopted throughput accounting to manage them and â€Å"maximize the throughput dollars† (or other currency) from each unit of constrained resource. Throughput accounting aims to make the best use of scarce resources(bottle neck) in a JIT environment.[4] Mathematical formula Activity-based costing Main article: Activity-based costing Activity-based costing (ABC) is a system for assigning costs to products based on the activities they require. In this case, activities are those regular actions performed inside a company.[5] â€Å"Talking with customer regarding invoice questions† is an example of an activity inside most companies. Companies may be moved to adopt ABC by a need to improve costing accuracy, that is, understand better the true costs and profitability of  individual products, services, or initiatives. ABC gets closer to true costs in these areas by turning many costs that standard cost accounting views as indirect costs essentially into direct costs. By contrast, standard cost accounting typically determines so-called indirect and overhead costs simply as a percentage of certain direct costs, which may or may not reflect actual resource usage for individual items. Under ABC, accountants assign 100% of each employee’s time to the different activities performed inside a company (many will use surveys to have the workers themselves assign their time to the different activities). The accountant then can determine the total cost spent on each activity by summing up the percentage of each worker’s salary spent on that activity. A company can use the resulting activity cost data to determine where to focus their operational improvements. For example, a job-based manufacturer may find that a high percentage of its workers are spending their time trying to figure out a hastily written customer order. Via ABC, the accountants now have a currency amount pegged to the activity of â€Å"Researching Customer Work Order Specifications†. Senior management can now decide how much focus or money to budget for resolving this process deficiency. Activity-based management includes (but is not restricted to) the use of activity-based costing to manage a business. While ABC may be able to pinpoint the cost of each activity and resources into the ultimate product, the process could be tedious, costly and subject to errors. As it is a tool for a more accurate way of allocating fixed costs into product, these fixed costs do not vary according to each month’s production volume. For example, an elimination of one product would not eliminate the overhead or even direct labor cost assigned to it. ABC better identifies product costing in the long run, but may not be too helpful in day-to-day decision-making. Integrating EVA and Process Based Costing Recently, Mocciaro Li Destri, Picone & Minà   (2012).[6] proposed a performance and cost measurement system that integrates the Economic Value Added criteria with Process Based Costing (PBC). The EVA-PBC methodology allows us to implement the EVA management logic not only at the firm level, but also at lower levels of the organization. EVA-PBC methodology plays an interesting role in bringing strategy back into financial performance measures. Lean accounting Main article: Lean accounting Lean accounting[7] has developed in recent years to provide the accounting, control, and measurement methods supporting lean manufacturing and other applications of lean thinking such as healthcare, construction, insurance, banking, education, government, and other industries. There are two main thrusts for Lean Accounting. The first is the application of lean methods to the company’s accounting, control, and measurement processes. This is not different from applying lean methods to any other processes. The objective is to eliminate waste, free up capacity, speed up the process, eliminate errors & defects, and make the process clear and understandable. The second (and more important) thrust of Lean Accounting is to fundamentally change the accounting, control, and measurement processes so they motivate lean change & improvement, provide information that is suitable for control and decision-making, provide an understanding of customer value, correctly assess the financial impact of lean improvement, and are themselves simple, visual, and low-waste. Lean Accounting does not require the traditional management accounting methods like standard costing, activity-based costing, variance reporting, cost-plus pricing, complex transactional control systems, and untimely & confusing financial reports. These are replaced by: lean-focused performance measurements simple summary direct costing of the value streams decision-making and reporting using a box score financial reports that are timely and presented in â€Å"plain English† that everyone can understand radical simplification and elimination of transactional control systems by eliminating the need for them driving lean changes from a deep understanding of the value created for the customers eliminating traditional budgeting through monthly sales, operations, and financial planning processes (SOFP) value-based pricing correct understanding of the financial impact of lean change As an organization becomes more mature with lean thinking and methods, they recognize that the combined methods of lean accounting in fact creates a lean management system (LMS) designed to provide the planning, the  operational and financial reporting, and the motivation for change required to prosper the company’s on-going lean transformation. Marginal costing See also: Cost-Volume-Profit Analysis and Marginal cost The cost-volume-profit analysis is the systematic examination of the relationship between selling prices, sales, production volumes, costs, expenses and profits. This analysis provides very useful information for decision-making in the management of a company. For example, the analysis can be used in establishing sales prices, in the product mix selection to sell, in the decision to choose marketing strategies, and in the analysis of the impact on profits by changes in costs. In the current environment of business, a business administration must act and take decisions in a fast and accurate manner. As a result, the importance of cost-volume-profit is still increasing as time passes. CONTRIBUTION MARGIN A relationship between the cost, volume and profit is the contribution margin. The contribution margin is the revenue excess from sales over variable costs. The concept of contribution margin is particularly useful in the planning of business because it gives an insight into the potential profits that a business can generate. The following chart shows the income statement of a company X, which has been prepared to show its contribution margin: Sales $1,000,000 (-) Variable Costs $600,000 Contribution Margin $400,000 (-) Fixed Costs $300,000 Income from Operations $100,000 CONTRIBUTION MARGIN RATIO The contribution margin can also be expressed as a percentage. The contribution margin ratio, which is sometimes called the profit-volume  ratio, indicates the percentage of each sales dollar available to cover fixed costs and to provide operating revenue. For the company Fusion, Inc. the contribution margin ratio is 40%, which is computed as follows: The contribution margin ratio measures the effect on operating income of an increase or a decrease in sales volume. For example, assume that the management of Fusion, Inc. is studying the effect of adding $80,000 in sales orders. Multiplying the contribution margin ratio (40%) by the change in sales volume ($80,000) indicates that operating income will increase $32,000 if additional orders are obtained. To validate this analysis the table below shows the income statement of the company including additional orders: Sales $1,080,000 (-) Variable Costs $648,000 (1,080,000 x 60%) Contribution Margin $432,000 (1,080,000 x 40%) (-) Fixed Costs $300,000 Income from Operations $132,000 Variable costs as a percentage of sales are equal to 100% minus the contribution margin ratio. Thus, in the above income statement, the variable costs are 60% (100% – 40%) of sales, or $648,000 ($1,080,000 X 60%). The total contribution margin $432,000, can also be computed directly by multiplying the sales by the contribution margin ratio ($1,080,000 X 40%). See also Accountancy Cost overrun Fixed asset turnover Management accounting IT Cost Transparency Kaizen costing Profit model References 1. Principles of Cost Accounting – Edward J. Vanderbeck – Google Books. Books.google.co.uk. Retrieved 2013-03-01. 2. Performance management, Paper f5. Kapalan publishing UK. Pg 3 3. Cost and Management Accounting. Intermediate. ICA. p. 15. 4. Performance management, Paper f5. Kapalan publishing UK. Pg 17 5. Performance management, Paper f5. Kaplan publishing UK. Pg 6 6. Mocciaro Li Destri A., Picone P. M. & Minà   A. (2012), Bringing Strategy Back into Financial Systems of Performance Measurement: Integrating EVA and PBC, Business System Review, Vol 1., Issue 1. pp.85-102. 7. Maskell & Baggaley (December 19, 2003). â€Å"Practical Lean Accounting†. Productivity Press, New York, NY. Books and journals Maher, Lanen and Rahan, Fundamentals of Cost Accounting, 1st Edition (McGraw-Hill 2005). Horngren, Datar and Foster, Cost Accounting – A Managerial Emphasis, 11th edition (Prentice Hall 2003). Consortium for Advanced Manufacturing-International Kaplan, Robert S. and Bruns, W. Accounting and Management: A Field Study Perspective (Harvard Business School Press, 1987) ISBN 0-87584-186-4 Sapp, Richard, David Crawford and Steven Rebishcke â€Å"Article title?† Journal of Bank Cost and Management Accounting (Volume 3, Number 2), 1990. Author(s)? â€Å"Article title?† Journal of Bank Cost and Management Accounting (Volume 4, Number 1), 1991. External links Accounting Systems, introduction to Cost Accounting, ethics and relationship to GAAP. National Conference on College Cost Accounting Cost accounting is a process of collecting, analyzing, summarizing and evaluating various alternative courses of action. Its goal is to advise the management on the most appropriate course of action based on the cost efficiency and capability. Cost accounting provides the detailed cost information that management needs to control current operations and plan for the future.[1] Since managers are making decisions only for their own organization, there is no need for the information to be comparable to similar information from other organizations. Instead, information must be relevant for a particular environment. Cost accounting information is  commonly used in financial accounting information, but its primary function is for use by managers to facilitate making decisions. Unlike the accounting systems that help in the preparation of financial reports periodically, the cost accounting systems and reports are not subject to rules and standards like the Generally Accepted Accounting Principles. As a result, there is wide variety in the cost accounting systems of the different companies and sometimes even in different parts of the same company or organization.

Information Technology Essay Samples Reviews & Tips

Information Technology Essay Samples Reviews & Tips Introducing Information Technology Essay Samples There are tutors and possibly even students who require time to understand how to formulate topics and write essays on Information Technology. Writing an incredible essay on technology does not need to be difficult. Students are therefore very likely to do a technology in education essay in order to know how to use technology to add knowledge. Up in Arms About Information Technology Essay Samples? You are going to be able to compose a computer technology essay about any of the latest technological changes in the industry of computers. Although basic information technology systems could be user friendly, advanced programs still need formal instruction via an expert consultant. As a consequence technologies are often related to a fall in the equilibrium price for a good or assistance. Implementing information technology into business operations can save yourself a lot of ti me during the conclusion of daily tasks. The Most Popular Information Technology Essay Samples The development of technology is presumed to have the ability to alter the relationships between individuals and societies that consider it challenging to interact together. The write-up provides a framework for statistically gauge the impact evaluation. Rapid changes need constant continuing education. A few of which are accurate analysis, picking the correct technology and the upcoming vision. Also, one needs to take a look at the correct example in order to find a guideline on how best to go about doing it. Just in order to supply you with a guideline, here is an illustration of a technology essay which you can look at. In case you have any experience at writing academic texts you ought to be aware that adherence to a particular format is equally as important a portion of the grade as the caliber of the true content. On the flip side, the research, development and evolution of ideas and data still need considerable resources, a few of which are critically limited. There are a number of technology essay topics, but you need to choose one which you feel comfortable writing about. As you compose the essay, you need to be able to define science, technology and the association between them both. The upcoming technology essay may also speak about the ethics or precautions in the area of science. Writing a computer technology essay will want a lot of knowledge about computers and recent developments in the area. The Secret to Information Technology Essay Samples Furthermore, you'll need to finish a diploma or degree course in information technology to acquire the best jobs for felons out there. Others might prefer to handle they research work and assignments by themselves, which is suggested to be the perfect method of sorting out information to produce papers of high quality. Do your research so that you include the most suitable info. You cannot mix information because it is going to lead to confusion. Processes ought to be streamlined and automated and also valueless processes ought to be eliminated and lead occasions and manpower efficiency needs to be made shorter. The next thing to do is to speak about the benefits of technology. To summarize, it is dependent on how you use technology. Technology is moving at an unbelievable pace. Information technology is the sole technology which provides you the chance to analyse certain data and plan your business enterprise journey accordingly. It allows businesses to make better decisions. It had brought phenomenal changes to all aspect of life. Knowing what it is you are going to speak about enables you to compose a consistent and convincing essay that readers may enjoy. The conclusion of essay, that's the previous part, should become your opportunity to produce your readers understand the entire point of your topic. If you cannot keep updating the info that you have, you might write irrelevant content in the technical essay example. The first thing which you've got to do is think of a topic that you need to right about. Information Technology Essay Samples Explained Actually, practically all of the information businesses will need to do business entails the use of computers and data technology. There are lots of resources which we may utilize to receive information, which range from print media to electronic media. In a couple of months, a slice of technology can be released to the marketplace and almost immediately rival companies too release theirs. As a lot of the business is an information company, perhaps it's obstructive to think about a business strategy and an IT strategy. Here's What I Know About Information Technology Essay Samples Communication was facilitated on a real-time basis and the future is about the digital world. Nobody doubts that their usage can bring a whole lot of advantages in numerous spheres. No student, any place in the world, will now be deprived of the ideal information that can be found on any subject in any component of earth. An individual armed with the proper information is easily the most powerful in today's era. The personal computer is today a portion of several urban homes in the nation. Regardless of the quite a few advances it is one particular field that's full of debates, discussions, and controversies. In fact, the facility to exchange info and effortless communication made it feasible to shorten the distance of the planet. Since you may see, the application of information technology in our everyday life has definitely altered the way we live our lives.

Understanding Modern Evolutionary Synthesis

The theory of evolution has itself evolved quite a bit since the time when Charles Darwin and Alfred Russel Wallace first came up with the theory. Much more data has been discovered and collected over the years that have only helped to enhance and sharpen the idea that species change over time. The modern synthesis of the theory of evolution combines several different scientific disciplines and their overlapping findings. The original theory of evolution was based mostly upon the work of Naturalists. The modern synthesis has the benefit of many years of research in Genetics and Paleontology, among other various subjects under the biology umbrella. The actual modern synthesis is a collaboration of a large body of work from such celebrated scientists as J.B.S. Haldane, Ernst Mayr, and Theodosius Dobzhansky. While some current scientists assert that evo-devo is also a part of the modern synthesis, most agree it has so far played a very slight role in the overall synthesis. While most of Darwins ideas are still very much present in the modern evolutionary synthesis, there are some fundamental differences now that more data and new disciplines have been studied. This does not, in any way, take away from the importance of Darwins contribution and, in fact, it only helps support most of the ideas Darwin put forth in his book On the Origin of Species. Differences Between Original Theory of Evolution and Modern Evolutionary Synthesis The three main differences between the original Theory of Evolution through Natural Selection proposed by Charles Darwin and the most current Modern Evolutionary Synthesis are as follows: The modern synthesis recognizes several different possible mechanisms of evolution. Darwins theory relied on natural selection as the only known mechanism. One of these different mechanisms, genetic drift, could even match the importance of natural selection in the overall view of evolution.Modern synthesis asserts that characteristics are passed down from parents to offspring on parts of DNA called genes. Variation between individuals within a species is because of the presence of multiple alleles of a gene.The modern synthesis of the Theory of Evolution hypothesizes that speciation is most likely due to the gradual accumulation of small changes or mutations at the gene level. In other words, microevolution leads to macroevolution. Thanks to years of dedicated research by scientists across many disciplines, we now have a much better understanding of how evolution works and a more accurate picture of the change species undergo over a period of time. Even though different facets of evolutionary theory have changed, the fundamental ideas are still intact and just as relevant today as they were in the 1800s.