There are two main costing methods that company may use, absorption costing and Activity established priced at. Absorption costing and Activity established priced at (ABC) are two similar systems that are being used to assign indirect costs to cost items. Absorption costing is also called 'traditional costing'; it is more simplistic and uses arbitrary allocation. On the other hand, ABC is more superior and uses cause-and-effect allocation. This report will deal with the different definitions, the history, the advantages and down sides of absorption and ABC systems. Then finial a advice which system is way better suited for this company.
This company needs either of the two costing system because they are useful during planning and budgeting. Furthermore getting the systems set up allows overheads to be recharged to services.
Peanutty Food and company is a Brazilian company which is involved in business to business associations and supply of elements to large consumers (Chengbo, 2009). Its business is centred on making and supplying of ingredients made from peanuts (mainly) and other nuts (secondarily) to food companies (ibid). In addition, it provides services to food companies as regards to preparing food (ibid). It is a well-structured company with four departments which can be Research and Development, Creation, logistics and Management (ibid).
In spite of its significant growth rates as shown by the quantity of its operations and commitment to its customers, it is confronted with some challenges which are as follows:
It has only one supplier which supplies its raw materials leading to the distributor having more bargaining ability over them.
Masterman described project procurement as the organizational structure needed to design and build construction projects for a particular client. That is very true to an extent because the procedure of "obtaining" a building by a customer involves a group of folks who are brought together and organized systematically in term with their roles, duties, duties and interrelationship between them. After assessing all options and confirming the need for a construction project, a more detailed case for the project should be developed.
A strategic method of procurement should be predicated on understanding the client's business needs and drivers, also to fully appreciate the marketplace where it operates. That is absolutely fundamental in establishing how efficient the construction project can assist the client in reaching business success.