Issues in Revenue Sharing in Sports Leagues
A sports league becomes profitable when it is successfully run over many years. This means that almost all the teams participating in the league must be competitive. Now, the amount of money that a team has deeply influences its competitive ability. For instance, a team with more funds is likely to be able to afford […]
How a Cram Up Works in Bankruptcy?
In most bankruptcy cases, senior classes of creditors have more power as compared to junior classes of creditors. This means that the re-organization plans are generally meant to satisfy the needs of senior classes of creditors. However, there are some cases in which companies give importance to the needs of junior stakeholders as well. There […]
Pros and Cons of Scalable Business Models
Scalable business models are the latest buzzword in entrepreneurial circles all across the world. Most new-age founders aspire to make their businesses more scalable. However, scalability has to be built into a business before it actually exists. It is for this reason, that the decision to scale or not becomes strategic and something that founders […]
Dollar Yuan Peg
China has become the largest exporter of goods in the world. This has been a remarkable feat achieved by the Chinese given the fact that just a couple of decades back, their economy was in complete shambles. Part of this feat can be attributed to the world class infrastructure that China has built to enable […]
Allocating Overheads in Job Order Costing
Tracking direct labor and materials that have been used in a job can be done with a fair degree of precision. That is not the real problem when it comes to costing. The real problem is with allocation of overheads. Usually, they have very little correlation to any specific activity. They are the result of […]
The following is the list of the most probable causes that would cause the job order costing system of the company to fail:
In modern times, we have information technology to the rescue. Companies can now buy off the shelf products for job order costing and use them to simplify the creation of the elaborate system.
The bookkeeping staff needs to be trained about the specifics of job order costing. This training is often expensive and takes time. Only after the process has been somewhat established, does a job order costing system give the benefits that it has been touted to provide.
For instance the allocation base needs to be selected, predetermined overhead rates need to be created and such other tasks need to be done. These tasks require skill and judgment. Only a person that is thorough with the operations of the firm can do these tasks. Thus the firm must ensure that they have relevant expertise before they begin adopting the technique.
The causes of incorrect job order costing can be quite grave. They have been listed below:
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