Accounting Essay Example | Topics and Well Written Essays - 500 words - 36

Accounting - Essay Example Failing to provide the cash flow statement, the company will lack the proper information on telling the sources of cash and its use. Additionally, the company will not have adequate planning tool for its business success in the long term (â€Å"Cash flow statements†, 2000). To improve operations, I would compare the expenses that accumulate for a given operation to its budget and provide management warning if the expenses appear to be ahead of projections (Lawrence, 2004). This will give the company time to control cost over the remaining part of the project. I would also approach the client about the increase in billing to cover the cost overrun. Assuming the costs are reimbursed to the clients, I would carry out cost precision where the customer will pay all the expenses incurred plus the revenue. Some of the accounting activities that I would take into consideration will be the cost of materials, cost of labor, and overhead. I would use cost information history to arrive at standard rates and then assign this standard costs to jobs based on the activity units (Drury, 2002). I will allocate the manufacturing overhead cost via Departmental machine hours (Innes & Mitchell, 2003). This is because the manufacturing companies studies and controls the time for direct labour and motion. They have started using machines to replace the direct labor. Using machines increases the factory overhead due to machinery depreciation, machinery maintenance, and set up of machines. Reducing the direct labor and increasing the manufacturing overhead, the correlation between the manufacturing overhead and direct labour tends to wane. Therefore, the logical response is to allocate manufacturing overhead based on the machine hours rather than direct labor hours (Carroll, 2004). I would use break-even analysis to determine the optimum output level below which will