The group member should obtain the annual report of a company (local company). For the obtained data, compute the following for the two most recent years:
Cost of sales as a percentage of sales. General and administrative expenses as a percentage of sales. Net income as a percentage of sales.
Operation costing combines characteristics of both job-order and process costing. It is used in those situations where the products have some common characteristics and some individual characteristics. Example of industries where operation costing maybe appropriate include shoes, clothing, jewelry and semiconductors.
Select one of the above products and search how the product is made. Construct a flowchart of the production process. Indicate which steps in the production process would use job-order costing and which steps would use process costing.
Section 2 – Capital Budgets
Choose any capital budgeting project such as building or renovating a facility. Investigate one of these capital budgeting projects.
Determine the total cost of the project and the source of funds for the project. Did the cost of the project stay within budget? If the present value method was used, review the calculations. Do you agree with the calculations and methods used? If the present value was not used to evaluate the project, estimate the project’s net present value. Evaluate the capital budgeting procedures that were actually used.