Respond to the required questions, double-spaced, APA format (source citations and reference insertions) essay (Each Question). In each Case Study, you must use at least three (3) references (in text), including the textbook (included below).
Textbook reference:
Managerial Accounting: Decision Making and Motivating Performance- Text Only: Datar, S.
M., & Rajan, M. V. (2014). Managerial accounting: making decisions and motivating performance.
Boston: Pearson. ISBN: 9780137024872
(This Assignment Box maybe linked to Turnitin.)
Respond to the required questions, double-spaced, APA format (source citations and reference insertions) essay (Each Question). In each Case Study, you must use at least three (3) references (in text), including the textbook (included below). Textbook reference: Managerial Accounting: Decision Making and Motivating Performance- Text Only: Datar, S. M., & Rajan, M. V. (2014). Managerial accounting: making decisions and motivating performance. Boston: Pearson. ISBN: 9780137024872 (This Assignment Box maybe linked to Turnitin.) 125 Words (Karen Martinez) – Reply and Comment on the following: It is not important for a company to distinguish between cost incurrence and locked-in costs." Do you agree? Explain with the use of appropriate examples. Cost incurrence describes when a resource is consumed. In other words, the company is now liable to pay for whatever was used. You don’t have to have received an invoice for the cost for it to have been incurred. For example, the electric company reads the meter on the last day of the month, but the company incurred the expense all month long. The actual invoice may not arrive until much later. Locked in costs are costs that will be incurred in the future based on decisions that have already been made. They have not yet been incurred. That will, however, occur soon. An example of a locked in cost is building a new factory. Once the decision to build the new factory has been made, the costs becomes locked in. They are very difficult, if not impossible to change. Usually if there is a fee or penalty to make changes. I disagree with the statement, and think it is important to distinguish between the two costs. Most locked in costs are incurred in the design stages but are not incurred until the manufacturing stage. Locked in costs are difficult if not impossible to be reduced or altered so it is important to differentiate between a cost incurrence and a locked in cost. 125 Words (Sabria Thompson) – Reply and Comment on the following: I strongly disagree. Locked-in-costs are costs based on decisions that have already been made but will be incurred in the future. A cost incurred is a cost for which a business has become liable, even if has not yet received an invoice from a supplier as documentation of the cost (AccountingTools, 2020). In my opinion, it’s critical to distinguish between the two. I think this question touches the surface but my opinion stems from a place of analytical benefits. Locked-in-costs are crucial and at the end of the day they refer more to the bottom-lines but when we study cost incurrence, we can see the value of the dollar. As we look at how money is allocated for each budget, as it’s incurred, we can ensure payouts occur as they should, but we can also benchmark if we’re being overcharged. When we look at and examine costs incurred, we present the opportunity to do things such as switch out workers who aren’t productive or switch vendors if we can get alternative options of the same or greater quality. It provides a way for companies to ensure their money is well spent and that profit-margins are as large as efficiently possible. My last opinion is, cost incurrence can co-exist with locked-in costs. This makes everything much easier when there’s a need to reconcile. We can save time on the back end if the breakdowns are already provided. In closing, based on my research, the two aren’t independent and can surely co-exist. With this being said, my opinion stands. It’s important to remember that budgets and locked in costs are subject to change, so while it’s important, costs incurred tell a truer story.