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Controller's Guide to Planning and Controlling Operations

Book Description

The Controller's Guide to Planning and Controlling Operations is a comprehensive guide for controllers, CFOs, and budget managers who need to determine:

  • The soundness of sales forecasts

  • The best approach for setting product prices

  • The profitability of customers and market segments

  • Federal tax remittance rules

  • The impact of a just-in-time system on inventory levels

  • Packed with clear and realistic strategies, it helps create a coherent framework of financial plans that apply to the full breadth of ongoing corporate control systems, as well as illustrates:

  • When to use labor and materials standards to control manufacturing

  • How to control research and development costs

  • How to grant appropriate credit levels to customers

  • How to set up an effective capital budgeting process

  • How to create a cost-of-capital calculation

  • Table of Contents

    1. Cover Page
    2. Title Page
    3. Copyright
    4. PREFACE
    5. Acknowledgments
    6. Contents
    7. 1: GENERAL DISCUSSION OF ACCOUNTING/STATISTICAL STANDARDS: BENCHMARKING
      1. MEANING OF ACCOUNTING/STATISTICAL CONTROL
      2. EXTENT OF ACCOUNTING/STATISTICAL CONTROL
      3. NEED FOR STANDARDS
      4. DEFINITION OF STANDARDS
      5. ADVANTAGES OF STANDARDS
      6. RELATIONSHIP OF ENTITY GOALS TO PERFORMANCE STANDARDS
      7. TYPES OF STANDARDS NEEDED
      8. TREND TO MORE COMPREHENSIVE PERFORMANCE MEASURES
      9. BENCHMARKING
      10. BALANCED SYSTEM OF PERFORMANCE MEASURES
      11. SETTING THE STANDARDS
      12. USE OF STANDARDS FOR CONTROL
      13. PROCEDURE FOR REVISING STANDARDS
      14. RECORDING STANDARDS
      15. APPLICATION OF STANDARD COSTS
      16. MANAGEMENT USE OF STANDARD COSTS
    8. 2: PLANNING AND CONTROL OF SALES
      1. INTRODUCTION
      2. SALES MANAGEMENT CONCERNS
      3. CONTROLLER'S ASSISTIVE ROLE IN SALES MANAGEMENT PROBLEMS
      4. CONTROLLER'S INDEPENDENT ROLE IN THE PLANNING AND CONTROL OF SALES
      5. CONTROL OF SALES
      6. SALES ANALYSIS
      7. SALES PLANNING: BASIS OF ALL BUSINESS PLANS
      8. STEPS IN DEVELOPING THE NEAR-TERM SALES PLAN/BUDGET
      9. CONTROL PHASE
      10. METHODS OF DETERMINING THE SALES LEVEL
      11. USEFUL SOURCES OF FORECASTING INFORMATION
      12. FORECASTING THE BUSINESS CYCLE
      13. SALES STANDARDS
      14. SALES REPORTS
      15. PRODUCT PRICING: POLICY AND PROCEDURE
    9. 3: PLANNING AND CONTROL OF MARKETING EXPENSES
      1. INTRODUCTION
      2. DEFINITION
      3. SIGNIFICANCE
      4. FACTORS INCREASING THE DIFFICULTY OF COST CONTROL
      5. SALES MANAGER AND MARKETING EXPENSES
      6. BASIC APPROACH IN THE PLANNING AND CONTROL OF MARKETING EXPENSES
      7. MARKETING EXPENSE ANALYSIS
      8. TYPES OF ANALYSES
      9. PLANNING MARKETING EXPENSES
      10. SPECIAL COMMENTS ON ADVERTISING AND SALES PROMOTION EXPENSE
      11. CONTROL OF MARKETING EXPENSES
      12. MARKETING EXPENSE STANDARDS
    10. 4: PLANNING AND CONTROL OF MANUFACTURING COSTS: DIRECT MATERIAL AND DIRECT LABOR
      1. GENERAL ASPECTS OF MANUFACTURING
      2. DIRECT MATERIAL COSTS: PLANNING AND CONTROL
      3. LABOR COSTS: PLANNING AND CONTROL
    11. 5: PLANNING AND CONTROL OF MANUFACTURING COSTS: MANUFACTURING EXPENSES
      1. NATURE OF MANUFACTURING EXPENSES
      2. RESPONSIBILITY FOR PLANNING AND CONTROL OF MANUFACTURING EXPENSES
      3. APPROACH IN CONTROL OF MANUFACTURING EXPENSES
      4. PROPER DEPARTMENTALIZATION OF EXPENSES
      5. VARIATIONS IN COST BASED ON FIXED AND VARIABLE COSTS
      6. VARIATIONS IN COST BASED ON DIRECT LABOR
      7. VARIATIONS IN COST BASED ON BATCH SIZE
      8. VARIATIONS IN COST BASED ON OVERHEAD
      9. VARIATIONS IN COST BASED ON TIME
      10. COST ESTIMATION METHODS
      11. NORMAL ACTIVITY
      12. ALLOCATION OF INDIRECT PRODUCTION COSTS
      13. BUDGETARY PLANNING AND CONTROL OF MANUFACTURING EXPENSES
      14. REVISION OF MANUFACTURING EXPENSE BUDGETS
      15. SECURING CONTROL OF OVERHEAD
      16. INDIRECT LABOR: A MORE PRECISE TECHNIQUE
      17. OTHER ASPECTS OF APPLYING BUDGETARY CONTROL
      18. OTHER CONTROL PROCEDURES
      19. ROLE OF THE CONTROLLER
      20. REPORTS FOR MANUFACTURING EXECUTIVES
    12. 6: PLANNING AND CONTROL OF RESEARCH AND DEVELOPMENT EXPENSES
      1. RESEARCH AND DEVELOPMENT ACTIVITIES
      2. IMPACT OF R&D ACTIVITIES ON CORPORATE EARNINGS
      3. R&D ACTIVITIES IN RELATION TO CORPORATE OBJECTIVES
      4. INTEGRATION OF R&D WITH OTHER FUNCTIONS
      5. ORGANIZATION FOR THE R&D FINANCIAL FUNCTIONS
      6. ACCOUNTING TREATMENT OF R&D IN FINANCIAL STATEMENTS
      7. ELEMENTS OF R&D COSTS
      8. ROLE OF THE FINANCIAL EXECUTIVE IN R&D
      9. GENERAL BUDGETARY PROCEDURE
      10. DETERMINING THE TOTAL R&D BUDGET
      11. INFORMATION SOURCES ON R&D SPENDING
      12. ESTABLISHING THE R&D OPERATING BUDGETS
      13. DETAILED BUDGETING PROCEDURE
      14. OTHER CONTROL METHODS
      15. EFFECTIVENESS OF R&D EFFORT
    13. 7: PLANNING AND CONTROL OF GENERAL AND ADMINISTRATIVE EXPENSES
      1. INTRODUCTION
      2. COMPONENTS OF G&A EXPENSE
      3. CONTROL OVER G&A EXPENSES
      4. REDUCING G&A EXPENSES
      5. BUDGETING G&A EXPENSES
    14. 8: PLANNING AND CONTROL OF CASH AND SHORT-TERM INVESTMENTS
      1. INTRODUCTION
      2. OBJECTIVES OF CASH PLANNING AND CONTROL
      3. DUTIES OF THE CONTROLLER VERSUS THE TREASURER
      4. THE CASH FORECAST
      5. CASH COLLECTIONS
      6. CASH DISBURSEMENTS
      7. INTERNAL CONTROL
      8. REPORTS ON CASH
      9. CASH FLOW RATIO ANALYSIS
      10. IMPACT OF NEW INFORMATION TECHNOLOGY AND ORGANIZATIONAL STRUCTURES
      11. INVESTMENT OF SHORT-TERM FUNDS
    15. 9: PLANNING AND CONTROL OF RECEIVABLES
      1. INTRODUCTION
      2. GRANTING CREDIT TO CUSTOMERS
      3. CUSTOMER MARGIN ANALYSIS
      4. COLLECTIONS TASK
      5. MEASUREMENT OF ACCOUNTS RECEIVABLE
      6. CONTROL OVER ACCOUNTS RECEIVABLE
      7. BUDGETING FOR ACCOUNTS RECEIVABLE BALANCES
    16. 10: PLANNING AND CONTROL OF INVENTORIES
      1. INTRODUCTION
      2. COSTS AND BENEFITS OF CARRYING INVENTORY
      3. ROLE OF THE CONTROLLER
      4. MATERIAL REQUIREMENTS PLANNING SYSTEMS
      5. JIT MANUFACTURING SYSTEMS
      6. INVENTORY REORDERING SYSTEMS
      7. OBSOLETE INVENTORY
      8. REDUCING INVENTORY
      9. INVENTORY CUTOFF
      10. BUDGETING FOR RAW MATERIALS
      11. BUDGETING FOR WORK-IN-PROCESS
      12. BUDGETING FOR FINISHED GOODS
    17. 11: PLANNING AND CONTROL OF PLANT AND EQUIPMENT OR CAPITAL ASSETS
      1. IMPACT OF CAPITAL EXPENDITURES
      2. CONTROLLER'S RESPONSIBILITY
      3. CAPITAL BUDGETING PROCESS
      4. ESTABLISHING THE LIMIT OF THE CAPITAL BUDGET
      5. INFORMATION SUPPORTING CAPITAL EXPENDITURE PROPOSALS
      6. METHODS OF EVALUATING PROJECTS
      7. PAYBACK METHOD
      8. OPERATORS' METHOD
      9. ACCOUNTANTS' METHOD
      10. DISCOUNTED CASH FLOW METHODS
      11. HURDLE RATES
      12. COST OF CAPITAL—A HURDLE RATE
      13. INFLATION
      14. FOREIGN INVESTMENTS
      15. IMPACT OF THE NEW MANUFACTURING ENVIRONMENT
      16. IMPACT OF ACTIVITY-BASED COSTING
      17. CLASSIFYING AND RANKING PROPOSED CAPITAL PROJECTS
      18. BOARD OF DIRECTORS' APPROVAL
      19. PROJECT AUTHORIZATION
      20. ACCOUNTING CONTROL OF THE PROJECT
      21. POSTPROJECT APPRAISALS OR AUDITS
      22. OTHER ASPECTS OF CAPITAL EXPENDITURES
    18. 12: MANAGEMENT OF LIABILITIES
      1. INTRODUCTION
      2. OBJECTIVES OF LIABILITY MANAGEMENT
      3. DIRECT LIABILITIES
      4. ILLUSTRATIVE PROVISIONS OF CREDIT AGREEMENTS
      5. PLANNING THE CURRENT LIABILITIES
      6. STANDARDS TO MEASURE AND CONTROL CURRENT LIABILITIES
      7. CORRECTIVE ACTION
      8. RISKS OF TOO MUCH DEBT
      9. SOME BENEFITS FROM DEBT INCURRENCE
      10. SOURCES OF INFORMATION ON DEBT CAPACITY
      11. STANDARDS FOR DEBT CAPACITY
      12. BOND RATINGS
      13. LEVERAGE
      14. CONTINGENCIES
      15. LONG-RANGE FINANCIAL PLAN
      16. MANAGING LIABILITIES: SOME PRACTICAL STEPS
      17. ACCOUNTING REPORTS ON LIABILITIES
      18. INTERNAL CONTROLS
    19. 13: MANAGEMENT OF SHAREHOLDERS' EQUITY
      1. INTRODUCTION
      2. IMPORTANCE OF SHAREHOLDERS' EQUITY
      3. ROLE OF THE CONTROLLER
      4. GROWTH OF EQUITY AS A SOURCE OF CAPITAL
      5. RETURN ON EQUITY AS RELATED TO GROWTH IN EARNINGS PER SHARE
      6. GROWTH IN EARNINGS PER SHARE
      7. COST OF CAPITAL
      8. COMPONENTS OF COST OF CAPITAL
      9. CALCULATING THE COST OF DEBT
      10. CALCULATING THE COST OF EQUITY
      11. CALCULATING THE WEIGHTED COST OF CAPITAL
      12. DIVIDEND POLICY
      13. LONG-TERM DEBT RATIOS
      14. OTHER TRANSACTIONS AFFECTING SHAREHOLDERS' EQUITY
      15. LONG-TERM EQUITY PLANNING
      16. SHORT-TERM PLAN FOR SHAREHOLDERS' EQUITY
      17. OTHER CONSIDERATIONS
    20. INDEX