By Mark Lee Inman
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Additional resources for Cost Accounting. Stage 2
Reducing balance This is where a computed equal percentage of the value of the asset is written off each year. Thus, taking the same asset as quoted above under the straight line illustration, a percentage of the year end balance will be written off each year. However, to alleviate the problem of the asset never being totally written off, a formula is employed to arrive at this percentage. 89% say 15% Thus applying to the illustration: Year 0 1 2 3 4 Balance brought forward Charge Carried forward 10,000 8,500 7,225 6,141 5,220 (1,500) (1,275) (1,084) ( 921) ( 783) 8,500 7,225 6,141 5,220 4,437 This method takes cognisance of the fact that a greater amount of the value of the asset will be lost in the earlier years of its life.
E. 01 per annum. Questions Questions relating to Chapter 2 and Chapter 3 are combined in a section at the end of Chapter 3. References and further reading 1 Layne, W. Armand, Cost Accounting Analysis and Control, Macmillan, 1984, Chapter 6. , Storage and Control of Stock, Pitman, 1981, Chapter 7. , Production and Operations Management, Holt Reinhart 1984, Chapter 17. , Essentials of Production and Operations Management, Holt Reinhart, 1985, Chapter 17. 5 Replacement prices (page 22) are sometimes referred to as current entrance prices.
C) Lack of promotional opportunities (this is more likely to affect skilled and staff employees rather than the direct labour force as such). g. ill health, the need to relocate. The reader will be aware that while these are items which should be regularly reviewed, an important factor in the equation is environmental. Clearly, labour turnover is at its highest when jobs are plentiful, and the employees are in a suppliers' market. However, where the situation is one of high levels of unemployment, either regionally or nationally, the labour turnover figure inevitably goes down, since there is not the choice of jobs available.