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Cost Accounting - Under Budget

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1 A manager comes up to you, asks you to code your time to a project that's under-budget instead of to the real project, which is running over-budget. What harm can it do? The company is still paying you the same amount; the costs are just going into different buckets.

2 How can an organization implement an effective cost accounting system and avoid the issue of blame? What steps could be taken to ensure that the system is not used inappropriately? How should managers use the information gained from the system, especially when results are negative?

3 How does an organization determine whether an activity "matches" cost behaviors.

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The solution answers a few questions on cost accounting.

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(1) Running under-budget means that everything goes smoothly and everybody does a job that is good enough to keep the project that way. If the manager pulls one person from that project on to another one, 2 problems can arise:
- the project that is running under budget now, may tumble and go over budget.
- it's not the fact that bringing an extra person would solve all the problems with the over budget ...

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