Cost and Optimization in Government

By Aman Khan | Go to book overview

the budget format. The format, which frequently varies between governments, provides specific guidelines regarding how a budget should be prepared, including setting goals, objectives, programs, and activities.

An important characteristic of all budgets, in particular an operating budget, is that once it has been approved and funds have been allocated for its execution it must be followed through. This may appear somewhat rigid to those who may not be familiar with public budgeting, but there is a rationale for this apparent inflexibility. In the private sector, competitive market forces serve as a vehicle to ensure that the resources of an organization are efficiently managed and utilized. In other words, when a private firm or business becomes inefficient, it will not make enough profit to stay in business, and will eventually be forced out of the market. Since no such forces exist in government, nonmarket mechanisms, such as laws, regulations, manadates, and various compliance requirements are necessary to achieve the same objective.


SUMMARY AND CONCLUSION

This chapter has presented a brief description of five of the most important activities in cost accounting: job costing, process costing, variable costing, cost allocation, and cost control. In job costing, costs are traced to a specific job, service, or activity. By tracing costs to a specific job, an organization can estimate the costs associated with each job accurately. In contrast, in process costing costs are assigned equally to all units of a job or service produced by an agency or department. The units in process costing are homogeneous, which makes it possible to assign the costs equally to these units. In variable costing, on the other hand, only variable costs are taken into consideration, rather than both fixed and variable costs. When the latter is considered in a system, it is known as absorption costing.

Cost allocation, the fourth element in this process, deals with the allocation of indirect costs to a department, an agency, or to any other responsibility center in an organization In doing so, it not only assigns costs that are indirect to a department but also examines how costs that jointly benefit several departments can be assigned. Finally, cost control deals with a set of procedues and measures that are useful in controlling the costs of an organization. A wide range of measures are currently available that can be used for this purpose. This chapter has focused on four such measures that are relatively easy to use, namely variance analysis, ratio analysis, (cash) internal control, and planning and budgeting.


Notes
1.
R. W. Ingram, et al. Accounting and Financial Reporting for Governmental and Nonprofit Organizations: Basic Concpts. New York, NY: McGraw-Hill, 1991.

-146-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this book

This book has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this book

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited page

Bookmark this page
Cost and Optimization in Government
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • Preface ix
  • Acknowledgments xii
  • Chapter 1 Basic Cost Concepts 1
  • Chapter 2 Cost Behavior 23
  • Notes 59
  • Chapter 3 Cost Analysis 60
  • Notes 105
  • Chapter 4 Cost Accounting 106
  • Notes 146
  • Chapter 5 Classical Optimization 148
  • Chapter 5 Classical Optimization 148
  • Notes 190
  • Chapter 6 Network Analysis 191
  • Notes 213
  • Chapter 7 Mathematical Programming 215
  • Notes 251
  • Chapter 8 - Games and Decisions 253
  • Notes 279
  • Chapter 9 Multicriteria Analysis 281
  • Chapter 9 Multicriteria Analysis 281
  • Notes 305
  • Chapter 10 Productivity Measurement 346
  • Chapter 11 Quality Control 348
  • Notes 373
  • Chapter 12 Besides Cost and Optimization 375
  • Notes 381
  • Bibliography 383
  • Index 389
  • About the Author 395
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
/ 398

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.