accounting questions

Please see attached for description. No word minimum. Please use APA format when citing sources. Original work only.

Please see the paragraph “Reducing Overhead Costs” below to help answer the following questions 1 & 2. Question 3 is related to “variances”.

1)

Going paperless can save companies a lot of money. It also is better for the environment and saves trees, which also helps the company’s image. Should there be any security concerns for people going paperless with important documents now though, or are consumers relatively safe?

2)

Using technology is a key way to help reduce overhead costs.  Is that necessary for a business to survive in today’s world, or are there still businesses out there that don’t incorporate modern technology in managing their operations?

3) Incorrect interpretation of favorable variances cause’s problems for a business for example a business might attempt to create a favorable material price variance by using cheaper material. This although would create favorable material variance but might lead to a sub-standard product and loss of customers. What would be an example of a favorable variance leading to a substandard product?

Variances

Budget variance

The difference between the actual fixed overhead costs and the budgeted fixed overhead costs for the period.

Denominator activity

The level of activity used to compute the predetermined overhead rate.

Volume variance

The variance that arises whenever the standard hours allowed for the actual output of a period are different from the denominator activity level that was used to compute the predetermined overhead rate. It is computed by multiplying the fixed component of the predetermined overhead rate by the difference between the denominator hours and the standard hours allowed for the actual

“Reducing Overhead Costs”

The article I read discussed several methods that allow a business to reduce overhead costs and began by explaining why it is necessary to reduce overhead costs and how costs that seem necessary may not be.

The second part of the article discussed a number of the ways, which would allow a business to reduce overheads. Going paperless according to the article would allow a business to decrease expenditure and is particle now that newer cheaper technology such as clouds and disks exists.

Another method propose by the article is hiring of professionals to handle the business accounts and taxes which according to the writer would reduce overheads by reducing mistakes and increasing deductions as professionals are more likely to find deductions that the business by itself might have overlooked.

Revaluation of business needs including the space and phone requirements was another important proposal by the writer when considering reduction in overheads. Having a perfect space that suits the needs of the business can save business important dollars by reducing the rent expenditure.

Lastly hiring of the right people and development of brand ambassadors were the last proposals for reducing overheads. Hiring individuals whom have multiple strengths and can serve more purposes than one is one of the best ways t reduce overheads while fulfilling all the needs of the business.

Developing clients as a brand ambassador allows a business to avoid the expensive advertising expenses and in turn reduce the overall overheads incurred by the business. (Tucker Cummings, 7 tips for reducing Overhead costs, 2013)

Reading the points raised in the article regarding a reduction in the overhead costs of a business refreshed some of the lessons I had learnt in this week’s class. The article when discussed how costs can be lowered allowed me to think how using the methods suggested by the article can allow a business to not just lower costs but also ensure it meets the benchmark. Further the overhead reduction discussed allowed me to also allowed me to understand how overhead variances can be improved.