Aggregate Demand And The Level Of Economic Activity Economics Essay

Aggregate Demand And The Level Of Economic Activity Economics Essay Introduction Collection of revenue and the use of government expenditure which affect the economy is termed as fiscal policy. Fiscal policy can be distinguished with the major sort of macroeconomic policy, monetary policy, which stabilizes the economy by controlling rate of interest and supply of money. Two major objectives of fiscal policy are taxation and expenditure of government Transforming in the level , composition of taxation and government expenditure can force on the following variables in an economy : Aggregate demand and the level of economic activity; The pattern of resource allocation; The distribution of income. Aggregate demand and the level of economic activity: At a given time the price level and the total demand for goods and services in an economy(Y) is called aggregate demand (AD) . [1]. It is the quantity of goods and services in an economy that will be obtained at all probable price levels.[2] When inventory levels are static the demand for the gross domestic product of an economy is termed as aggregate demand. It is also called effective demand although at other times this term is differentiated. It is often quoted that the aggregate demand curve is downward sloping as at lower price levels a larger amount is demanded. Components of Aggregate demand and the level of economic activity: An aggregate demand curve is the summation of individual demand curves for different sectors of the economy. The aggregate demand is generally expressed as a linear sum of four divisible demand sources.[3] where is consumption (may also be known as consumer spending) = ac + bc(Y à ¢Ã‹â€ Ã¢â‚¬â„¢ T), is Investment, is Government spending, is Net export, is total exports, and is total imports = am + bm(Y à ¢Ã‹â€ Ã¢â‚¬â„¢ T). The pattern of resource allocation: Resource allocation is generally used to allot the resource available in an economy in an economic way. How limited resources are allocated among producers, and how limited goods and services are distributed among consumers , this study takes into observation the accounting cost, economic cost, opportunity cost, and other costs of resources and goods and services. Allotment of resources is a vital idea in economics and is related with economic effectiveness and maximization of utility. The distribution of income: Amongst the population of a nation how the nations total economy is allocated is termed as income distribution. It has always been a major concern of economic policy and economic theory. The allocation of income between the vital factors of production, land, labor and capital are considered to express income distribution. Fiscal policy is a vital factor for the economic development of a country. In Bangladesh fiscal policy consists of activities, which the country carries out to attain and utilize resources to afford services while ensuring optimal efficiency of the economic units. This policy controls the behavior of economic forces throughout the public finance. The main factors to attain these goals are variation in public expenditure, variation in public revenue, and management of public debt. These are revealed in the financial planning operations of the government, set up and executed on year-on-year basis. Literature Review For the overall economic development of a country fiscal policy and its management exert greater influence on economic activity. To boost up an economic infrastructure many research and study have been done by economists and policymakers. In this section literature abounds on the effectiveness and importance of fiscal policy in developed and developing countries of the world. Developing countries are facing dual challenges while undertaking fiscal adjustment policies. One arises from the increasing demand for public expenditures for Infrastructure and social sector investment, and the other arises from the lack of capacity to raise revenue from domestic sources to finance the increased expenditure, primarily due to narrow tax base. To boost competitive capacity of the country in a rapidly globalizing world, the governments of developing countries have to invest a large portion of their revenue in building physical infrastructures. In addition, the low income developing countries also need to spend a major portion of their development expenditures in providing social services to the poor such as health, education etc. On the other hand, as Khattry (2003: 402) pointed out, the structural characteristics of low income countries, combined with prevalence of unsophisticated tax administration limit their ability to raise taxes from domestic sources, namely income and domestic indirect taxes. Also, the existence of a large informal sector and the underground economy constrains the governments capacity for revenue growth. Another source of fiscal problem arises with the process of trade liberalization that requires reduction of taxes on international trade together with the elimination of quantitative restrictions and other forms of trade barriers. Therefore countries have to resort to domestic sources to compensate the revenue loss emanating from trade liberalization. As the scope of domestic sources of revenue is limited due to the narrow tax base and structural constraints in the low income countries, this may lead to a vulnerable fiscal position. In principle, a well functioning VAT system on import combined with broad based low tariffs) can recoup some of the revenue loss due to the greater inflow of imports that eventually follows trade liberalization. National Strategy for Accelerated Poverty Reduction (NSAPR) of Bangladesh (2005) recognizes that, as government revenue is heavily dependent on trade taxes, and tariff liberalization typically results in tariff revenue loss, alternative sources of revenue must be ensured in order to prevent a sudden rise in budget deficit (which is already high). In order to recoup revenue losses due to tariff liberalization government is trying to increase revenue from direct taxes. It is also envisaged that indirect taxes such as VAT and supplementary duty are applied uniformly on both domestic production and imports, it would both reduce anti-export bias and increase government revenue by widening the tax-net (NSAPR, 2005, p.86). Trade liberalization may thus lead to a fiscal squeeze as a result of re duced revenue and simultaneous increase in expenditure. According to Khattry (2003) fiscal squeeze led some countries to reduce expenditure on physical capital, while that on social services (e.g. health and education) has been financed by acquiring additional debt. However, it has been empirically substantiated that government capital expenditure plays an important role in enhancing economic growth. Bose et al (2003) investigated a panel of thirty developing countries over the decades of 1970s and 1980s, and found that, the share of government capital expenditure in GDP is positively and significantly correlated with economic growth though current expenditure is insignificant. The purpose of this paper is to evaluate the relationship between revenue and expenditure and its implication for managing the budget deficit. In order to do this a three variable model is formulated comprising government expenditure, revenue and GDP. Firstly, existence of a long-run relationship among these three variables is tested by using Johansen (1991, 1995) co integration approach. Granger causality test is applied on the corresponding vector error correction model to examine short-run causal relationship between the variables The goal of fiscal policy is to enhance economic growth and employment and to bring stability in economic outcome variables such as the real GDP growth rate. Under the above circumstances, the nature and objectives of fiscal policy may differ with the level of development of the countries. Long run outcome of expansionary fiscal policy depends on the nature of distribution of public resources as the same amount of public money can generate different growth pay-offs in different sectors, and the overall growth of the economy depends on the combined growth of these sectors When the government takes expansionary fiscal policy (expenditure surpassing revenue) either through increasing expenditure or reducing taxes or both, it has to borrow from internal and external sources to finance the deficit. The concept of deficit budget was popularized by Keynes and his followers -the principal argument is that government can boost up economic growth by increasing government expenditures in the short run. Again the government has to shrink its expenditures during the time of growth as excessive aggregate demand can generate inflation. In contrary to the above theory some economists argue that budget deficit negatively affects economic growth According to the advocates of the latter view, lowering budget deficit reduces interest rate thereby increasing investment, which in turn enhances economic growth The risk of expansionary fiscal policy is that, it leads to public debt growth, where it is envisaged that the growth of the economy will be significant enough in the subsequent periods so that the government will have a larger revenue base to finance its enhanced debt obligations. However, failure to generate enough economic growth may force the government into a deficit trap. Therefore the government has to borrow again to finance its deficit -this time may be in greater volume due to increase in the expenditure for repaying principal and interest of previous periods deb t even if the magnitude of public sector activities remains unaltered. There is also a risk that, government borrowing from domestic sources may crowd out private investment by raising the rate of interest. Constraining private investment in this fashion and expending the same amount of money in less productive sectors of the economy can negatively affect overall growth of the economy. As mentioned by Carneiro et al (2004, p.9), if economic agents are non Recording due to credit constraints and overlapping generation, public deficit can have a negative impact on growth as public deficits can hamper growth by competing with private physical capital for individual savings. Conversely, in developing countries public investment can be influential to crowd in private investment as shown by Binswanger et al (1993); infrastructure accessibility and the rural banks are crucial factors for increasing private investment in agriculture, which requires substantial government intervention in fac ilitating private investment. Given excess liquidity in the system (as it is the case in Bangladesh), in spite of significant public borrowing from the banking system over the last 4-6 months, private credit actually proceeded at its usual pace. This however need not be true all the time. Bangladeshs fiscal policy is closely linked to its monetary policy because public budget deficits are mainly financed by increases in money supply. Theoretically, expansionary fiscal policy would generate an increased supply of high-powered money in the face of frequent adjustment in the budget deficit and can provoke price spiral if there is no excess capacity in the economy (Friedman 1956; Friedman and Kuttner 1992). However, increasing government borrowing from central bank is seen as highly inflationary in the case of Bangladesh. But it should be noted that under the situation of chronic slow down of general demand (i.e. a general glut in the economy) higher public expenditure can create higher economic activity by protecting the falling trend in demand which is financed by increased public borrowing (Kiguel 1989). However, there is a general consensus among economists and policy-makers that regulating the growth of money stock is necessary to achieve a fairy stable price level a nd full employment of an economy (Sims 1972) Blanchard and Perotti (2002) use information about the elasticity of fiscal variables to identify the automatic response of fiscal policy, and find that expansionary fiscal shocks increase output, have a positive effect on private consumption, and a negative impact on private investment. More recently, using sign restrictions on the impulse-response functions and identifying the unexpected variation in government spending by a positive response of expenditure for up to four quarters after the shock, Mountford and Uhlig(2005) find a negative effect in residential and non-residential investment Similar studies applied to other countries are relatively scarce, largely due to the limited availability of quarterly public finance data, and, in addition, do not provide a consensual view. Perotti (2004) investigates the effects of fiscal policy in Australia Canada, Germany and the U.K., and finds a relatively large positive effect on private consumption and no response of private investment. Biau and Girard (2005) find a cumulative multiplier of government spending larger than one, and positive reactions of private consumption and private investment in France. De Castro and Hernà ¡ndez de Cos2006) use data for Spain and show that, while there is a positive relationship between government expenditure and output in the short-term, in the medium and long-term expansionary spending shocks only lead to higher inflation and lower output. Heppke- Falk et al. (2006) use cash data for Germany, and find that a positive shock in government spending increases output and private consumption, although the effect is relatively small. Giordano et al. (2007) show that, in Italy, government expenditure has positive and persistent effects on output and on private consumption. Analysis The Peoples Republic of Bangladesh, state of southern Asia, in the northeastern portion of the Indian subcontinent, edged on the north, east and west by India, on the southeast by Burma (Myanmar), and on the south by the Bay of Bengal. The total area of the country is 147,570 sq km with a population of 126 million. It lies roughly between 20 °34 and 26 °36 North latitude and between 88 °01 and 92 °41 east longitude. The capital and leading city of Bangladesh is Dhaka. The economy of Bangladesh is comprised by that of a developing country. Its per capita income in 2008 was est. US$1,500 (adjusted by purchasing power parity) significantly lower than India, Pakistan, both which are also lesser than the world average of $10,497. According to the gradation by the International Monetary Fund, Bangladesh ranked as the 48th largest economy in the world in 2008, with a gross domestic product of US$224.889 billion. The economy has grown at the rate of 6-7% p.a. over the past few years. More than half of the GDP belongs to the service sector; nearly half of Bangladeshis are employed in the agriculture sector, with RMG, fish, vegetables, leather and leather goods, ceramics, rice as other essential produce. The aim of the governments fiscal management is striking a weighing balance between government revenue and expenditure. One more foremost goal is to uphold shortage in the existing budget as much as reasonable for advanced investment in the public division. As a result of cautious fiscal policy and strengthening of fiscal management, overall fiscal deficiency through the current decade remained unchanged. To formulate and execute sound fiscal policy is one of the most significant functions of the government. It puts importance on sustaining macroeconomic constancy through balancing public expenditure management. There is no substitute to sound fiscal management in overall economic governance as a fair public income and expenditure management that assures private sector institutions and individuals a steady macroeconomic background. The vital source of government revenue is tax. Public revenue mainly consists of direct and indirect taxes which accounted for more than 80 percent of total government revenue. The government collects the rest of the public revenue from different non-tax collection such as fee, charge, toll etc. The level of revenue assortment is a vital indicator to establish the step of economic development of a country. The economy of a country becomes more stable if it collects large amount of revenue. In this section we are going to analyze the fiscal condition of Bangladesh during the time period from FY-1991 to FY-2008.During these years Prudent fiscal management emerged as a most important challenge facing the country. The Governments revenue mobilization efforts developed remarkably in the early 1990s following the launch of some major fiscal reforms, mainly introduction of the value-added tax (VAT) in 1991.The VAT provided greater coverage and raised rates than the taxes that it restored (mostly excise duty). The revenue tax to GDP ratio rose from 5.9 percent in FY1991 to 7.3 percent in FY1993, but since then, the proportion has remained steady at about 7 percent. A stagnant tax to GDP ratio reveals lack of improvement in broadening the tax net and in improving the tax management system; in brief, the effectiveness of tax assortment remains fragile and futile. Specifically, the Government has failed to widen the coverage of direct taxes, broaden VAT coverage to high-revenue-y ielding trades and services, develop the implementation of import taxes, and bolster tax government. Conversely, nontax revenues are relatively small (a bit less than 2 percent of GDP), and they also festered over much of the 1990s. As consequence, since FY1993, the entire revenue to GDP ratio has altered around 9 percent, making revenue collection of Bangladesh effort one of the weakest in the global economy. In spite of unsatisfactory revenue collection efforts for much of the 1990s, the Government was capable to uphold the fiscal shortage within 4-5 percent of GDP by keeping spending under control. Government expenditure, both current and capital increased rapidly. Therefore, the fiscal scarcity went up to indefensible levels. With declining alternatives to foreign funding of the deficit, the Government had been compelled to finance the shortfall from domestic sources -from banking sector and domestic borrowing. The ensuing monetary adjustment seriously damaged macroeconomic stability. Table 4 : Selected Fiscal Indicators (Percent of Gross Domestic Product) Because of drop of the revenue to GDP ratio to 9 percent in FY1998-99 from 9.3 percent in FY1997-98, caused by flood-induced disruptions, the Government attempted to reverse the declining trend and projected revenue to GDP ratio of 10 percent in the FY1999-00 budget. In spite of establishing a verified revenue mobilization object, no major efforts were made to apply vital fiscal reforms, reduce the tax structure, strengthen tax management, and extend the tax foundation. Moreover, the hindrance in introducing the reshipment assessment scheme, and slothful growth in imports also added to revenue shortfall. Customs duties collection declined by 10 percent in FY1999-00 compared with FY1998-99, and the share of customs duties in National Board of Revenue portion of taxes declined to 28 percent from 32 percent. Nontax revenue collection was also less than projected due mainly to reduced profit and dividend earnings of state-owned enterprises (SOEs). In FY1999-00, losses of nonfinancial SOE s were estimated at Tk31 billion, or 1.3 percent of GDP. Therefore, actual revenue mobilization in FY1999-00 rotated to be considerably below budget projections, at 8.9 percent of GDP. Government expenditure increased to 13.8 percent of GDP in FY1999-00 from 13.3 percent in FY1998-99, because of a rush in the outlay resulting from flood-induced expenditure, particularly the requirement for extra imports of food grains and post flood rehabilitation outlays. The tendency prolonged in FY1999-00 with overall expenses rising to 15 percent of GDP. Though the Government was capable to Keep up current spending at 7.6 percent of GDP (the same percentage as in the previous year), spending under the annual development program (ADP) went up to 6.7 percent of GDP from5.6 percent in FY1998-99. In the FY1999-00 budget, the Governments aim was to reduce expenses to 7.4 percent of GDP. It was a determined aim in view of the coming general election (scheduled for October 2001) when the pressures on t he Government to accommodate increased expenditure is bound to be considerable. Allocation for the ADP in the FY2000-01 budget was 6.5 percent of GDP, 50 percent of which was expected to be financed from domestic resources, and 40 percent of the domestic funding of the ADP would be from bank borrowing. The choice to fund a superior development budget with substantial borrowing from banks had risks to sustain macroeconomic constancy. While 34 percent of the ADP funds have been allocated to sectors that address poverty directly, about 33 percent had been assigned to infrastructure development comprising energy, transport, and communication. Not all ADP projects could be justified on grounds of accelerating the pace of development; several projects had questionable merit. What was more worrying was that some low -priority projects were being financed by high-cost foreign suppliers credits. In FY 1999-00, revenue/GDP ratio was 8.47 percent, which step by step went up to 10.79 percent in FY2005-06. In FY 2007-08 the revenue/GDP more went up to 11.17 percent and the g rowing trend of revenue-GDP ratio further increased to 11.24 percent in FY2008-09. Table 4.1 illustrates tax and non-tax revenue receipts and tax-GDP ratio within the period from FY1999-00 to FY2008-09. From the beginning of the FY2008-09 the revenue objectives of fiscal year came under challenge because of the impact of worldwide financial crisis. The international economy plunged into collapse mainly for noxious credit crisis in the US financial organizations and gigantic falls in prices of commodities like fuel, fertilizer etc. This price drop caused poorer collection of import duties which is the largest source of revenue although the price of commodities favored reduction of high inflation condition. The assortment of import duty in FY 2008-09 fell diminutive of the goals as the import duty is established on the basis of prices of the imported commodities. Study of revenue collection activities for FY2008-09 by categories illustrates that the volume of revenue collection attains from value added tax (VAT).Income tax takes up the second position in the row. Next places are held by import duties, complementary duty, additional taxes and excise duty. On the whole, the part of VAT in the entire revenue collection is progressively increasing. It can be states that, income tax occupies second place above import duties for the second consecutive time. In FY 2008-09, though the entire revenue collection by NBR source fell diminutive of the goals but overall revenue collection stood at TK. 52525.61 crore, which is TK. 5236.49 crore higher than the assortment of the previous fiscal year showing an 11.07 percent increase. In FY 2007-08, total revenue collection placed at TK. 47289.12 crore, which was Tk. 10,069.8 crore or27.06 percent higher than the assortment of the previous year. In FY 2006-07, the total revenue collection under NBR amounted to Tk. 37219.32 crore which was Tk. 3,216.89 crore or 9.46 percent higher than that of the previous year. Item-wise tax collection from FY2006-07 to FY2008-09 is shown in Table 4.2. Management of public expenditure is the most vital part for the fiscal management of the government. The major aims of fiscal management are to uphold social safety net activities, inspire expenditure in productive level, practice austerity in public expenditure and controls over unproductive expenses. Reducing poverty through improving the standards of living of the generals, building physical infrastructure and developing human resources are the key features of large public outlays in every year. Total public expenditure, development expenditure and expenditure/GDP ratio for FY 2008-09 and during the last decade are shown in Table 4.3. Investigation of entire non-development expenditure illustrates that in FY 2003-04, expenditure on pay and allowances was 27.4 percent of total non-development expenses. In FY 2004-05 and FY 2005-06 these percentage decreased to 25.3 and 27.6 respectively, but went up to 28.5 percent in FY 2006-07 and again decreased to 23.6 percent in FY 2008-09. In FY 2003-04, the spending on subsidy and current transfer accounted for 28.4 percent of entire non-development expenses. In FY 2004-05, FY 2005-06, FY 2006-07 and FY 2008-09 the spending on subsidy and current transfer accounted for 30.1, 29.1, 31.4 and 40.5 percent of entire non-development expenses correspondingly. In FY 2004-05, FY 2005-06, FY2006-07 and FY 2008-09 the shares of interest payments on foreign and domestic credits in total non-development cost were 18.8, 19.8, 20.2 and 20.8 percent respectively. The average genuine cost against the adjusted allotment of ADP was around 90 percent during the time from 1999-00 to 2005-06 (Table 4.4). In FY2006-07 and FY 2007-08, the utilization of ADP is about 83 and 82 percent correspondingly. In FY 2008-09 the short-term expenditure records 85.7 percent utilization of revised allotment. The growing tendency of distribution and expenditure in socio-economic and physical infrastructure segments all the way through ADP is constant with the twin objectives of the government- attaining higher growth and diminishing poverty. ADP expenditure and its composition by key sectors are shown in Table 4.5. Budget is organized in line with the national plans and policies taken up for economic development, poverty diminution and social growth. There arises a budget shortage occurring from a space between the government revenue and expenditure, where expenditure becomes more important than the revenue income. The succeeding governments are taking policies to control resources and shifts earnings at an increased rate to the poor people of the country since over 40 percent of population live beneath poverty line. Though, this enhances budget shortage little further, but it generates purchasing power of a vast population that finally propel growth by escalating aggregate demand. It also facilitates a huge portion of the population to keep minimum livelihood. The tendency of budget shortage in Bangladesh obviously shows that shortage remains under 5 percent of GDP except for those years when there were natural catastrophies. Table 4.6 below represents data on budget shortage and the form of i ts financing throughout the time period from FY1999-00 to FY2008-09. At present the debit obligation of the government is at a reasonable stage. Financing throughout grant and credit from outer sources is progressively tightening because of shifting in the policies of contributors. This, prompted the government to take a variety of restructuring initiatives and to adopt inspirational measures to mobilize resources from domestic sources together with from external sources. In principle, the government has a preferences on concessional foreign borrowing to domestic borrowing due to the poorer outlays of foreign borrowing and longer reimbursement time period. Findings Bangladesh is a third worlds developing country. At present it is going through a financial crisis. To analyze any countrys financial condition the key factor is to investigate its fiscal policy and management as fiscal policy has a great impact on the countrys development procedure. In our term paper we have discussed the fiscal condition of Bangladesh in brief. Financing of regular insufficiency, generally undertaken through borrowings from abroad, from Bangladesh Bank, and from scheduled banks, has become a central characteristic of the fiscal policy of the country. Opportunity of borrowing from the public by the government for financing budget deficiency is very limited in the country as investments capability of the people is very low. Therefore, the opportunity of non-inflationary financing of budget shortfall does not exist here. Availability of foreign borrowing depends on the international liquidity situation and the prevailing circumstances in the international capital market, which is always uncertain and unpredictable for a country like Bangladesh. Here, some major key findings which has a great influence on Bangladeshi economy that we noted out from the analysis section are added : # Introduction of Value Added Tax (VAT) in early 1990s is one of the key fiscal reforms to develop a effective fiscal administration. # The revenue tax to GDP ratio rose from 5.9 percent in FY1991 to 7.3 percent in FY1993 # Because of drop of the revenue to GDP ratio to 9 percent in FY1998-99 from 9.3 percent in FY1997-98, caused by flood-induced disruptions, the Government attempted to reverse the declining trend and projected revenue to GDP ratio of 10 percent in the FY1999-00 budget # Customs duties collection declined by 10 percent in FY1999-00 compared with FY1998-99, and the share of customs duties in National Board of Revenue portion of taxes declined to 28 percent from 32 percent # In FY1999-00, losses of nonfinancial SOEs were estimated at Tk31 billion, or 1.3 percent of GDP. Therefore, actual revenue mobilization in FY1999-00 rotated to be considerably below budget projections, at 8.9 percent of GDP # In FY1998-99 there had a rush in the outlay resulting from flood-induced expenditure, particularly the requirement for extra imports of food grains and post flood rehabilitation expenses # In the FY1999-00 budget, the Governments aim was to reduce expenses to 7.4 percent of GDP. It was a determined aim in view of the coming general election (scheduled for October 2001) when the pressures on the Government to accommodate increased expenditure is bound to be considerable. # In FY 1999-00revenue/GDP ratio was 8.47 percent, which step by step went up to 10.79 percent in FY2005-06. In FY 2007-08 the revenue/GDP more went up to 11.17 percent and the growing trend of revenue-GDP ratio further increased to 11.24 percent in FY2008-09. # From the beginning of the FY2008-09 the revenue objectives of fiscal year came under challenge because of the impact of worldwide financial crisis. # In FY 2008-09, though the entire revenue collection by NBR source fell diminutive of the goals but overall revenue collection stood at TK. 52525.61 crore, which is TK. 5236.49 crore higher than the assortment of the previous fiscal year showing an 11.07 percent increase. In FY 2007-08, total revenue collection placed at TK. 47289.12 crore, which was Tk. 10,069.8 crore or27.06 percent higher than the assortment of the previous year. In FY 2006-07, the total revenue collection under NBR amounted to Tk. 37219.32 crore which was Tk. 3,216.89 crore or 9.46 percent higher than that of the previous year. Item-wise tax collection from FY2006-07 to FY2008-09 # The average genuine cost against the adjusted allotment of ADP was around 90 percent during the time from 1999-00 to 2005-06. In FY2006-07 and FY 2007-08, the utilization of ADP is about 83 and 82 percent correspondingly. In FY 2008-09 the short-term expenditure records 85.7 percent utilization of revised allotment. # The tendency of budget shortage in Bangladesh obviously shows that shortage remains under 5 percent of GDP except for those years when there were natural catastrophes. The findings

Cost Accounting Terminologies Essay

Cost accounting, as a tool of management, provides management with detailed records of the costs relating to products, operations or functions. Cost accounting refers to the process of determining and accumulating the cost of some particular product or activity. It also covers classification, analysis and interpretation of costs. The cost so determined and accumulated may be the estimated future costs for planning purposes, or actual (historical) costs for evaluating performance. The Institute of Cost and Management Accountant (ICMA), London, defined cost accounting as â€Å"the process of accounting for cost from the point at which expenditure incurred or committed to the establishment of its ultimate relationship with cost centers and cost units. In its widest usage it embraces the preparation of statistical data, the application of cost control methods and the ascertainment of profitability of activities carried out or planned.† Costing Cost accounting and costing have distinctly different meanings. The Institute of Cost and Management Accountant (ICMA), London, defined costing as the ascertainment of costs. Costing includes the â€Å"techniques† and â€Å"processes† of ascertaining costs. The technique refers to the principles or rules which are applied for ascertaining costs of products manufactured and services rendered. There are mainly two methods of costing job costing and process costing. The process includes the day to day routine of determining costs within the methods of costing adopted by the business enterprise. Within such a process, there could be historical costing, marginal costing, absorption costing and standard costing etc. Objectives of Cost Accounting There is a direct relationship among information needs of management and cost accounting objectives and techniques and tools used for analyses in cost accounting. Cost accounting has the following three important objectives: 1. To determine the product cost.  2. To facilitate planning and control of regular business activities. 3. To supply information for short and long-run decision. Product Costing The objective of determining the cost of products is the prime importance of cost accounting. The total product costs and cost per unit of product are important in making inventory valuation, deciding price of the product and managerial decision making. Planning and Control Another important objective of cost accounting is the creation of useful cost data and information for the purposes of planning and control by management. The different alternative plans are evaluated in terms of respective costs and associated benefits. The management control over business operations aims to establish balance between actual and budgeted performance. A properly designed cost accounting system includes the following steps in the control process: 1. Comparing actual performance with budgets and standard 2. Analyzing the variances between budget and standards and actual by causes, and management responsibility so that corrective actions may take place. 3. Providing managers with data and reports about their individual performances and performances of subordinates. Information for decision Another important objective of cost accounting system is to provide data and special analyses for short and long-run decisions of a non-recurring nature. Appropriate cost information must be accumulated to make a wide variety of short and long run decision. According to Henke and Spoede, the following are the cost information developed in cost accounting: 1. As a basis for valuing manufactured inventories and cost of goods sold in externally presented financial reports. 2. In controlling operations through the evaluation of operating results and the placement of responsibilities for the uses of organizational resources on the shoulders of specifically identifiable persons within the organization. 3. In planning operations through the establishment of cost and budgetary goals. 4. In making day- to- day operating decisions. The cost information is used for two purposes in most organizations: 1) the cost accounting systems provide information to evaluate the performance of an organizational unit or his manager, and 2) also provide the means for estimating the unit cost of products or services that the organization can manufacture or provide to others. a) Performance measurement: This measurement can be done by comparing current costs with those who were expected – or standard costs budgeted cost – to the degree of knowing which of them have been controlled. Deviations of expected with the current – variances – can be identified, evaluated and discussed by managers. b) Cost of goods and services: In manufacturing companies, the costs of goods must be measured to determine the cost of items transferred from work in process inventory to finished products. To meet the demands for information, a cost system should measure all the costs of manufacturing process and allocate a portion of those costs to each unit of output. The cost to obtain, maintain and manage the manufacturing plant or building should be added to the cost of material and productive work that requires each unit. The first are called indirect costs and the two last are called direct costs. c) Profit analysis. Information in costs is essential to analyze the profits obtained from a product or product line. The information on the cost of a product enables managers to assess the contribution margin – the difference between the price and variable costs – and the gross margin – the difference between the price and the total cost of the product. d) Product mix. For the companies that offer more than one product or service the cost information is key to handle the mix of products or services offered to customers. With information on cost-profit, a manager can lead the effort in sales and advertising for products that generate greater value. The products that do not create any profit can be removed, have a price reassignation, or tied up with products that have greater utility. e) Price assignation. Regardless of where prices are determined by the forces of market demand, product differentiation and advertising offer to many managers some sort of idea to assign prices to products or services. The costs of products and trends commonly offer signals to managers that prices should be changed. An example could be the change in the cost of a material or critical component which can give a signal to reassess the price of a product or service. f) Cost of service. Many products require the seller to provide additional services to customers. In such cases, the information about the cost of service is so important for managers as the cost of production. The same for companies that offer services only, unless the cost of service is measured, there is no way to know whether providing the service is profitable or not, or whether changes in prices or advertising are needed. Looked from another angle, the uses that the administration of a company can give to the costs can be grouped into 4 categories, specified below Method of costing As state earlier, the term costing refers to the techniques and processes of determining cost of a product manufactured or a service rendered. Different methods are applied in business enterprises to ascertain cost depending upon the nature of the product, production method and specific business conditions. For example, in a textile or steel company, raw material passes through different stages and production is done continuously. In some other industries, production is done at different customers specific orders and each job is different from the other job.

Growing Fungi and Bacteria of Plants

Introduction There are both virulent and non-virulent bacteria and fungi that grow on plants. It is difficult to distinguish between the two without proper inspection and diagnosis of the diseased plant to know whether the bacteria or the fungus in question is the virulent or non-virulent one. Therefore pure cultures need to be isolated to know with absolute certainty which is the causative bacteria or fungus. Potato dextrose agar is a good nutrient agar for mycelia to thrive on which is present in most fungal moulds. Standard nutrient agar is a general utility used for non-fastidious microorganisms. 2 Aim The aim is to isolate fungi and bacteria colonies from diseased and healthy leaves. Materials and Methods Materials used for the experiment was two of each: standard nutrient agar plate and potato dextrose agar plate. To remove any epiphytic or saprophytic microbes from the plant surface the leaf is superficially sterilized with 100% ethanol. A scalpel to cut the leafSterile water for macerating the leaves. To isolate the fungi: Cut 5 pieces of leaf from the diseased leaf around the edges of the diseased area so it contains both healthy and diseased parts, place it on the one potato dextrose agar plate. Then cut 5 pieces from the healthy leaf and place them on the second dextrose agar plates. To isolate bacteria: Macerate both the healthy and diseased leaves separately in the sterile water and streak it onto the two separate standard nutrient agar plate.Incubate all four plates at 25? C for up to 7 days. Discussion There is growth on both the healthy and diseased agar plates for both bacteria and fungi. For the healthy fungal plate there is a single type of growth which suggests that it is a natural non-pathogenic fungus that grows on plants. On the diseased plants there are 5 different colonies of fungus from the 5 different pieces of leaves. The one area has a clear zone where the fungus has inhibited the growth of the other colonies.On the healthy bacteria l plate there is some bacterial growth which can also suggest non-pathogenic bacteria that grows on plants. On the diseased plant bacterial plate there is some bacterial growth but not a lot and still fungal growth. Conclusion The lack of bacterial colonies on the bacterial plate and the fungal growth on the same plate suggests that the disease on the plant is caused by a fungal pathogen and not a bacterial one. There are fungi and bacteria that grow on plants that are not harmful towards the plant. ?

Rosa Lee Story - 866 Words

The Rosa lee story Rosa Lee gave dash full access to her and her family life for four years, because she thought someone could learn from it. Rosa was born in Washington and was living a low class life, and often looked down up on for it . Rosa lee was brought up in a single parent house hold and when she entered jr. high her dad died. Rosa mom often struggled to take care of her and her siblings. Her mother gave birth to twenty-two kids, but only eleven survived. Rosa and her mom never saw eye to eye and when she got pregnant at the age of thirteen it didn’t make their relationship any better. At the age of fourteen she had her first prostitution experience for five dollars, she told her customers at work that if they were†¦show more content†¦They had honest jobs like bus driving and had their own cab services. Her brother and sister choose a different path because they seen and knew the struggle that their mom and sister Rosa had to deal with. Seeing Rosa life its self made you want to do right. Eight kids, having to steal, selling and using drugs and being back and forth in jail made you want to do right. Rosa didn’t start selling drugs with the intent to use them, it just happened, she thought selling marijuana and heroin was a quick way to get money and keep her welfare, but when she started she couldn’t quit she was using two fourty dollar bags a day. She said that when she used the drug it gave her courage. Rosa could do and say anything when she was high. Rosa and her siblings used drugs and broke the law because they were not taught any right from wrong . They had such a rough childhood and at this time they didn’t know any better, they were young when they started. Even Rosa kids started taking different paths at very young ages. They didn’t go to school because she didn’t make them. Rosa did drugs in front of her kids and it made them want it. Her one and only daughter Patty started using drugs at the age of thirteen and was rapped several times by relatives while Rosa was incarcerated, which is why she said she hated males and on top of that she was prostituted by her mom. Her son Ronnie started using drugs at the age of fifteen,Show MoreRelatedFighting For Equal Right Essays754 Words   |  4 Pagesfor white to treat black drastically. Resentment slowly grew among members. In 1950s to 1970s, many different activist sparked a Civil Right Movement. The activist who participates in the ignition of the civil right movement are Rosa Park, Emmett Hill, and Harper Lee, their contribution had unleashed the long suppressed hate within the people, and their effort also builded a strong bond between each other. He was the most beautiful baby in this world. Mamie said. Emmett Till was an innocentRead MoreAnalysis Of Rosa Parks, An African American Activist For Racial Equality1342 Words   |  6 PagesAnother Aspect of Education â€Å"Racism is still with us. But it is up to us to prepare our children for what they have to meet, and, hopefully, we shall overcome† (Rosa Parks). Rosa Parks, an African American activist for racial equality, stated this in hopes that older generations will teach equality to the younger people of American society. Racial discrimination is commonly thought of as a historic issue that has been largely resolved in today’s day and age. Since slavery was abolished in theRead MoreTo Kill a Mocking Bird Is a Relevant Novel Essay842 Words   |  4 Pagessociety at large. To Kill A Mocking Bird was written during the time of the Civil Rights Movement. It reflects on an important part of history and exposes practices that young people may not be familiar with. For example, â€Å"The Rosa Parks story†, As a Member of the NAACP, Rosa Parks refused to give up her seat at the front of the colored section of a bus to a white passenger. She was then arrested and the Mo ntgomery black community launched a bus boycott, which lasted over a year, until the busesRead MoreRosa Lee Essay3975 Words   |  16 PagesNAME (primary client): Rosa Lee Cunningham DATE OF BIRTH: October 7, 1936 CHRONOLOGICAL AGE: 52 SEX: Female ADDRESS: FUNDING SOURCE: DATE OF REPORT: 3/14/2012 Identifying Information: Rosa Lee is a feisty African American female who grew up poor on the fringes of a Capitol Hill neighborhood. Her parents were sharecroppers who had migrated to the city. Rosa Lee had eight children, six boys and two girls, over an 11 year stretch; she was 14 years old when sheRead MoreRosa Parks, the Mother of Civil Rights1060 Words   |  5 PagesRosa Parks was an African American woman who was brave enough to stand up to the whites. Even though she went to jail for what she did, she believes she did the right thing. What Rosa had done on the bus started boycotts and created more and more activists. People wonder if Rosa Parks was raised to stand up for herself or if she was supposed to stay quiet. Looking at Rosa’s life and what happened on the bus and beyond, it can be concluded that she was taught to take pride in her race. Rosa (McCauley)Read MoreThe Courage Of Rosa Parks1566 Words   |  7 PagesRoxanne Williams Prof. Lobito Enc. 1101 April 19, 2016 The Courage of Rosa Parks ‘’Each person must live their life as a model for others.’’ (Rosa Parks) Rosa Parks was tired of the way African Americans were poorly treated. She took a stand by not obeying a demand to give up her seat to a white passenger on a Montgomery bus. Because of her bold action she became a model to millions. Parks was an African American woman who became known for her bravery, which helped to change the nation. ‘’ParksRead MorePrejudice And Prejudice By Harper Lee1254 Words   |  6 Pagesspecific situation. In many cases, prejudice is being unethical and showing a biased opinion toward a person’s race, age, disability, ethnicity, and etc†¦ In To Kill A Mockingbird, Harper Lee purposely characterizes the idea of prejudice as a common topic that is responsible for social injustice and racial inequality. Lee illustrates the ways of prejudice by having situations that may have occurred in past history. She carefully distinguishes the idea of prejudice and explains to the reader by tellingRead MoreHidden Figures By Margot Lee Shetterly Segregation / Civil Rights Movement1288 Words   |  6 PagesSegregation was the discrimination of colored people and being separated from the white community. This time period, the 1960’s, was shown in both Hidden Figures and The Help. The book Hidden Figures by Margot Lee Shetterly represents segregation/Civil Rights Movement as a nonfictional story about three black women who strive to be engineers at the Langley lab in Virginia and their efforts to get there. However, The Help by Kathryn Stockett represents segregation/Civil Rights Movement as the backdropRead MoreHidden Figures By Margot Lee Shetterly Segregation / Civil Rights Movement1347 Words   |  6 PagesSegregation was the discrimination of colored people and being separated from the white community. This time period, the 1960’s, was shown in both Hidden Figures and The Help. The book Hidden Figures by Margot Lee Shetterly represents segregation/Civil Rights Movement as a nonfictional story about three black woman who strive to be engineers at the Langley lab in Virginia and their efforts to get there. However, The Help by Kathryn Stockett represents segregation/Civil Rights Movement as the backdropRead MoreHidden Figures By Margot Lee Shetterly Segregation / Civil Rights Movement1402 Words   |  6 Pagespeople were given poorer treatment than white people, and everything was segregated, from buses to schools to water fountains/bathrooms. Segregation was portrayed in two books. The book Hidden Figures by Margot Lee Shetterly represents segregation/Civil Rights Movement as a nonfictional story about three black woman who strive to be in the engineering field at the Langley lab and what it takes for them to get there. However, the book The Help by Kathryn Stockett represents segregation/Civil Rights