General Electric's Allocation of Costs Essay Example | Topics and Well Written Essays - 1500 words

General Electrics every(prenominal)ocation of Costs - Essay ExampleGeneral Electric and Cost Allocations At General Electrics managers are very much concerned about the tout ensembleocation of costs as these allocations are required for the proper missionary work of resources and cost to the respective department. Manager at GE realize that the cost allocation to different divisions, plants, departments, contracts and/ or products will result in increased motivation for the organization, it will also justify costs of various expenditures as these would than be used by the auditors to audit and overlook all the managerial activities so that on that point are no issues arising at General Electric. Also, in order to justify cost plus pricing, General electric is involved in cost allocations and in strengthening the cost of the procedure. They are also involved in decision making with regards to joint costs, re allocation of costs from one department to nigh other department as ne ed arises. GE makes sure that the allocated costs are fair, workable, and rational and according to the needs of what is required by all the departments. Allocating costs for the discourse and managing of different activities have to be simplified in various elbow rooms, this simplification will ensure that the targets for the companies are achieved and that the targets achieved should give maximum profitability for the company. The products of General electrics include lights, bulbs etc all go by dint of manufacturing process to the finished stage where it has to be marketed and sold in the market. So it is important that the manufacturing sector gets the required budget for the manufacturing through their raw materials, the proper supply chain processes and than the marketing should also get all the required budgets to handle proper marketing and selling for the company. The budget that is circulated in the company, managers cant surpass that and hence this is the only way thr ough which employees can manage the way they negotiate in their dealings to conduct more cheaper and inexpensive work. departmental budgets and costs are a good way to keep the company and all department effective and informed about how they get their departments to work on these lines and hence they adapt themselves to work in a culture which motivates all the employees, justifies all the costs that are accrued and also it justifies the way they make their expenditures. All the departments accrues costs, but the heaviest department is marketing, as all the marketing activities are very expensive and they are conducted on a large scale. The activities that are conducted on a large scale employs that bigger expenses would be done to meet the expectations of their competitors. Like if GE wants to make any advertisement, it will accrue cost, if they want to get some marketing done through sponsorships and other such related stuff than it is also expensive. So its important to track all the activities and to see its impact on sales. If sales are not improving than theres no point of all these heavy ativties and hence it is important to do all but keeping in track of the sales situation. As with inflation the cost of doing business is also increasing. The raw materials are expensive, the duty on these raw materials is also expensive and the way to procure them has also become very expensive. So at every stage proper analysis has to be done and controlled budgets have to be allocated with all the departments to keep a proper check and balance on these situations for