Assessing the amount of overhead cost that can be allocated to each production process can be tough. This is why an overhead rate is calculated to estimate the overhead costs for each cost driver or activity. Overhead costs can be allocated to the direct costs such as direct labor costs … Read more
Every organization has a structure known as a chain of command that dictates the reporting relationships between different employees. A chain of command builds a reporting relationship in an organization wherein a hierarchy of people reports to one another based on their level of authority. In this article, we will … Read more
There are two ways in which businesses vertically integrate. When a business extends its operational activities in the direction of its customers, it is said to be forward vertical integration. However, if a business extends back through its supply chain to control early-stage inputs, it is called backward vertical integration. … Read more
Autarky in economics can be thought of as an extreme form of economic protectionism and nationalism. This involves economic independence from other countries wherein a country employs to survive or thrive on its own and grows to a level of self-sufficiency. The concept of autarky in economics may be rare … Read more
Historically, the traditional economy is significant because it marks the evolution of the market economy, being that every nation developed from some type of traditional economy. Contemporarily though, there are several traditional economy examples of societies in recent times that allow traditions to dictate the way goods are produced and … Read more
In accounting, carrying out a bank reconciliation at the end of a financial period is very important to ensure that the financial records of a company are correct. Making the necessary bank reconciliation journal entries helps to eliminate any discrepancies between the bank statement figures and the figures on the … Read more
Process costing system is an accounting method usually used by manufacturing companies that mass produces very identical products or units of output. This costing system is used when the costs of producing each individual unit are very similar, and it is difficult to track the costs for each individual unit … Read more
Horizontal integration takes place when a company merges or acquires another company that is at the same point of its value chain in the same industry. Typical horizontal integration examples could be a manufacturer acquiring another manufacturer, a distributor merging with another distributor, or a raw materials owner merging with … Read more
Backward vertical integration is a strategy that involves a business owning and controlling the business activities that are upstream of its supply chain; that is, the business merges with or acquires its inventory or raw material supplier. In this article, we will discuss some real-life backward vertical integration examples and … Read more
A lot of companies depend on suppliers of raw materials, manufacturing partners, distributors, and retailers for their business operations and tend to face disruptions in their supply chain; on the other hand, some companies have adopted different types of vertical integration strategies wherein they take ownership of two or more … Read more
