Ivy Joyce D.

Villanueva
BSTM 4-YA-1A

Direct and Indirect Cost

A cost which can be directly identified which making a product or providing a service. Direct costs
fluctuate along with production and purchasing levels, as well as in response to outside variables
like shifts in supplier pricing or currency exchange rates. Direct costs can be classified into direct
materials, labor, wages and expenses. The sum of cost of the materials and labor is often referred
to as a prime cost. In some cases, the direct costs may be equal to the cost of a good. Calculating
the direct cost will depend on the product being manufactured and thus the methods used vary.
Examples of direct costs of the food and beverage department in a hotel include the money spent
on the food and beverages served, the wages of table service personnel, and the costs of
entertainment in the dining room and lounge. Direct costs can help you make important pricing
decisions. Knowing direct expenses aids in the development of a strategic marketing plan and good
business decisions. Calculate your production costs before you start producing and selling your
products. Once the overall costs are identified, you can figure out the selling price and the quantity
of goods you'll need to move in order to make a profit. Therefore, you must know how much
money you spent on each item produced in order to recover your costs. Direct costs should be
monitored to ascertain whether the manufacturing price decreases or increases. You should
examine the product pricing as production costs go up. The profits may decrease if you don't keep
an eye on changes in supply pricing. Estimate the direct costs each month to be sure they haven't
changed in order to prevent this from occurring. While Indirect Cost represent the expenses of
doing business that are not readily identified with a particular grant, contract, project function or
activity, but are necessary for the general operation of the organization and the conduct of activities
it performs. An indirect cost rate represents the ratio between the total indirect costs and benefiting
direct costs, after excluding and or reclassifying unallowable costs, and extraordinary or distorting
expenditures. Indirect costs include costs which are frequently referred to as overhead expenses
for example, rent and utilities, general and administrative expenses salaries, accounting
department costs and personnel department costs.
 Cost Object

A cost object is a phrase used in management accounting to refer to any aspect of a company's
operations for which expenses are specifically assigned, calculated, accrued, and tracked.
Examples of cost objects include products, services, customers, departments, and projects. A cost
object is a general phrase that applies to any component of a business that creates costs that a
business wants to quantify the price of for planning purposes, controlling, making decisions, and
other activities that manage costs. When a business creates a product, spends money on a range of
direct and indirect expenses, which allocated to the product cost object, as follows Direct materials,
Direct Labor, salaries, transportation, and equipment. There are three main types of coat objects,
Output cost objects are products and services offered by a company. A company's output, or its
range of products and services, is its most frequent and significant cost object. This is due to the
fact that every firm must be aware of the breakeven cost of the output of its goods and services in
order to set prices that will result in desired profit margins and maintain long-term business
viability. Next is Operational cost object are projects, department processes and other objects
within a business for instance, a company that manages events is likely to keep track of the
expenses related to each event it plans. And last is Business relationship are costumers and other
cost objects outside of a company For instance, a business might keep track of the expenses related
to doing business with a particular third party, such as a significant client, a supplier, or even a
government organization. Cost objects make financial planning, management, and decision-
making more granular, transparent, accurate, and efficient especially across a wide range of
business segments include cost control, budgeting and forecasting, financial reporting, pricing and
profitability, and regulations.
 Detecting Travel and Entertainment Expense Fraud

According to one survey done by the Global Business Travel Association in 2014 was about 292
billion dollars in that entity in any industry and that’s projected to increase to 310 billion in 2017.
Organizations are trying to take advantage of some benefits that are being offered through these
travel and entertainment programs as opposed to traditional methods that were being used.
According to IRS regulations, businesses must acquire a complete accounting for the business
expenses that their workers incurred, including receipts and expense reports, within a reasonable
amount of time. The company shall receive any unused advances or extra payments within a
reasonable time period. The expenditure must pertain to business. The cost must be directly
connected to providing services as an employee. The expense must be sufficiently supported by
evidence before it can be accepted as supported. Documentation for the type and amount of the
expenditure includes receipts and invoices. The amount of the expense that is paid using the vehicle
mileage allowance is known as deemed substantiation. Before being approved as supported, the
expense must have enough proof to back it up. Receipts and invoices are used to support the type
and monetary amount of the spending. Expenses that are covered in whole utilizing the vehicle
travel allowance are referred to as "deemed substantiation." Ensure that your employees stay
within the policy because if it words get out of sort of thing happen it could spell repetitional
damage. You can protect your company’s resources and reputation while growing T&T program.
A simple definition of the word ‘reputation’ is the general beliefs or views that people have about
something or someone. Essentially, all of the different opinions that exist combine to form a
reputation. Individuals can have reputations, as can organisations and other entities, including
travel industry companies.
 Examining Travel & Entertainment Expenses

The video that I’ve been watch by Lynn is Examining Travel expense audits are essential because
they enable cost control, provide insight into travel expense data, verify compliance to company
spending policies, and aid in the detection of irregularities and expense fraud. A T&E policy is
essential for the company and is an effective method of managing business travel. it is a document
that tells them in complete transparency what is or is not reimbursed and the conditions to be
respected during a trip. A T&E policy's objectives are to control employee travel, maximize
spending limits, and make sure that all expenditures are in keeping with the guidelines. The travel
policy covers more than just spending restriction. Employees' interests are also served, and
providing them with comfort and safety allows them to travel without concern for costs. Because
of this, it's crucial to take the requirements and opinions of your employees into considerations. A
company travel policy consists of outlining the guidelines for employee travel, providing a detailed
framework for determining the budget, limiting costs for accommodations, travel, and other
services, as well as internal validation procedures. The travel policy is a crucial document that
compiles all the established rules. It aids in preventing potential overruns and unnecessary
expenditures. Audit procedures are the methods used by auditors to gather all the information they
require. These details are used by the auditors to create a report. The report presents a
comprehensive picture of an organization's financial situation. To identify and stop fraud in the
future, audit methods must be effective. Companies must adhere to a set of guidelines when
conducting a travel cost audit. It is possible to avoid confusion within teams or processes with a
clear and well-communicated method. Additionally, it helps each stakeholder understand how they
fit within the process. Everyone can keep aware and proactive because of this.
 Travel & Entertainment Expenses Audit Solution

Travel expense audits are crucial because they help you control costs, gain insight into travel
expense data, ensure compliance with your expense policies, and help identify irregularities and
expense fraud. There are various reasons why conducting travel cost audits can be difficult Manual
methods of managing travel expenses, such as requesting paper receipt submission from
employees and compiling data using spreadsheets, might result in a disorderly travel expense audit
process. Travel expense audits are performed by auditors who compile reports. By comparing
receipts with travel cost submission records, the auditor will perform a complete evaluation of
your financial facts about travel expenses. Evaluation of travel expense policies The corporate
travel and expense policies will also need to be reviewed by auditors. This enables them to assess
how strictly managers adhere to the policies. As with any audit process, there are best practices to
follow when travel expense audits are carried out. Travel expense audits are essential to ensure
that internal controls like your corporate travel policies are working, employees are following the
requirements, and that you’re not losing unnecessary money in the process. All expense reports
require management approval using the Approvals Management system. To request
reimbursement for business trip expenses, employees must enter and submit expense reports. Each
expense report consists of a header record and detail records. The header record contains basic
information, such as the employee's address book number, the purpose of the trip, the business unit
responsible for the expenses, etc. The detail records contain information about each of the expenses
they incur. Before submitting expense reports, employees can review report totals and verify the
expense amounts.