150 words for Coursemate-2 response required for below post:
Process costing is a way of attributing assembly costs to output devices. In the cost model, production costs are not related to profitability characteristics. Mainly costs are allowed for assembly of units. That being said, distribute the cost of profitable equipment while distributing across segments. The valuation technique is commonly used for strategies that produce large volumes of homogeneous product (Sungki, 2019). The costing process involves valuation using a variety of computational methods, including object casting, degree valuation or interest value formation. Using the cost method is the top of the road in good conditions. Homogeneous assumptions that yield devices are indistinguishable from each other. To avoid the risk of crop reserves being uniform, the cost method can be carefully estimated using.
The small effort indicates that each symbolic unit return is not always worth it. In the case where the list of profitability is simple, it is useful to use the cost method for this factor. In the case where it is now excessive or impossible to determine production costs to classify profitable equipment, it may be useful to use a cost calculation method. Evaluation behavior assessment refers to the manager’s effort to realize that performance cost substitution goes a long way, rather than the scope of the ancillary activity. In addition, these costs also include direct materials, direct labor and overhead costs, which are approximately from the development of the facility. Leaders usually make this direct estimate using meaningful numerical abilities. It is not uncommon for managers to use quantitative methods to demonstrate their respectability (Louisiana, 2020). The most effective approach is the high-low method. This process makes the most reliable use of the pleasant and minimal estimates of useful electricity and its characteristic costs to select truly valuable energy. Although there are many obstacles to this process, it is very easy to first try to verify ownership, actual electricity and total costs. As an administrator, I like the 5 different steps to calculate the cost of the process, such as analyzing the flow of inventory, combining product lists with equivalent units, calculating all applicable costs, calculating unit costs, and assigning costs to completed and incomplete inventory units.
Process Cost Calculation Example: XYZ International manufactures purchase equipment required for the manufacture or assembly of three offices. The major division in manufacturing is the design division, in which the equipment is produced quite substantially. Over the long term of March, the design department brings in approximately $ 50,000 in direct fabric prices and 000 120,000 in extrusion prices. In March, the division produces 10,000 devices, which means that the specific valuation of equipment passing through the design department during this period is $ 5 for live ...
150 words for Coursemate-2 response required for below postPr
1. 150 words for Coursemate-2 response required for below post:
Process costing is a way of attributing assembly costs to output
devices. In the cost model, production costs are not related to
profitability characteristics. Mainly costs are allowed for
assembly of units. That being said, distribute the cost of
profitable equipment while distributing across segments. The
valuation technique is commonly used for strategies that
produce large volumes of homogeneous product (Sungki, 2019).
The costing process involves valuation using a variety of
computational methods, including object casting, degree
valuation or interest value formation. Using the cost method is
the top of the road in good conditions. Homogeneous
assumptions that yield devices are indistinguishable from each
other. To avoid the risk of crop reserves being uniform, the cost
method can be carefully estimated using.
The small effort indicates that each symbolic unit return is not
always worth it. In the case where the list of profitability is
simple, it is useful to use the cost method for this factor. In the
case where it is now excessive or impossible to determine
production costs to classify profitable equipment, it may be
useful to use a cost calculation method. Evaluation behavior
assessment refers to the manager’s effort to realize that
performance cost substitution goes a long way, rather than the
scope of the ancillary activity. In addition, these costs also
include direct materials, direct labor and overhead costs, which
are approximately from the development of the facility. Leaders
usually make this direct estimate using meaningful numerical
abilities. It is not uncommon for managers to use quantitative
methods to demonstrate their respectability (Louisiana, 2020).
The most effective approach is the high-low method. This
process makes the most reliable use of the pleasant and minimal
estimates of useful electricity and its characteristic costs to
select truly valuable energy. Although there are many obstacles
2. to this process, it is very easy to first try to verify ownership,
actual electricity and total costs. As an administrator, I like the
5 different steps to calculate the cost of the process, such as
analyzing the flow of inventory, combining product lists with
equivalent units, calculating all applicable costs, calculating
unit costs, and assigning costs to completed and incomplete
inventory units.
Process Cost Calculation Example: XYZ International
manufactures purchase equipment required for the manufacture
or assembly of three offices. The major division in
manufacturing is the design division, in which the equipment is
produced quite substantially. Over the long term of March, the
design department brings in approximately $ 50,000 in direct
fabric prices and 000 120,000 in extrusion prices. In March, the
division produces 10,000 devices, which means that the specific
valuation of equipment passing through the design department
during this period is $ 5 for live materials and $ 12 for
conversion costs. As an example of cost behavior, if 36,000
gallons of water and 60,000 gallons of water are selected, the
opposite cost is $ 6,000 ($ 20,000 - $ 14,000) and the opposite
value is 24,000 (60,000 - 36,000). So the slope of the line, the
variable fee is $ 0.25 ($ 6,000 ÷ 24,000), and the fixed cost is $
5,000. See the table to reveal this.
High - low technique. The high-low method distinguishes the
antithesis in costs, usually the high quality, and the maximum
reduced sales ranges are usually on the opposite side in devices
that are less important for high quality and variable cost
estimates. The unreasonable passion item is 75,000 gallons and
the low one is 32,000 gallons. The variable cost per unit is
assumed to be $ 0.163. This was solved by dividing 7,000 ($
20,000 - $ 13,000) by 43,000 (75,000 - 32,000) gallons of
water.
References:
Busan, G., & Dina, I. (2009). Using Cost-Volume-Profit
Analysis in Decision Making. Annals of the University of
Petrosani Economics, 9(3), 103–106.
3. Lusiana Lusiana, & Ika Kristianti. (2020). Sticky cost behavior
in selling, general, and administrative costs in Indonesian
manufacturing companies. Jurnal Keuangan Dan Perbankan,
24(2), 214–224.
Sungki Kim, Wonil Ko, & Sungsig Bang. (2019). Analysis of
Unit Process Cost for an Engineering-Scale Pyroprocess Facility
Using a Process Costing Method in Korea. Energies, 8(8),
8775–8797.
150 words for Coursemate response required for below post:
Analytical summary of chapter 5 and 6
Chapter 5: Cost behaviour pattern
This chapter is all about cost behaviour patterns. There are 4
major methods of cost analysis(Saylor Academy, n.d.-a).
1. Account Analysis: In account analysis, costs are divided into
three types.
· Variable: These are the costs which change as per the activity.
E.g., If the quantity of production increases, raw material
required to produce the product increases. Here raw material
cost is variable.
· Fixed: Costs in this category do not vary with production
activities. Consider production warehouse rent. Even if working
hours increase to meet additional demand for the product, rent
of the production warehouse will remain the same for the leased
duration. Fixed costs are further divided into committed fixed
costs and discretionary fixed costs
· Mixed: These costs comprise of fixed and variable cost
components. Consider paying out to a sales representative on
payroll of a company who also get intensives over sales they
make. These sales representatives will get their salary as well as
commission every month. Though the salary is fixed,
commission will change every month as per the sales target they
4. achieve.
2. Hi-Low Method: Hi-Low method uses estimated costs from
several earlier reporting periods and estimates current variable
and fixed costs.
3. Scattergraph Method: Scattergraph method uses entire data
values and not only around highest and lowest levels of changes
in activity. So results projected by Scattergraph method are
more accurate.
4. Regression Analysis: Regression analysis uses multiple
predefined mathematical equations to find best possible values .
This analysis is known to give more accurate results and is
widely accepted.
Multiple tools are available for these analyses and even
applications like excel can go to a great deal to help analytics to
assist in the process.
Chapter 6 discusses Cost-Volume-Profit analysis, popularly
known as CVP analysis, and how they are interrelated and how
the analysis can help decide a company’s strategy for
production, operations and sales.
CVP analysis differs for single product versus multi product or
service companies as their cost centres and revenue models
differ from each other in various ways.
Like cost behaviour pattern analysis, several tools are available
to perform CVP analysis. Even Excel helps in CVP analysis.
To understand the CVP analysis and how it helps managers to
take costing related decisions, let’s consider an example where
a company produces an instrument being sold at $250/unit. Unit
variable cost is $150 and total fixed expenditure is $50,000.
Now the company wants to decide on incentives to be given to
sales representatives. CVP will help here to get a grip on the
company's financials.
Let's say management thinks a profit of $30,000 is where they
can start incentives for the sales team. So, the profit target for
the sales team is $30,000. Let us calculate how many units,
sales team needs to sell to achieve this.
Each unit is sold for $250 and $150 is variable cost. So,
5. remaining $100 ($250 - $150) contributes to cover fixed cost,
which is $50,000. So, the company needs to sell 500 units
($50,000, total fixed cost / $100, contribution by every unit
sold) to reach break- even point. After the sale of 500 units,
every unit sold will contribute $100 towards profit of the
company. So to earn a profit of $30,000, sales people need to
sell 300 units ( $30,000, required profit / $100, contribution
towards profit by each unit sold) of the product.
So, in total, the sales team must sell 800 units (500 units to
reach breakeven + 300 units to make intended profit) to make a
profit of $ 30,000.
This is how CVP analysis gives clear ideas on business
financials for break even point, total sale, unit price etc. Now
the manager knows exactly what his sales numbers should be to
meet management’s expectations of profit level of $30,000.
Similarly, he can plan for many other queries like, what
happens if company decides on adding mode models? What
should be the production plan for the new product? If a
company is opting for external commercial borrowing,
depending on the company's earnings what interest rate
company should go for? Is there any scope for optimizing
production processes to lower production cost?
Such and many more queries can be answered efficiently using
cost behaviour patterns, CVP and other analytical methods.
References:
Saylor Academy. (n.d.-a). How Do Organizations Identify Cost
Behavior Patterns? Retrieved February 16, 2021,
from https://saylordotorg.github.io/text_managerial-
accounting/s09-how-do-organizations-identify-.html
Saylor Academy. (n.d.-b). How Is Cost-Volume-Profit Analysis
Used for Decision Making? Retrieved February 16, 2021,
from https://saylordotorg.github.io/text_managerial-
accounting/s10-how-is-cost-volume-profit-anal.html