#1  Dawn Cordero Wednesday Jun 14 at 8:47pm Manage Discussion Entry Issue one: Labor Cost “Labor cost consist of the cost of the work that goes into the manufacturing of a product or the execution of a service.  Direct labor cost can be figured by multiplying the cost of labor per hour by the number of employee-hours required to complete the job.  Business owners, however, need to keep in mind that the “cost of labor per hour’ includes not only hourly wage or salary of the employees, but also the costs of the benefits that those workers receive. Issue two: Material Cost Material costs are the costs of all materials that are part of the final product offered by the business. “Direct materials are assigned to jobs in a manner very similar to direct labor. It is very important that material that is used on a specific job be matched to the job” (Wainwright, 2012). As with labor, this expense can apply to both goods and services. In the case of goods, material costs refer to the costs of the various components that make up a product, while material costs associated with services rendered typically include replacement parts, building parts, etc. Issue three: Overhead Cost Overhead costs are costs that cannot be directly attributed to one particular product or service. Some business consultants simply refer to overhead costs as those business expenses that do not qualify as labor costs or material costs. These costs include indirect expenses such as general supplies, heating and lighting expenditures, depreciation, taxes, advertising, rental or leasing costs, transportation, employee discounts, damaged merchandise, business memberships, and insurance. A certain percentage of employees usually fit in this category as well. While the wages and benefits received by an assembly line worker involved in the production of a specific product might well qualify as a labor cost, the wages and benefits accrued by general support personnel janitors, attorneys, accountants, clerks, human resource personnel, receptionists are included as overhead. Overhead expenses are typically divided into two categories fixed expenses and variable expenses. Fixed expenses are regular (usually monthly) expenses that will not change much, regardless of a company's business fortunes. Examples of fixed expenses include rent, utilities, insurance, membership dues, subscriptions, accounting costs, and depreciation on fixed assets. Variable expenses are those expenses that undergo greater fluctuation, depending on variables such as time of year (for seasonal businesses), competitor advertising, and sales. Expenses that are more heavily predicated on company revenues and business owner strategies include office supplies, mailing and advertising, communications (telephone and Fax bills), and employee bonuses. References: Wainwright, S. K. (Ed.) (2012).  (Links to an external site.) Links to an external site. (Links to an external site.) Links to an external site. Principles of acc ...

1. #1
Dawn Cordero
Wednesday
Jun 14 at 8:47pm
Manage Discussion Entry
Issue one: Labor Cost
“Labor cost consist of the cost of the work that goes into the
manufacturing of a product or the execution of a service. Direct
labor cost can be figured by multiplying the cost of labor per
hour by the number of employee-hours required to complete the
job. Business owners, however, need to keep in mind that the
“cost of labor per hour’ includes not only hourly wage or salary
of the employees, but also the costs of the benefits that those
workers receive.
Issue two: Material Cost
Material costs are the costs of all materials that are part of the
final product offered by the business. “Direct materials are
assigned to jobs in a manner very similar to direct labor. It is
very important that material that is used on a specific job be
matched to the job” (Wainwright, 2012). As with labor, this
expense can apply to both goods and services. In the case of
goods, material costs refer to the costs of the various
components that make up a product, while material costs
associated with services rendered typically include replacement
parts, building parts, etc.
Issue three: Overhead Cost
Overhead costs are costs that cannot be directly attributed to
one particular product or service. Some business consultants
simply refer to overhead costs as those business expenses that
do not qualify as labor costs or material costs. These costs
include indirect expenses such as general supplies, heating and
lighting expenditures, depreciation, taxes, advertising, rental or

2. leasing costs, transportation, employee discounts, damaged
merchandise, business memberships, and insurance. A certain
percentage of employees usually fit in this category as well.
While the wages and benefits received by an assembly line
worker involved in the production of a specific product might
well qualify as a labor cost, the wages and benefits accrued by
general support personnel janitors, attorneys, accountants,
clerks, human resource personnel, receptionists are included as
overhead.
Overhead expenses are typically divided into two categories
fixed expenses and variable expenses. Fixed expenses are
regular (usually monthly) expenses that will not change much,
regardless of a company's business fortunes. Examples of fixed
expenses include rent, utilities, insurance, membership dues,
subscriptions, accounting costs, and depreciation on fixed
assets. Variable expenses are those expenses that undergo
greater fluctuation, depending on variables such as time of year
(for seasonal businesses), competitor advertising, and sales.
Expenses that are more heavily predicated on company revenues
and business owner strategies include office supplies, mailing
and advertising, communications (telephone and Fax bills), and
employee bonuses.
References:
Wainwright, S. K. (Ed.) (2012). (Links to an external site.)
Links to an external site. (Links to an external site.) Links to an
external site. Principles of accounting: Volume II [Electronic
version]. Retrieved from https://content.ashford.edu (Links to
an external site.) Links to an external site.
#2
Joseph Mendrala
Thursday
Jun 15 at 12:31pm
Manage Discussion Entry

3. A company can run into any number of problems when
trying to determine the actual costs of goods that it is selling
there are three main problems; labor costs, materials cost and
overhead costs. Labor costs are in relation to what an employee
will be compensated for their work on a given task. For
example, let’s look at companies like Thrive or Essential oils,
they sell a wide variety of products and they have sales people
that go out and try to sell their products. So, how are they to
determine how much of the money paid to the sales people
should be attributed to each individual product? This
particular problem makes it more difficult to know what the
actual cost of producing and selling each product is. Though
sometimes the sales person might not make an actual hourly
wage they still will receive pay for selling the product. Material
costs would be the cost that is used to make the product, now
here is where things can get tricky because most of the time
materials are bought then the cost of inflation goes way up so
that way the company is making a better margin off of what
they are selling. An example would be Pottery Barn, the quality
of their furniture is actually not great at all in fact I have seen
margin reports from this company and the profit made off of the
merchandise is unbelievable. Overhead costs are sometimes not
totally controllable but are the operating expense it takes to
make the product, house etc.
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#3 DawnSneed
Thursday
Jun 15 at 1:26pm
Manage Discussion Entry

4. Identify three factors that are affecting airline company’s
ability to break even. For each of your factors, discuss how
these have an impact on the breakeven (contribution margin,
fixed costs, variable costs, a combination, etc.), and what
happens if these factors increase or decrease.
Cargo, freight and the cost of fuel will be major factors that
will affect airline company’s ability to break even. The older
planes will need to be removed so that the production on new
planes can arrive. That brings about a demand for more space,
more flights, and more fuel usage. It all goes hand and hand.
The more cargo that needs to be flown, the more space needed
to ship it. When the oil prices increase it raises the cost of fuel
and that makes an impact on demanded flights to destinations.
Cargo will also be affected and increase. Flight demands are
increasing and that will demand the increase the labor and
overhead variables. Wages paid to employees will increase.
Ticket prices, luggage prices go up and the cost of fuel will
increase, this will cause a demand for more efficient planes that
may cost more due to advanced technology. Older planes will
be replaced with new planes.
Reference
Zacks Investment Research. (2011). Airline Industry Stock
Outlook – July 2016. Retrieved from
https://www.zacks.com/commentary/84559/airline-industry-
stock-outlook---july-2016
#4
Martha Diaz
Thursday
Jun 15 at 3:01pm
Manage Discussion Entry
Hello Class,

5. We’ve all experienced (or heard about) the challenges that the
airlines have been facing. Read the Zacks Investment Research
article, “
Airline Industry Stock Outlook – July 2016 (Links to an
external site.)
Links to an external site.
Links to an external site.
.” Identify three factors that are affecting airline company’s
ability to break even. For each of your factors, discuss how
these have an impact on the breakeven (contribution margin,
fixed costs, variable costs, a combination, etc.), and what
happens if these factors increase or decrease.
I believe that the three factors that are affecting airline
company’s ability to break even are:
1.
Terrorism
is the number one factor affecting the airlines, especially since
the Brexit decision to leave the EU. Additionally, airlines
stocks have been hit hard by fears of travel demand slackening.
Airlines stocks have been dealing with issues such as the mass
shooting in OrlandoFl, the explosion at the Shanghai Pudong
airport on June 12. Fears that such attacks could lead to less
demand for air travel resulted in a widespread sell-off in the
aviation section. (Zacks, July-2016)
2.
The second factor has been the oil prices, for many years
the airline's tickets prices increased to a point, that ticket sales
went down, due to the high price of jet fuel, which is a worrying
factor for airlines, since they have been generating huge
savings. (Zacks, July 2016)
3.

6. The third factor is the economic and political stability. Political
and legal factors include governmentintervention in economic
operations. Airlines operate in a political
environment that's very regulated and restricted. Government
intervention can be necessary to protect the passengers’ interest
and airlines operations’ safety measures.
Furthermore, a healthy economy acts as a catalyst for industrial
growth. Economic health is also measured by various economic
indicators. Examples of economic indicators include growth in
gross domestic product (or GDP), per capita income, disposable
income, industrial production, the level of business, and
consumer confidence. (Cederholm, Sep 3, 2014)
Martha
https://www.zacks.com/commentary/84559/airline-industry-
stock-outlook---july-2016
Links to an external site.
http://marketrealist.com/2014/09/why-economic-factors-
support-airline-industry-growth, By Teresa Cederholm | Sep 3,
2014
Links to an external site.