Product Costing Methods: Strengths and Weaknesses

Product Costing Methods: Strengths and Weaknesses Todays competitive environment requires manufacturers to know their costs for competing globally. A top notch costing system is one of the most powerful information tools a management can have; especially which provide a clear picture of the activities that are driving costs and the ways individual products and processes consumes resource. We can use costs in distinct ways. Product costing is used for strategic decision making. 1 PRODUCT COSTING Product costing system is a set of procedures that accounts for an organizations product costs and provides timely and accurate unit cost information for pricing, planning and control, inventory valuation and financial statement preparation. An organization should be concerned about product costing and their firms product costing system. Use of an appropriate product costing system helps allocation of indirect costs and helps to use resources in a productive way. It is used to determine the market profit margins and also focus on sales function, customers markets and setting prices. 1. A The most common systems of product costing are: Job order costing Job order costing allocates costs to products that are readily identified by individual units or batches of which requires varying degrees of attention and skill. It is extensively used in service industries, hospitals, law firms, movie studio, accounting firms, etc. It is more complex when companies sell many different products and services. Process costing Process costing allocates costs to products by averaging costs over large number of nearly identical products. Since every unit is essentially the same, each unit receives the same manufacturing input as every other unit. Refineries, paper mills and food processing companies use process costing. A complication arising in process costing is that manufacturing of not all units may be completed at the balance sheet date. 1. B Strengths of Product Costing Useful for making judgments about management related profitability and performance, which often leads to decisions about resource allocation, shifting money from unrewarding activities to profitable activities and improve products cost performance. Helps for valuation of inventories for financial reporting purposes. Stock can be valued at the lower of cost or net realizable value under the prudence principle and the problems of allocating overheads to products for financial reporting do not arise. Plays an important role in complex pricing decision process and cost control. Cost based pricing is particularly true for customized products which do not have readily available market price. Managers often use product cost for planning and controlling the costs. For this purpose managers mainly focus on the product cost, although the scope of the analysis can be extended to include product costs from other areas of the value chain. Helps the organizations to find out the cost associated to each product .That enables to selling profitable products. This will help to avoid the use of non profitable products, and maximize profits. It gives an understanding of each products contribution to the bottom line. 1. C Weaknesses of Product Costing There are few limitations faced by the organizations by using the product costing systems they are: This costing system was developed during a period when 80% cost were related to labour, so it focused on direct labour cost. It is related to the benefits of a change in process or method reduction in direct labour. Only limited service organizations used full product costs for pricing decisions. In service organizations inventory valuation is not a major issue because there is not much to store. Planning and controlling of service organizations done through responsibility centers linked to functional activities rather than product or services. It assumed that the factory is an isolated entity and provide no indication of the impact of change in the factory on the rest of the organization. 2 Conventional costing Conventional costing produces inventory values which consist of variable costs and such fixed costs which commensurate with the level of production at which the inventories are produced. Conventional cost can aid in controlling cost as efficiently as direct costing. When conventional cost is employed on the books, the variable and fixed costs must be assembled and arranged to fit the analysis made out side the records. A limitation for conventional system is that conventional costs develop under absorbed or over absorbed manufacturing expenses which are not understood by management. (Convertibility of Direct and Conventional Costing; Joseph A. Mauriello; National Association of Cost Accountants. NACA Bulletin (pre-1986); Mar 1954; 35.7) 3 Traditional Costing Traditional costing is among the oldest used methods of costing systems. In traditional costing, the manager or the management assigns direct labour, direct material and overheads to each unit of production. In this case, the overheads are not broken down by activity but based on certain volume related factors such as direct machine hours, direct labour hour etc. (At what overhead level does activity based costing pay off? Robert J Vokurka; Rhonda R Lummus Production and Inventory Management Journal; First Quarter 2001; 42, 1; ABI/INFORM Global pg. 40) 3. A Going against the odds Although the introduction of ABC was supposed to be the remedy for the short-comings of Traditional Costing, the Japanese managers still use traditional costing measures and are able to reduce costs and increase their market share. Traditional costing uses a very powerful set of tools and methods and may be much mightier than written deficient by the simplistic textbooks. (Why the Japanese can do without ABC Patel, Ashok, Russell, David. Certified Accountant. Cork: Nov 1994. pg. 64) 3. B Advantages of Traditional costing system Easy to understand and it is widely used In a firm with only one product line, the final cost will be the same as if ABC were used It is a convenient base for the assignment of manufacturing overheads (with direct labour as a significant portion of the product cost) Easy to depict a diagram representing the flow of product cost (ABC: Revisiting the Basics) 3. C Disadvantages of Traditional Costing In most of todays business scenario, the information that a management needs for decision making are not being satisfactorily provided The averaging of the overall costs to the entire product line may result in some products carrying a major proportion of the overheads than it actually should. This in turn will affect the decision making related the product such as marketing emphasis, pricing, cost control etc Since being a volume driven cost allocation, the entire process of costing is based on the manufacturing cost while the other factors of costs (performance driven) such as Research and Development, marketing etc are averaged across all the products. (ABC: Revisiting the Basics) 4 Activity Based Costing Activity-based costing was introduced about 15 years ago and implemented initially by large manufacturing companies since it is proven to show as more beneficial in larger firms that have a diverse mix of products or services. ABC is a system for assigning costs to products based on the activities they require. These activities are those regular actions performed inside a company. Eg: asking a customer invoice related questions. In this way an organization can establish the true cost of its individual products and services for the purposes of identifying and eliminating those which are unprofitable and lowering the prices of those which are overpriced. It is generally used as a tool for understanding product and customer cost and profitability. As such, ABC has predominantly been used to support strategic decisions such as pricing, outsourcing and identification and measurement of process improvement initiatives. Cost centre, cost allocation, fixed cost, variable cost, cost drivers are the methodologies used in activity based costing. 4. A Strengths It helps to identify costs of individual activities, based on their use of resources Identify most and least profitable customers, products and channels through its methodologies. It helps to control the cost at individual level as well as on departmental levels. The cost of all activities associated with a product or service can be accurately determined before it is launched, so it helps in pricing, future product planning etc. Expands the cost of producing and selling a product so that better decision making information is available. Uses the technologies available to track costs in todays manufacturing environment. 4. B Limitations Some overhead cost is difficult to assign to products and customers, such as the chief executives salary. ABC is time consuming, if all activities are to be costed. It may be difficult to set up and establish ABC if an organization is using more traditional accounting methodologies. ABC identifies product costing better in the long run, but may not be too helpful in day-to-day decision-making. 5 Conclusion Product costing suffers from some set backs but overall it is an effective tool that helps organization in predicting and minimising costs involved in manufacturing a product as well as in providing management with relevant information for strategic decision making process that have a long term impact on the profitability of the firm. And though many experts suggest the use of marginal costing in decision making the modern organization concentrate on product costs. Traditional costing systems fail to meet the managements decision making requirements in the modern organization. But the introduction of ABC had taken out this shortcoming to a minimum level and has made it much easier for the cost control and help managers take wise decisions based on their numbers. This is where product costing systems make an impact and prove to be useful and more importantly a necessity.

Essay --

Furniture can enhance the appearance of any space and add value to the house while improving the function. Wall cabinet is one of a furniture range that can be used in a kitchen, living room, bedroom, office and many other spaces. Wall cabinets are built in a wide variety of designs, material, functions and sizes. Most wall cabinets are simply for storage but nowadays, people require durable, sturdy, long lasting yet affordable furniture with improved functionality. Modular furniture provides components that can be combined to meet individual needs and tastes which utilize all space where it can be interchanged and adjusted. In order to create a successful design of a modular kitchen cabinet, appropriate hanging mechanisms are needed. It is important to understand the properties of materials and design of the hanging mechanism so that proper utilization can be achieved to ensure efficient product design and user safety. Material selection is among one of the most important aspects that must be taken into account before any hanging mechanism is produced. This is because material plays an important role in determining the suitability and durability of the hanging mechanism design. Nowadays, more advanced materials have been used to replace conventional materials because advanced materials offer more advantages (Myrdal, 2009). For instance in furniture manufacturing, conventional material such as solid wood have been replaced with alternative lumber such as particle board, plywood, glulam, LVL or OSB because of their economic and production efficiencies. This study is aimed at discovering a better solution by providing an alternative material and design to make the most important part of a wall mounted cabinet which is the hanging... ...gs but could produce a higher strength product. Therefore, using this material as hanging mechanism could lower raw material cost and at the same time provide a strong and eco-friendly alternative hanging mechanism. Hypothetically, if the proposed design (French cleat) and material (LVL) has the same or better qualities than the existing design and material, it can be used as the hanging mechanism in modular kitchen cabinets. Therefore, the thesis is proposing a new design of hanging mechanism using LVL which could probably give similar or better loading capacity and mechanical properties as compared to existing designs used in kitchen cabinets. Due to the lack of natural resources, the alternative material which is engineered wood product offers additional advantages as it retains the structural properties of wood and may be used as a substitute for solid wood.

Personal Strengths & Weaknesses :: Personal Narrative Character Analysis Essays

I gave this paper a lot of thought before I began to write. ?What qualities and traits do I posses that make me desirable as an employee, a teammate, and as a person First, you must be able to identify your own personal strengths and weaknesses in order to become a lifelong learner and an essential part of a ?team?. As technology is constantly growing you have to be willing to accept what makes you an asset or a liability in any given situation you may encounter in your life. The qualities and traits that I feel make me a valuable entity to my employers, co-workers, classmates and within my personal relationships are varied. I will go on to describe some of the attributes I think are most important in establishing and maintaining successful relationships whether personal or work related.   Ã‚  Ã‚  Ã‚  Ã‚  On a daily basis I am challenged with a multitude of situations that I must prioritize and resolve in order to move ahead. Through these experiences I have developed the ability to juggle these situations in a timely and satisfactory manner. Thus, making me a multitasked individual capable of handling a variety of rigorous tasks. Multitasking enables me to be more productive within a demanding atmosphere.   Ã‚  Ã‚  Ã‚  Ã‚  Aside from being an expert juggler, the ability to work well with others is a crucial part of most social interactions, as we are forced to interact with individuals in our social and personal realm. Active listening and an open dialogue are the keys to good communication. This has helped me to fulfill my obligations as a team member.  Ã‚  Ã‚  Ã‚  Ã‚   Dedication and hard work are additional components that have enabled me to gain ground in the workplace. For example, the refinery I work at is running 24, 7, for me this means having to sometimes work overtime or on the weekends. Taking on-line courses has made it easier for me to remain accessible and dependable as an employee. I haven?t learned how to fit in time with friends and family yet, but I hope by my 3 or 4 course this will be a breeze.   Ã‚  Ã‚  Ã‚  Ã‚  Although I would like to think I was perfect, I have come into the reality that in order to move forth in life you must continually try to better yourself both professionally and personally. I feel that my most crippling weakness is my lack of education. Now days, you can?t practically get a job flipping burgers without an Associates Degree. Personal Strengths & Weaknesses :: Personal Narrative Character Analysis Essays I gave this paper a lot of thought before I began to write. ?What qualities and traits do I posses that make me desirable as an employee, a teammate, and as a person First, you must be able to identify your own personal strengths and weaknesses in order to become a lifelong learner and an essential part of a ?team?. As technology is constantly growing you have to be willing to accept what makes you an asset or a liability in any given situation you may encounter in your life. The qualities and traits that I feel make me a valuable entity to my employers, co-workers, classmates and within my personal relationships are varied. I will go on to describe some of the attributes I think are most important in establishing and maintaining successful relationships whether personal or work related.   Ã‚  Ã‚  Ã‚  Ã‚  On a daily basis I am challenged with a multitude of situations that I must prioritize and resolve in order to move ahead. Through these experiences I have developed the ability to juggle these situations in a timely and satisfactory manner. Thus, making me a multitasked individual capable of handling a variety of rigorous tasks. Multitasking enables me to be more productive within a demanding atmosphere.   Ã‚  Ã‚  Ã‚  Ã‚  Aside from being an expert juggler, the ability to work well with others is a crucial part of most social interactions, as we are forced to interact with individuals in our social and personal realm. Active listening and an open dialogue are the keys to good communication. This has helped me to fulfill my obligations as a team member.  Ã‚  Ã‚  Ã‚  Ã‚   Dedication and hard work are additional components that have enabled me to gain ground in the workplace. For example, the refinery I work at is running 24, 7, for me this means having to sometimes work overtime or on the weekends. Taking on-line courses has made it easier for me to remain accessible and dependable as an employee. I haven?t learned how to fit in time with friends and family yet, but I hope by my 3 or 4 course this will be a breeze.   Ã‚  Ã‚  Ã‚  Ã‚  Although I would like to think I was perfect, I have come into the reality that in order to move forth in life you must continually try to better yourself both professionally and personally. I feel that my most crippling weakness is my lack of education. Now days, you can?t practically get a job flipping burgers without an Associates Degree.

The Great Gatsby :: essays research papers

The movie created by David Merrick as well as the novel written by F. Scott Fitzgerald, both entitled The Great Gatsby, ate truly two fine pieces of art. The movie version shows the viewer what is happening in the story without internal comments from the narrator and the viewer can understand exactly what is happening without any intellectual thought involved. The novel, however, challenges the reader to look deep inside the writing in order to grasp the true effect of the novel and what kind of meaning is being portrayed. The novel also challenges the reader’s creativity and imagination. It lets the reader explore the character’s personalities in their own special way and the reader can relate these personalities to real life. The novel also allows the reader more freedom that the move, in the way that it lets the reader shape their own opinions of the different characters. As a person watches the movie version, all the characters are laid out for them and every detail of the character is seen, yet in the novel the character is described fully and it is up to the reader’s imagination to picture what the character looks like as well as the emotions conveyed by this character in the novel. The novel version of The Great Gatsby is a definite piece of art and clearly challenges the reader both intellectually and imaginatively to understand the words that describe the character accurately. Therefore the novel The Great Gatsby by F. Scott Fitzgerald is still the best representation of the Romantic Hero and his American Dream, despite efforts by interpreters like David Merrick in his film version to "usurp" it, for the author challenges the reader’s imagination through his brilliant narrative technique, unforgettable characterization, and use of symbolism, so that Gatsby’s experience becomes everyone’s. The novel is told in the perspective of a single character, Nick Carraway. Nick is an innocent and simplistic character and when the story is conveyed through this type of character it usually is told truly, and without any outside influence from the other characters in the plot. Nick’s telling of the story is taken from his first hand accounts on how he sees the story unfold, straightforward and in the order that it occurs without confusion. Nick is a very moralistic man and his morals, and also his values, are positively genuine. His heart is filled with compassion, especially for Gatsby and the events that surrounded Gatsby’s death as he was one of three people that were at this great man’s funeral.

Nutrition Workout Log Essay

Did you meet your nutritional goal? Explain why you did or why you did not meet your goal. Yes I met my goal because I only drank one can of soda for dinner in a whole day. Usually I drink about 3 a day, so I’m trying to lower my soda intake everyday. Explain why your nutritional goal is important to maintain health. My nutritional goal is important to maintain good health because the acid is high in soda. I realized that soda eats the inner layer of your stomach and also eats the enamel off your teeth. Did you encounter any challenges as you strived to meet your goal? Yes, It was hard for me to reach my goal because im used to drinking soda multiple times a day. I started drinking more water so it got my mind off of drinking soda. Did pursuing your nutritional goal enhance your physical activity in any way? Why or why not? Yes, when I drank less soda I realized that I wasn’t as tired, and also wasn’t as hungry. When I worked out I had more energy and felt better about myself. Fitness Test Comparison: (worth 20 points) Repeat the body composition fitness test from the Getting Started lesson. Compare your original body composition result (body mass index or BMI) with your current body composition result(body mass index or BMI). Write out your original score and status, along with your current score and status. Original score ___26. 2_______ Current score ___24. 7________ Did your results improve? Why or why not? Yes my results improved since the beginning. I’ve been working out more and eating healthier food to try and make myself better off in the long run. Date Warm-Up Physical Activity Intensity (Light, Medium, or High) Cool-Down Mins 10/17/12 Body stretches Running Medium- High

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Dominic Cole’s IELTS Blog www. dcielts. com The bar chart below shows the quarterly profit forecast for three major US companies in 2012. Write a report for a university lecturer describing the chart. You should write at least 150 words. You should spend about 20 minutes on this task. Quarterly pro? t forecasts for three major US companies in 2012 1500 1350 1200 Pro? t in millions of dollars 1050 900 750 600 450 300 150 0 Jan-March Apr-June July-Sept Oct-Dec Microsoft Ford IBM Dominic Cole’s IELTS Blog www. dcielts. comThis bar graph shows the quarterly change in pro? ts for Microsoft, Ford and IBM in 2012. The ? rst point to note is that while both Microsoft and IBM are predicted to show a substantial growth in pro? ts in this period, there is going to be little movement in the ? gures for Ford. It should also be remarked that although IBM will start the year with the lowest margin, it is predicted to be the most pro? table company by the end of the year. If we look at the numbers in detail we see that Ford is expected to make a ? st-quarter pro? t of around $825 million and this should rise marginally to $900 million by the end of September, only to fall back to its starting point by December. In stark contrast, IBM is predicted to show a steady growth in pro? ts throughout the year, shooting up from just over $180 million to exactly $1,200 million by the year? s end. After a dif? cult ? rst quarter where its pro? ts drop by around half to around $200, Microsoft is forecast to follow a similar pattern of steady growth from April to December, ? ishing at $600 million. notes 1. This report relates to future predictions. See the variety of language that refers to the future 2. The report starts by noting the two main points: general growth apart from Ford and that IBM moves from the least pro? table to the most pro? table 3. The second paragraph deals with each company in turn. It is linked by the comparisons comparing Ford to IBM and then IBM to M icrosoft 4. The word pro? t is repeated consistently but there is some effort to use synonyms or related phrases

Musical lyrics and writing inspired by music should be studied as literature

Musical lyrics and writing inspired by music should be studied as literature. This is because just like literature music is designed either fictionally or factually. It also incorporates symbolisms, themes and many more that has connections with literature. Artists who are musically inclined also uses feelings and present events to guide them in writing musical composition. From here one can say that music and literature intertwines. The emotion of the composer is reflected on his craft just like writers and poets on the aspect of literature. The most common literature bodies that can be linked directly to musical lyrics are those of poetry.This is because just like poems, music has rhymes and intonations and often reflects an ideology from the artist. It also exposes something that is timely depending on the current events. There are musical writings that imply radical thoughts during war and there are musical lyrics that give a romantic notion for composer who are in love. Both mus ical lyrics and literature serves as an inspiration to many people. Lyrics should be studied as a literature to easily grasp the message and at the same time find out if the piece is based on fiction or fact.