Absorption costing takes into account all of the costs of production, not just the direct costs, as variable costing does. Absorption costing includes a company's fixed costs of operation, such as salaries, facility rental and utility bills. Having a more complete picture of cost per unit for a product line can be helpful to company management in evaluating profitability and determining prices for products. Absorption costing also provides a company with a more accurate picture of profitability than variable costing does if all of its products aren't sold during the same accounting period when they are manufactured. This can be especially important for a company that ramps up production well in advance of an anticipated seasonal increase in
Elements that can influence variable cost are; supply and demand, task difficulty, location and effectiveness. Factors Affecting Fixed Costs Any equipment or technology obtained, specialty built to producing electronically fueled vehicles that can't be modify and utilized for some other new item for generation, is a fixed expense. In manufacturing electronic hybrid vehicles, over the long haul there are no fixed expenses. Be that as it may, in the short run if electronically hybrid vehicles were not popular, the funds spent to buy the equipment utilized exclusively to deliver these vehicles would be an aggregate misfortune. According to, Teisl, Rubin, and Noblet (2006)
In this technique a budget is prepared for future period. It helps in planning and controlling the costs based on the budget prepared. In Reliance Digitals a budget is prepared at the beginning of the year, and then at the end of the year all the costs incurred are calculated and compared with the budget done initially. If the calculated values at the year end are within the budget prepared then the company is said to have made profits, and if it exceeds the budget plan then the company is said to have incurred loss. Types of Costs: Fixed Costs: Fixed Costs cannot be changed with the output.
Job costing involves keeping an account of direct and indirect costs. Since both types of costs are usually closely related (a job requiring high input of labor and material is likely to consume more power, machine time, supervision time, inspection time, etc.) indirect costs may be applied as an estimated fraction of direct costs. Job costing methods are similar to contract costing and batch costing methods, and are used in construction, motion picture, and shipping industries, in fabrication, repair, and maintenance works, and in services such as auditing.” (BusinessDictionary.com) Organizations incur a variety of costs in their operation. These costs are very different from one another and need to be treated differently to give an accurate picture of the
The online nature makes updating the price periodically quite manageable. So, it is expected that the dynamic pricing approach will in the future overcome the quantity based approach in adoption. In this paper we propose a novel dynamic pricing approach. It is based on having a seasonal reference price, and control variables in the form of multipliers. Each multiplier will adjust the price up or down around the reference price based on a certain influencing variables (for example hotel occupancy, time till arrival, etc).
Cost accounting now became mainly an accounting task, which until then had predominantly been developed by industrial engineers (Chatfield 1977,163). In 1889 Towne (in Chandler 1977:274) described a gain-sharing plan that had been employed by his company since 1884, to the Society of Mechanical engineers. In terms of this plan any reduction in unit costs achieved through improved equipment and plant size, more effective scheduling, improved utilisation of machines and materials and more productive labour, would be shared equally between the company and its workers (Chandler 1977:274). In 1895 Frederick Taylor delivered a paper in which he pointed out that savings such as mentioned by Towne should not be based on past experience but rather on a standard time and output. This should be determined "scientifically" through detailed job analysis and time and motion studies of the work involved.
CONCEPT PAPER ON ACTIVITY BASED COSTING In recent years, companies have reduced their dependency on traditional accounting systems Developing activity-based cost management systems. Traditional costing systems have a tendency to assign indirect costs based on something easy to identify (such as direct labor hours). This method of assigning costs can be very inaccurate because there is no actual relationship between the cost pool and the cost driver. This can make indirect costs allocation inaccurate. Initially, managers viewed the ABC approach as a more accurate way of calculating product costs.
Part A Question 01 A company can study the relationships between cost, volume and profit using Cost - Volume – Profit analysis. It is need to bare a cost for any kind of production that comprises variable, Fixed and mixed cost. In the Cost-Volume-Profit analysis all the costs are separate as Fixed and Variable costs. Variable costs are directly proportional to the production volume (Number of units). Direct material cost and direct labor cost are examples for variable cost.
2. 2 PROJECT COST MANAGEMENT Cost performance on a construction project remains one of the main measures of the success of a construction project (Atkinson, 1999; Chan and Chan, 2004). Several reasons are vital for consistent cost estimating for example – budgeting purposes, loan applications if necessary, for estimating commercial feasibility or viability of the project. Cost management could be defined (include, consist of) as process of planning, interpretation, detailing, directing, agreement, cost control and evaluation of the construction during its preparation and constructing phases. This process is going on from throughout the building planning, projection and design, construction phases of a project until the final account is