Job Costing ledgers, wherein such costs are recorded, form an integral part of the final account statement of the manufacturers. This type of costing involves recording the costs as per the specific jobs rather than a particular process. However, Process Costing refers to the methodology involved in calculating the costs that are incurred while performing a particular task or undertaking a specific process. This might involve the costs that are either incurred directly or indirectly. Process Costing helps to keep a tight reign over the monthly expenditures in a manufacturing business.
Job Order Costing “Costing is an accounting technique used to determine the exact expenses for materials, labor and overhead incurred in operations” (D. Ingram). Job order cost method is a method of costing used when the products are made based on specific customer orders. Job order costing records the actual materials and labor expenses for specific jobs, and assigns overhead to jobs at a pre-determined rate. Different costing methods have each their own strength and weaknesses that make them best suited for a vast array of situations. In the Job Order Costing method every product manufactured is considered it’s own unique job.
The forecasted cash outflow and inflow for every period must be recognized and additionally the expected discount rate in order to compute NPV. In spite of the fact that the correct value can be identified after project completion but reasonable appraisals can be made by taking a gander at the execution of comparable projects. NPV formula as below where Ct is net cash inflow, Co is total investment, r is discount rate and t is no. of years. The NPV technique empowers companies to change in accordance with the difficulties of working with constrained financial resources.
Additionally, efficient distribution channels, optimal outsourcing and vertical integration, bargaining power to negotiate the lowest price for production inputs as well as high buying capacity all participate in making cost leadership a go-to strategy for high return on investment and profitability. The possible downsides of this strategy can vary from low workers remunerations to exploitation of unskilled workers. The advantages of cost leadership are often threaten by external business environment threats such as higher minimum wages laws. Examples of successful cost leadership organisations: WAL-MART.INC (ASDA), Costco, MCDONALD 'S, IKEA. Cost advantages stem from the fact that a company can quickly reap higher profit margins despite selling products or services at competitors price due to lower production costs.
Supply Chain Management (SCM) is the wider concept of looking at the business needs from the sourcing till the production of the final product and delivering it to the customer. SCM attempt to centrally control or link the sourcing, the production, the shipment, the warehousing and distribution of products. The purpose is to ensure the whole business know what is happening when and where. By managing the international supply chain, companies are able to cut wastage and become more lean and mean, be more competitive and provide products faster. Being more lean and mean will drive the company to keep tighter control of internal inventories, production, distribution, sales and the inventories held and forecasted are all key elements in the SCM.
For example, if an organization has a contract with a supplier for buying a maximum possible amount of a product, but the business scenario changes and that organisation needs more amount than the earlier agreed fixed amount for a certain period of time. It has to negotiate with the supplier again to buy at a relatively higher amount, but it depends on supplier to deliver more than what is agreed previously. Now, if the organisation is producing that product itself, then just production needs to be increased. Now it has the control to increase or reduce production at will, that’s why supply chain is much more coordinated. In addition to this another benefit of vertical integration, is that your organization will be able to invest in highly specialized assets.
This could result in an increase in costs in the short term and long term for both companies, which have to be balanced with the advantages gained (Donald J. Bowersox, 2002, p. 40). Woodmere would benefit due to the exclusivity arrangement, as it would be able to manage capacity of its manufacturing plants better. It would also be able to highlight its success in this venture with HomeHelp to other customers and have similar arrangements with others. With the implementation, Woodmere would have a competitive advantage, which will not be easy for competitors to
Purchasing often includes receiving and payment as well. Within the overarching Procure-To-Pay Cycle, the steps specifically related to purchasing are:1) Purchase Order Acknowledgement, 2) Advance Shipment Notice, 3)Goods Receipt 4) Invoice Recording, 5) 3 Way Match 6) Payment to Supplier . Unlike the entire Procure-To-Pay Cycle, the steps explicitly related to purchasing should not be tailored to suit the size and scope of each individual business. These are fundamental steps of good purchasing and should be employed routinely as a best practice in all businesses. Conclusion Because purchasing is a process within the overarching procurement process, both procurement and purchasing are often used interchangeably.
Successful business can also be built around hundreds or thousands of profitable products. Several businesses start small and develop over time, adding products as they get more experience and are capable of identifying and/or developing new products and markets. Regardless the size of the business or number of products, the same directions apply. Each product must "carry its own weight" to build a profitable business. Using cost volume profit analysis business managers can examine a single product, a group of products, or assess the entire business as a whole.
Abstract - Supply chain management has played a significant role in global market. The role of logistics in supply chain management is to provide plenty of significant improvements in industrial development. However, Third-party logistics activities such as transportation, warehousing, material handling and other value-added enable companies to get customized logistical support while manufacturers focus on the core organizational activities to achieve excellence. Third party logistics assists to supply right product in right time with right quantity to right consumers. The objective of this study is to statement the role of third party logistics in supply chain management and to understand the relationship between supply chain management and