Cost Reduction There are right cost reduction techniques and there are wrong ones. Using the right strategies will result in a more efficient company spending. Using the wrong techniques will create a reduction of expenses required to maintain product quality and company value. It is a fine line sometimes‚ but a systematic approach can help managers avoid making serious mistakes in the rush to cut expenses. Cost management strategies should be utilized as components of a larger objective to maintain
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Product cost is the cost of direct labor‚ direct materials‚ and manufacturing overhead that are consumed to create a product. Product cost can also be considered the cost of the labor required to deliver a service to a customer. Direct Material Cost Definition: Direct material cost is the cost of materials used to manufacture a product or provide a service. Direct Labor Definition: Direct labor is production or services labor that is assigned to a specific product‚ cost center‚ or work order
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Assignment: Fixed and Variable Costs‚ Break-Even Point Exercise 10.1 Recompute fixed costs‚ variable costs‚ and the BEP. What are the variable costs? What are the fixed costs? How many meals will the WHDM program need to provide during the fiscal year to reach the BEP? How much profit will the program earn if it completes its 45‚000-meal contract with the City of Westchester? The variable cost of service is $3.93 during the fiscal year the WHDM should provide 1‚011 meals to reach their
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Explicit costs: $37‚000 (= $12‚000 for the helper + $5‚000 of rent + $20‚000 of materials). Implicit costs: $22‚000 (= $4‚000 of forgone interest + $15‚000 of forgone salary + $3‚000 of entreprenuership). Accounting profit = $35‚000 (= $72‚000 of revenue - $37‚000 of explicit costs); Economic profit = $13‚000 (= $72‚000 - $37‚000 of explicit costs - $22‚000 of implicit costs). 8-4 (Key Question) Complete the following table by calculating marginal product and average product from the data
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businesses are transforming labor into a more flexible (and variable) cost. Among such companies are Hewlett-Packard‚ General Electric‚ DuPont‚ Sun Microsystems‚ and British Airways. Discuss whether direct labor is a fixed or a variable cost. What are the pros and cons of management treating direct labor as a variable cost? Are there ethical issues to be considered here? Direct labor can be classified as a fixed cost or a variable cost‚ depending on how flexible the employer needs to be/can be with
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which the scope of a businesses’ activities are narrow versus broad and the extent to which a business seeks to differentiate its products. The four strategies are summarised in the figure below: The differentiation and cost leadership strategies seek competitive advantage in a broad range of market or industry segments. By contrast‚ the differentiation focus and cost focus strategies are adopted in a narrow market or industry. Strategy - Differentiation This strategy involves selecting one
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COST CONCEPTS AND COST ACCOUNTING By: Aman Jawahar Sarika Deepak Muneer CONTENTS Concept of Cost Cost Accounting Terms in Cost Accounting Elements of Cost Meaning of Overheads Classification of Costs Methods of Costing Types of Costing MEANING: Cost Concept: The term ‘cost’ means the amount of expenses [actual or notional] incurred on or attributable to specified thing or activity. Cost means ‘the price paid for something’. Cost Accounting: Cost Accounting is concerned with recording
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3-22‚ identifying product and period costs a. Transportation-in- product costs b. Insurance on the office building- period costs c. Office supplies- period costs d. Costs incurred to improve the quality of goods available for sale. Product costs e. Good purchased
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Ronald Coase noted‚“The cost of doing anything consists of the receipts that could have been obtained if that particular decision had not been taken.” For example‚ the opportunity set for this Friday night includes the movies‚ a concert‚ staying home and studying‚ staying home and watching television‚ inviting friends over‚ and so forth. The opportunity cost of taking job A included the forgone salary of $102‚000 plus the $5‚000 of intangibles from job B. Opportunity cost is the sacrifice of
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TYPES OF COSTS Introduction :-Production is the result of services rendered by various factors of production.The producer or firm has to make payments for this factor services. From the point of view of the factor inputs it is called ‘factor income’ while for the firm it is ‘factor payment’‚ or cost of inputs.Generally‚ the term cost of production refers to the ‘money expenses’ incurredin the production of a commodity. But money expenses are not the only expensesincurred on the production
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