Cost Accounting Applied
ACC 350 Cost Accounting
What Is Cost Accounting?
Apple Inc. has proven its successes over the past few years, and the proof lies in its three-year financial history (2009-2011). According to the report (Figure 1), Apple has effectively allocated its costs to divisions, plants, departments, contracts, and products. Using a basic calculation to find out how its net income behaves, and then compare that to the changes in sales, operating expenses, costs of sales, plants, property & equipment, contractors, employees will somewhat reveal the company performance as a manufacturer in technology. Between 2009 and 2010, Apple’s net income increases around 170 percent, and between 2009 and 2011, the net income reaches 315 percent. There is an obvious sharp increase in net income, and using this timeline comparison between 2009-2010 and 2009-2011 for other elements will help conclude how effectively Apple allocate costs. Below is the list of calculation of those elements: * Sales: increases 152 percent in 1 year and 252 percent in 2 years. * Operating Expenses: increases 133 percent in 1 year and 183 percent in 2 years. * Plants, property & equipment: increases 161 percent in 1 year and 263 percent in 2 years. * Cost of sales: increases 154 percent in 1 year and 183 percent in 2 years. * Contractors: increases 112 percent in 1 year and 116 percent in 2 years. * Regular employees: increases 136 percent in 1 year and 176 percent in 2 years. In comparison with Apple’s net income growing at a fast pace (170 percent in 1 year and 315 percent in 2 years), other elements’ rates also increase but at a slower pace. In other words, Apple has effectively allocated costs with minimal amount to achieve a higher net income.
The activity-based costing (ABC) helps trace more costs as direct costs, create homogenous cost pool linked to different activities, and seek a cost-allocation base that...
References: “Standard Costing” (2012). Accounting Coach. Retrieved on February 20, 2012 from http://www.accountingcoach.com/online-accounting-course/30Xpg01.html
Horngren, Datae, Foster, Rajan, Ittner, (2009). “Activity-Based Costing and Activity-Based Management.” Cost Accounting. Pearson Education. Chapter 5, P. 152.
Horngren, Datae, Foster, Rajan, Ittner, (2009). “Process Costing.” Cost Accounting. Pearson Education. Chapter 17, P. 615.
Figure 1 – Apple Inc. Investor Relations. Retrieved on February 9, 2012 from http://files.shareholder.com/downloads/AAPL/1688554230x0x444195/E7A8FE5F-8835-46AB-ACC2-6FA28DFB546D/Three_Yr_Financial_History.pdf
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