Gracie Faye International (GFI) has an art to understand their abilities to record, classify, and summarize their financials, but they are lacking the understanding of their cost accounting systems, product costs for production of toka balls, specific job order cost for special order products, and their cost information on the two models of pitching machines, which all of these areas are not being justify on how important cost accounting is to a growing company like GFI. These four areas will be explored in more detail in order to shed light on each activity, which will ensure that GFI is making a profit, correct decisions, and recognizes any corrections that need to me made. GFI must understand that cost accounting is an important function in their corporate strategy.
Cost accounting is known as managerial, or management accounting, which it provides economic, and financial information in making decision for the company. Its main objective is to provide information in aiding management to plan, direct, and control operations. It also improves these controls by supplying data on the cost incurred to each manufacturing department. The skill sets that I have will enhance GFI on many levels, and they include; full knowledge of purchasing policies, processes, and procedures, balance and reconcile records, able to research and resolve unbalance issues, have strong technical skills, solid decision making skills, and the ability to exercise independent judgment, prioritize and plan, work activities efficiently to meet deadlines, work as a team or independently, detailed oriented, excellent oral and written communication skills, and strong mathematical skills. Cost management is used to plan, and control the company’s decision process, in which product cost would be lower, and product value would increase for customers. It provides information that ensures management makes short, and long term decisions no matter what kinds of materials are being used, changes in plant process, or in product design.
Management would make these kind of decision to increase short term profits, and improve the long term position of the company.
There are three cost system that are used for manufacturing operations; Job order cost system, Process cost systems, and Activity based (ABC). Job order is used to produce products for specific orders, and it estimates the costs with producing the goods for different jobs (Atkinson et.al. 2005 p.79) Process costing is often used by companies that operate using continuous processing. This type of system applies the costs of production, labor and support activities as the goods pass through the different process stages. (Atkinson et al, 2005, p. 92-94) ABC has a two stages, the first stage is cost is allocated to pools, and the second stage is the cost pools are allocated to products, or services. (Edmonds et al, 2006, p. 233). These systems include understanding the difference between manufacturing, and non manufacturing costs, computing the cost of manufacturing a product, indentifying cost behavior when it comes to utilizing cost volume profit relationships, setting prices, budgeting, controls, and capital when it comes to the company’s strategies.
Now manufacturing cost are incurred by a producer of goods that are needed to transform raw materials into finished product, and the cost consist of basic materials, and components, labor, and factory overhead in order to complete a finished product. The material, and labor is classified as direct, or indirect to the finished product. To explain direct material, it is taking major components, which can be traced to the finished product. It counts these components carefully, because of the significance to the product, for example take a lawn mower its major components are the engine, wheels, and handle, but the indirect materials is those minor items like screws, nuts, bolts, washers, and lubricants, which is...
References: Atkinson, A.A., Kaplan, R.S., & Young, S.M. (2005). "Management accounting." (Custom ed.). Upper Saddle River, NJ: Pearson Custom Publishing.
Edmonds, C.D., Edmonds, T.P., Olds, P.R., & Schneider, N.W. (2006). "Fundamental managerial accounting concepts." (3rd ed.). New York: McGraw-Hill Irwin.
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