Production Cost Methods

 

In a 1-2 page paper, please complete the following:

• Discuss the production costing method(s) used by your chosen company.
• Do you feel that these method(s) are appropriate? Why?
• How do these method(s) impact data analysis?
• Be sure that the paper has no spelling or grammatical errors.

Save your assignment as a Microsoft Word document.

Running head: PUBLIC MANUFACTURING COMPANIES
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PUBLIC MANUFACTURING COMPANIES
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Public manufacturing company

Name

Institution

Public manufacturing company

Introduction

Running of a company involves a lot of tasks especially a public manufacturing company like the ford motor company. A company entails planning, controlling and decision making and there are many elements that are considered when planning, controlling and decision making.in planning, the elements are its generic activity, the environmental context that involve the organization goals, purpose for the goals, the quality planning should have a strong effect. The plan should include everyone in the company .like a company that is planning to cut shot its employees should give the employees a notice and an alternative job and also be able to compensate them (Agus & Shukri, 2012).

The company should be able to look for them any job vacancies and save them the trouble of searching for a new job.in controlling, the company should provide guidelines and a unified direction for the people, and it should also serve as a source of motivation for the employees. The employers should treat the employees with care and not underestimate them for they play an important role in the company. In decision making, the decisions made should benefit the interests of the employer and the employee. The decisions made should improve the business environment and the lives of everyone working at the company. The decisions made in a company shouldn’t abuse the rights of others (Kartikasari & Merianti, 2016).

Conclusion

In every company, there are the employees that are majorly the strength of the company and for any success of a company is determined by the employees. How a company treats its employees will either lead to its success or its downfall.

References

Agus, A., & Shukri Hajinoor, M. (2012). Lean production supply chain management as driver towards enhancing product quality and business performance: Case study of manufacturing companies in Malaysia. International Journal of Quality & Reliability Management, 29(1), 92-121.

Kartikasari, D., & Merianti, M. (2016). The Effect of Leverage and Firm Size to Profitability of Public Manufacturing Companies in Indonesia.

Running head: COSTING METHODS

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Costing Methods

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COSTING METHODS

NAME

COURSE

LECTURER

DATE

Costing method is a technique used by firms to determine the value of its inventory. The standard costing methods are LIFO, FIFO, and the weighted average. In the beginning, the Ford Company was using the LIFO method but lat

er opted to use the FIFO method (Jones, 2015). The LIFO method operates in such a way the goods that come last in the firm are the first to be sold. This means all the products are sold at higher prices based on the value of the previous production. The FIFO method which is the current costing method used. The technique requires that the output sells goods.

The first products to be produced are the ones to be sold. This ensures that the products are sold when their market is still prime and not delaying until the order goes down. The FIFO method was used to ensure that products do not remain in the store for long. For example under LIFO the firm produces spare parts but because people require the modern make they are sold first, in the FIFO the firm provides the spare parts but clears stock of the previous production before giving the next bunch
into the market (Jones, 2015).

The two methods are essential in costing the inventory of the Ford Company. The use of LIFO ensures that the values used in taxation are always low thus the firm attains more profit. On the FIFO side its use it gives a better indication of the value of the inventory at the end of the accounting period and raises the net income of the firm because the items which are old in the firm are still used in getting the total cost. Finally, both the methods are easy to use and give the accountants easy time during the evaluation of the value of the inventories
(Palewatta & Perrera, 2017).

References

Jones, P. (2015). Budgeting, costing and estimating for the injection moulding industry. Shrewsbury: I Smithers.

Palewatta, I., & Perrera, H. (2017). Inventory Optimization using ERP to reduce final product lead time, Inventory value an inbound logistics cost for MTO, FMCG Company. International Journal of Multidisciplinary Studies, 3(2), 53.

http://dx.doi.org/10.4038/ijms.v3i2.7

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Running Head: FIXED &VARIABLE COSTS. 1

FIXED & VARIABLE COSTS. 3

Fixed and Variable Costs

(Name)

(University)

Fixed cost

Fixed cost is the cost that is constant despite the level of operations.

Variable cost

is the cost that alternates depending on the level of operations. Ford Motors has both the fixed and variable costs. According to Warren (2017), taxes, license fees, salaries and rent/lease are some of the fixed costs. Taxes are set to be a certain percentage of the income that Ford Motors will raise. The percentage has a constant effect on the amount that remains after the taxes. The licenses fees are paid on an annual basis for the firm to be allowed to operate. The license fee is a constant figure that is adjusted based on the level of the inflation on the economic. Salaries to employees are set to be a certain amount and employees are paid the agreed figure on a monthly basis. Rent or lease figures for the buildings the firm has entered to use with their owners for a certain period is fixed (Warren, 2017).

Variable cost

Commissions, transport cost, electricity bills, water bills, wages and storage fees are some of the variable costs. The amount paid for this expenses changes from month to month. The commission is the amount paid to salespersons and agents and is dependent on the level of sales of Ford products made. Hence, the commission is bound to change based on the level of sales made. Transport cost is based on the amount of shipment being made. Warren (2017) noted that shipment is determined by the level of demand. It is bound to happen that at times the transport cost is low when demand is low and high when the demand increases. Electricity and water bills are dependent on the level of operation increasing when activities are many. Wages is the amount of amount that goes to contracted employees and the number of workers varies depending on the level of activity. The higher the level of the activity the lower the impact of fixed cost on the total cost with variable cost being the higher cost eventually reducing cost per unit produced.

References

https://www.stock-analysis-on.net/NYSE/Company/Ford-Motor-Co

Warren, C. S., Reeve, J. M., & Duchac, J. E. (2017). Managerial accounting.