3:57 PM il AT&T ( Notes This discussion is a continuation from week 1. 1. You and your business partner(s) will decide which costing system works best - process costing and job order costing. Include the following in your initial post: o The name of your company (remind us) Product(s) (remind us) o Will your company use job order or process costing and why? If process costing is selected identify the processes If job order costing is selected - identify the unique production o How will you allocate predetermined overhead? Identify and justify the cost driver. Be sure to show calculations and an examnle all AT&T ? 3:57 PM (Notes driver. Be sure to show calculations and an example showing the development of predetermined overhead amount, using a specific cost driver 2. When responding to your designated group this week, evaluate the business in relation to the information identified. Comment on: o The completeness of the information o Questions you may have on elements presented The justification to use process/ job order costing (does it make sense) o Do you agree with the allocation of overhead? 3. In addition, from Thursday through Sunday, think about Applied Overhead. What types of error or poor estimates might cause Applied .all AT&T ? 3:57 PM ( Notes elements presented o The justification to use process/ job order costing (does it make sense) o Do you agree with the allocation of overhead? 3. In addition, from Thursday through Sunday, think about Applied Overhead. What types of error or poor estimates might cause Applied Overhead to be either very low or very high compared to Actual Overhead. What's an example of a problem that might develop as a result of that error or poor estimate? Would that error most likely make the Actual Overhead lower or higher, all other things equal? ved in Drie Achan Week 2: Business Partner Group Discussion - Cost Classification No uad res 3mplies pae sy Sunday of We Your instuctor wi te bin 1. Woing with your buiness pertmer ote mantactuing busin nga name and oion iyrl post present the oing tonor your busines Name of business Type ofued Location of buainess Deteinepd man e Cot caton Dete endvi at yur b s r ted (e. ae dret ndret atue veheat period 17product ude jusfication of o dcatione 2 When reponding to your d uation inuded The completens a torwe e hebuind the Cone ion The I'm on Hep Ahangessavedn De Determinea pradutaacue Cot dassicaion Detemine the individual cotshat your business would inour related (ed varble () drect 4indirect ( manucuing overhead period, and (7) produet Indude jucaion of cot cassications 2 When respornding to your desigated grup tor ts w, evalute the business and he Information induded in their post. Consider The completeressohemation Questiora you may haeoneents presented and Especialy tikabout whete the cost cassticatione make sere ion to the business Expiain your repon 3 naddion trom Thuday through Sunday gvean eample of a usines den w be helped by knowinga parioer cegory of cost cassications ie advara dredt perdrdut Epn how h cot gry be used make tha decon TS ll AT&T 12:48 PM 1 of 2 Done Company name Southwest Communication Company Location Los Angeles Company Product - Fiber Optic Cable Manufacturing unit Relates to Fiber Optic Cable Manufacturing Classification of cost in case of Fiber Optic manufacturing business are as follows: Manufacturing cost: Fixed Cost - a) Lease payment b) Utilities c) Insurance d) Salaries Variable Cost a) Labor b) Commissions c) Raw Material used in production Direct cost a) Material cost including glass and insulation. b) Employees salary directly related to manufacturing the fiber optic cable. Indirect Cost Manufacturing Overhead a) Utilities b) Rent c) Machinery maintenance d) Clerical/Custodial Salary ll AT&T 12:48 PM 1 of 2 Done d) Clerical/Custodial Salary e) Supervisor Salary ) Material Handling g) Depreciation In the case of depreciation cost we need to classified under two one is treated as Manufacturing Overhead and part of indirect product cost. Interest cost this is not a direct cost but treated as a period cost. To run the above business, we need to incur certain period cost like Selling expenses, Travelling cost. Travel cost also is divided into two parts indirect cost and some part relates to period cost. Certain costs are fixed in nature- like rent, electricity, loan payment, and salaries. For a manufacturing company following costs play major role while making any decision: 1. Purchase of material 2. Power and fuel 3. Shipping Cost 4. Advertisement and Sales promotions part of period cost 5. Any legal and professional charges All direct cost as mentioned above are most important to determine the operations cost. Certain cost which are not direct but covered under period cost like depreciation, amortization, and Interest cost affect the net profit of the company. 3:57 PM il AT&T ( Notes This discussion is a continuation from week 1. 1. You and your business partner(s) will decide which costing system works best - process costing and job order costing. Include the following in your initial post: o The name of your company (remind us) Product(s) (remind us) o Will your company use job order or process costing and why? If process costing is selected identify the processes If job order costing is selected - identify the unique production o How will you allocate predetermined overhead? Identify and justify the cost driver. Be sure to show calculations and an examnle all AT&T ? 3:57 PM (Notes driver. Be sure to show calculations and an example showing the development of predetermined overhead amount, using a specific cost driver 2. When responding to your designated group this week, evaluate the business in relation to the information identified. Comment on: o The completeness of the information o Questions you may have on elements presented The justification to use process/ job order costing (does it make sense) o Do you agree with the allocation of overhead? 3. In addition, from Thursday through Sunday, think about Applied Overhead. What types of error or poor estimates might cause Applied .all AT&T ? 3:57 PM ( Notes elements presented o The justification to use process/ job order costing (does it make sense) o Do you agree with the allocation of overhead? 3. In addition, from Thursday through Sunday, think about Applied Overhead. What types of error or poor estimates might cause Applied Overhead to be either very low or very high compared to Actual Overhead. What's an example of a problem that might develop as a result of that error or poor estimate? Would that error most likely make the Actual Overhead lower or higher, all other things equal? ved in Drie Achan Week 2: Business Partner Group Discussion - Cost Classification No uad res 3mplies pae sy Sunday of We Your instuctor wi te bin 1. Woing with your buiness pertmer ote mantactuing busin nga name and oion iyrl post present the oing tonor your busines Name of business Type ofued Location of buainess Deteinepd man e Cot caton Dete endvi at yur b s r ted (e. ae dret ndret atue veheat period 17product ude jusfication of o dcatione 2 When reponding to your d uation inuded The completens a torwe e hebuind the Cone ion The I'm on Hep Ahangessavedn De Determinea pradutaacue Cot dassicaion Detemine the individual cotshat your business would inour related (ed varble () drect 4indirect ( manucuing overhead period, and (7) produet Indude jucaion of cot cassications 2 When respornding to your desigated grup tor ts w, evalute the business and he Information induded in their post. Consider The completeressohemation Questiora you may haeoneents presented and Especialy tikabout whete the cost cassticatione make sere ion to the business Expiain your repon 3 naddion trom Thuday through Sunday gvean eample of a usines den w be helped by knowinga parioer cegory of cost cassications ie advara dredt perdrdut Epn how h cot gry be used make tha decon TS ll AT&T 12:48 PM 1 of 2 Done Company name Southwest Communication Company Location Los Angeles Company Product - Fiber Optic Cable Manufacturing unit Relates to Fiber Optic Cable Manufacturing Classification of cost in case of Fiber Optic manufacturing business are as follows: Manufacturing cost: Fixed Cost - a) Lease payment b) Utilities c) Insurance d) Salaries Variable Cost a) Labor b) Commissions c) Raw Material used in production Direct cost a) Material cost including glass and insulation. b) Employees salary directly related to manufacturing the fiber optic cable. Indirect Cost Manufacturing Overhead a) Utilities b) Rent c) Machinery maintenance d) Clerical/Custodial Salary ll AT&T 12:48 PM 1 of 2 Done d) Clerical/Custodial Salary e) Supervisor Salary ) Material Handling g) Depreciation In the case of depreciation cost we need to classified under two one is treated as Manufacturing Overhead and part of indirect product cost. Interest cost this is not a direct cost but treated as a period cost. To run the above business, we need to incur certain period cost like Selling expenses, Travelling cost. Travel cost also is divided into two parts indirect cost and some part relates to period cost. Certain costs are fixed in nature- like rent, electricity, loan payment, and salaries. For a manufacturing company following costs play major role while making any decision: 1. Purchase of material 2. Power and fuel 3. Shipping Cost 4. Advertisement and Sales promotions part of period cost 5. Any legal and professional charges All direct cost as mentioned above are most important to determine the operations cost. Certain cost which are not direct but covered under period cost like depreciation, amortization, and Interest cost affect the net profit of the company