Costing Systems and Analysis

please respond to the two peers:

Costing Systems and Analysis

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Option 1

Discuss the usage and creation of standard costs by an operation. How are these costs developed? How can they be used in the creation of a forecast? How can these be used in an individual or organizational measurement system?

– OR –

Option 2

Discuss a current business activity that you or your department does that could be improved by leveraging Variance Analysis. Discuss the perspective you could gain, and what a “favorable price” and a “favorable quantity” variance mean in this application.

peer #1

2 days ago

Shaqcueal Jones

RE: Week 7 Discussion

COLLAPSE

Hi Professor and classmates,

This week we are looking at costing systems and Analysis

Option 1

Discuss the usage and creation of standard costs by an operation.

The discuss of standard cost is the Variable Cost Variances: Standard Variable Cost – Actual Variable Cost X Actual Volume = Cost Variance. Normal conditions are examples of material cost, labor cost (1). In my department, we see a lot of changes when it comes to standard cost as far as waste, downtime since. I work in dining services things are always changing we do a lot of serving food and products along with catering of parties.

How are these costs developed?

The standard costing system involves estimating the required cost of the production process. The average cost of all elements by purchasing products for our area it can become costly depending on the items needed. The use of coffee is the most profitable to me we have a shipment of at least five to 6 bulk boxes of Starbucks coffee beans. Each week we run through so many supplies of coffee the company spends. A lot since the prices have risen for the buying Starbucks beans at least $26 dollars or more for the bulk.

How can they be used in the creation of a forecast?

The demands and for services and use of good the cost of a single cup of coffee is $2 and for specialty drinks runs around $3-$4. Not even including the price for food items that are brought (2) CVP-cost volume cost includes Revenue, the variable cost, Fixed cost this all plays a big role in our company because we have to split part of our costs with the campus it’s at least half of what me make so for the company to see any profit the sales on foods and drinks have to be raised.

How can these be used in an individual or organizational measurement system?

The organization I work for the use of coffee sales and food sales are measured by how much we use Quantity Variances: (Actual Quantity- Standard Quantity) X Actual quantity. So, the company has to downsize on products brought if they can work on the sales on how it is begin used and buying not many supplies. I believe we can achieve higher goals and sales will be proficient and that way you will know which way to go.

References

  1. JWI 530 EOP Video: CVP-cost volume Profit
  2. Finance For Non-Financial Management ch.10

peer #2

2 days ago

Paul Weaver

RE: Week 7 Discussion

COLLAPSE

Hello Professor Miller and Classmates,

Option 1

Discuss the usage and creation of standard costs by an operation.

Standard or average costs are used instead of the actual cost of each item as an optional cost accounting approach. By using average costs, companies can more easily plan budgets and recognize cost irregularities as they occur (1).

Standard costs are created by an organization to simplify estimating and budgeting of costs by taking into consideration normal variations in cost (1).

How are these costs developed?

Standard costs are developed based on the budgeted direct (material and labor) and indirect (overhead) costs (3). These steps carefully examine the manufacturing process and material alternatives to meet product requirements and establish robust processes. Various manufacturing processes are considered based on volume, timing, and associated overhead costs.

From a development perspective, the budget costs or target costs are established very early in the process based on estimates for selling price, market strategy and planned profit margin. At every step along the way the target costs are closely reviewed.

How can they be used in the creation of a forecast?

The standard cost is a measure of how much one unit of product or service should cost to produce or deliver (3). The standard costs of a product will be made up of the components required to produce the product (3). The standard cost of 1 unit multiplied by the sales forecast for a given period of time would provide the cost of the product for that forecast period.

How can these be used in an individual or organizational measurement system?

In the standard costing system, the company can see the variances and make budgetary adjustments as needed. The goal is to improve operations (5).

Paul

References:

  1. JWI520. 2020. Week 7, Lecture Notes: and EOP Videos
  2. Siciliano, B.(2015). Finance for Nonfinancial Managers. CWL Publishing Enterprises.
  3. Rapier D.(January 26, 1996). Standard Costs and Variance Analysis. Harvard Business School Publishing Corporation.
  4. Bragg S. (December 21, 2018). Variance Analysis. Accounting Tools: https://www.accountingtools.com/articles/what-is-variance-analysis.html
  5. Shamsa. (n.d.).Standard Costs & Management by Exception. Accounting Details: http://www.accountingdetails.com/standard_costing.htm

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