Product CostsI need two responses to each student discussion board post. Please keep separate and in order. Each position should be at least 150 words each with references Turnitin is being used to check for plagiarism, and Please use APA format. 300 words total
Anna Williams
XXXXXXXXXX:30am Apr 3 at 1:30am
Product Costs
There can certainly be several different costs and expenditures that are concomitant with engineering products. In Chapter 3 of the textbook which covers the ins and outs of job costs as well as process costing, we get a detailed explanation about what goes into the complete cost system. Three of the major types of costs associated with a manufactured product include direct materials, direct labor and manufacturing overhead.
Direct materials are related to manufacturing costs because they include the materials that will be needed for the job as well as the materials that are needed to make the product itself. As for direct labor and manufacturing overhead costs, Schneider XXXXXXXXXXexplains that, “Labor and overhead costs are incurred to convert materials into a finished product; hence, labor and overhead costs are called conversion costs. Because labor and overhead often enter the process at the same time, we combine them for illustrations throughout the chapter. This assumes that overhead is applied to production using direct labor hours or dollars” (p.101). To put simply, both areas work together to get the product into production as the labor costs cover the labor and overhead costs cover the basics that are needed to get things off the ground such as costs for the facility (rental space), utilities or personnel salaries.
There are various reasons why some of these costs are allocated to the product through costing methods such as job order costing and process costing. According to Averkamp (2019), “Job order costing or job costing is a system for assigning and accumulating manufacturing costs of an individual unit of output. The job order costing system is used when the various items produced are sufficiently different from each other and each has a significant cost” (p.1). In contrast, the method of process costing is often only utilized when products that are the same are produced in bulk or large quantities.
After reading the articleFirst Solar Preview: Manufacturing Costs, Project Order Book In The Spotlight, it is evident that First Solar has various manufacturing costs. I believe one of the largest manufacturing costs that they incur include their panel manufacturing costs. While their panel technology is what gives them a competitive edge, it is also a large manufacturing costs. Based on the information in the article, they are constantly trying to reduce this costs.
References
Averkamp, H XXXXXXXXXXWhat is job order costing? Retrieved from https://www.accountingcoach.com/blog/what-is-job-order-costing(Links to an external site.)Links to an external site.
Schneider, A. (2017).Managerial Accounting: Decision making for the service and manufacturing sectors(2nd ed.) [Electronic version]. Retrieved from https://content.ashford.edu/(Links to an external site.)Links to an external site.
Trefis Team. (2014, February 24).First Solar preview: Manufacturing costs, project order book in the spotlight(Links to an external site.)Links to an external site.(Links to an external site.)Links to an external site.. Retrieved from http://www.forbes.com/sites/greatspeculations/2014/02/24/first-solar-preview-manufacturing-costs-project-order-book-in-the-spotlight/
Matthew Lindemulder
XXXXXXXXXX:42pm Apr 3 at 3:42pm
When it comes to manufacturing products, there are going to be three common costs involved in making these goods. These costs associated with manufacturing products include materials, labor, and overhead costs. We discussed two different costing systems in CH 3 which include the job cost system and the process cost system. The job costing system is when the products are different than one another, creating more unique materials for each job. On the contrary, the process costing system is when the products are all alike, and the company can utilize the same standard materials for all products. A manufacturing company is going to have more detailed costs than other service organizations, and knowing the extent of the costs that go into making the products is essential to turning a profit for the company.
Manufacturing products is a costly and time consuming environment. Each product that is manufactured has materials that go into making it. The materials need to be detailed and outlined in a process so that management understands every material needed to create a finished product. The products are not going to be made without a labor staff put in place. Since manufacturing is not a glorious world for many to be in, the costs to keep these teammates put in place on their team can continue to increase. Along with the materials and labor, having the facilities and equipment in order is another costly resource needed for manufacturing. With the adaption of technology continuing to increase production lines, companies need to continue evaluating their process to ensure that they are up to date in the process that they are facilitating their products.
For many companies like First Solar, freight costs are going to be something that they cannot get around. Transportation and logistics costs continue to rise, due to the cost of fuel, labor, and the continued shortage of drivers on the road. Companies today like to go as "green" as possible, and recycling is another cost that is high when it comes to manufacturing items such as solar panels. The production line making up their labor is a high cost that First Solar is facing. Finding ways to continue adapting their technology with their equipment will go a long way in continuing to find ways to eliminate costs. Manufacturing companies face a lot of obstacles when it comes to the costs of producing goods. Materials, labor, and overhead are three things that are always going to come into play for organizations manufacturing.
Reference
Schneider, A. (2017).Managerial Accounting: Decision making for the service and manufacturing sectors(2nd ed.) [Electronic version]. Retrieved from https://content.ashford.edu/
Rubrics/Marking Guidelines :
I need 2 responses to each student discussion board post. Please keep separate and in order. each post should be at least 150 words each with references Turnitin is being used to check for plagiarism and Please use APA format. 300 words total