Measuring Costs
Measuring profits or net income is the most important thing accountants do. The second most important task is measuring costs. Costs are extremely important to running a business and managing them effectively can make a substantial difference in a company's bottom line.
Any business that sells products needs to know its product costs and depending on what is being manufactured and/or sold, it can get complicated. Every step in the production process has to be tracked carefully from start to finish. Many manufacturing costs cannot be directly matched with particular products; these are called indirect costs. To calculate the full cost of each product manufactured, accountants devise methods for allocating indirect production costs to specific products. Generally accepted accounting principles (GAAP) provide few guidelines for measuring product cost.
Accountants need to determine many other costs, in addition to product costs, such as the
costs of the departments and other organizational units of the business; the cost of the retirement plan for the company's employees; the cost of marketing and advertising; the cost of restructuring the business or the cost of a major recall of products sold by the company, should that ever become necessary.
Cost accounting serves two broad purposes: measuring profit and furnishing relevant information to managers. What makes it confusing is that there's no one set method for measuring and reporting costs, although accuracy is paramount. Cost accounting can fall anywhere on a continuum between conservative or expansive. The phrase actual cost depends entirely on the particular methods used to measure cost. These can often be as subjective and nebulous as some systems for judging sports. Again accuracy is extremely important. The total cost of goods or products sold is the first and usually largest expense deducted from sales revenue in measuring profit.
Terms of Use for this Private Label Article
Possibly Related PLR Articles:
Cabrillo National Monument
Located in San Diego California, the Cabrillo National
Monument provides a historic lighthouse with plenty
of activities. There are great views here as well,
with tidepools, flora and fauna, whales to watch,
and even military history.
...read more
Publishing Your eZine - the Cons
As with any other types of businesses, publishing your own online newsletter a.k.a. eZine has its share of drawbacks, in spite of the several benefits it offer.
The purpose of this article is not to scare you away with the disadvantages of...read more
Getting Started With Breast Feeding
When you hold your baby for the first time in the
delivery room, you should put his lips to your
breast. Although your mature milk hasn't developed
yet, your breasts are still producing a substance
known as colostrum that helps to protect...read more
Internet Marketing Strategies that Won't Hurt Your Savings Much
Your new business will benefit a lot from various Internet marketing methods. But you don't have to spend millions of dollars just to get some decent exposure for your company. There are ways to make your business be seen and felt without doing...read more
Where to Practice Aikido
Aikido is the modern Japanese martial art developed between the 1920 to 1960 by Morihei Ueshiba who was said to have been influenced by Omoto-kyo. It is the pacifist nature of Omoto-kyo that is said to be the fundamental principle of this "art of...read more
Chronological vs. functional resumes
A resume is a one- to two-page document summarizing your career objectives, professional experiences and achievements, and educational background.
While there are numerous ways to format your resume, there are two main resume styles:...read more
Some Facts about Silky Terrier Pet Dogs
Dogs have always been man's best friend. Nowadays, however, human-canine relations have been rather strained mainly because of apartment living. Many people today live in condominiums or apartment building where pets aren't allowed. Because of this,...read more
Understanding Bad Cholesterol
Cholesterol is a very familiar medical term almost to anyone, particularly the middle age group. It is a common thing the word will never be a part of teen-age lingo. The main reason is, most of the dreaded ailments accompanying "high cholesterol"...read more
Life's good with LG cellular phones
The cellular phone industry is already able to stand as a functional gadget and not merely luxurious toy. Because of this, manufacturer quickly jump into the cellular phone bandwagon, this includes the electronics companies and telephone companies....read more
Fun Office Christmas Activities
Just because you're stuck in an office all day doesn't mean Christmas fun can't extend to your workplace. Depending on the environment at your work, it's definitely possible to mix holiday fun with work.
One obvious choice for some fun at the...read more