Question

• Use the Internet to research financial statements of a manufacturing company. Analyze the cost components of the primary manufacturing process and examine the significance of cost behavior analysis to the company. Evaluate the value of using cost behavior analysis to management.
• Examine the elements of the cost-volume-profit (CVP) income statement and provide your opinion on the benefits of its use for decision making by the management of the company researched over traditional income statements under generally accepted accounting principles (GAAP)

Answer 1

The company I researched is Dell. I looked at their financial statements for the year 2018 and found that the Cost of Goods Sold (COGS). There was also raw materials at 967M, finished goods at 1.2B, and work in progress at 514M. Cost behavior analysis is the study of how sure cost respond to the changes in the level of activity inside a business. It is essential to a manager because it helps the management to plan the business activities and is also critical choosing between different systems of actions. If Dell used the cost behavior analysis, mitigate what they are wasting and how they can improve in time to come. Dell is an electronics company, and if they steadily release new laptops, it can affect them in a good or bad way. The cause of the effects is from experimenting and mistakes. I would recommend that they get the product tested before it is released to the public. It is hard for corporations to think of something new at times.

The cost-volume-profit income statement contains the volume or level of activity, variable cost, unit selling price, sales mix, and variable cost. CVP provides managers with the power to be responsible for certain realistic issues required in company examination. Questions could be what is the break-even point of the business. When the manager knows the break-even point, they can alter spending and expand production accomplishments. With CVP, conclusions can be broke down into possibilities that can help the decision-making method.