In: Accounting
Select a public (i.e. one that publishes its financial information) manufacturing company and become familiar with its products. Describe the company, its products, and the specific manufacturing costs it incurs. Categorize each cost into the three manufacturing cost categories and state if the costs are variable, fixed, or mixed. Explain how you came to your conclusions.
The manufacturing company I have picked is Apple
ANSWER:
We can take the case of Cement Manufacturing Company.
1. Portland concrete
Portland concrete is the most widely recognized kind of concrete. It's a fundamental element of cement. Portland concrete is a blend of limestone and dirt. It's ground and consumed at an extremely high temperature to frame clinker. The clinker is ground into a fine powder. There are various kinds of portland concrete. Every sort of portland concrete has an alternate substance sythesis. Be that as it may, the assembling procedure is the equivalent for every sort of portland concrete.
2. Mixed concrete
So as to deliver mixed concrete, certain regular or man-made mixes, for example, sandstone are blended in with portland concrete and ground together. Mixed concrete is increasingly reasonable for specific applications contrasted with portland concrete. This concrete is utilized for huge solid works, for example, dams.
3. Claim to fame concrete
Claim to fame concrete has a few one of a kind properties. It's utilized in explicit applications like earnest fixes and too high quality applications.
- Now, we will become acquainted with about the three assembling cost classes: Manufacturing cost is the whole of expenses of all assets devoured during the time spent creation an item. The assembling cost is ordered into three classes: direct materials cost, direct work cost and assembling overhead.
1. Direct materials cost: Direct materials are the crude materials that become a piece of the completed item. Assembling process increases the value of the crude materials by doing different activities to keep up a deliverable item. There are numerous tasks that can be applied to crude materials, for example, welding, blending, pouring, cutting and painting, stringing.
2. Direct work cost: The immediate work cost is the expense of laborers (Skilled, Semi-Skilled, Unskilled) who can be effectively related to the unit of creation.
3. Assembling overhead: Manufacturing overhead is any assembling cost that is neither direct materials cost or direct work cost. Assembling overhead incorporates all charges that offer help to assembling of the completed item from the crude material.
Specific assembling costs that concrete organizations brings about to deliver concretes are as per the following:
1. Force and fuel Cost(Manufacturing Overhead):
The concrete business depends on force and its fuel. Force and fuel costs represent approx 25-30% of the cost of concrete when it's sold. Therefore, force and fuel majorly affect the organization's working expenditure.Different assortments of fuel—diesel, coal and lignite—are utilized all the while. Concrete plants require various measures of intensity dependent on the warmth treatment process that is being utilized. This cost will be classified as Mixed Cost for example Semi variable since this expense relies upon the creation of concrete additionally a portion of the force and fuel cost will be fixed independent of the creation.
2. Limestone and Raw material Cost (Direct Material):
The second significant segment in the creation of concrete is the expense of crude materials. The most essential crude material that is utilized is limestone. Crude materials represent around 40% of the expense of deals. Concrete plants are commonly situated close to limestone holds since limestone can't be moved to significant distances. Aside from limestone, other crude materials utilized in the concrete business are fly debris gypsum and so on. This cost will be classified as Variable Cost since this expense relies upon the volume creation of concrete.
3. Transportation cost (Manufacturing Overhead):
In the concrete division, the assembling offices and end-client markets are impressive good ways from one another. Concrete plants are situated close to limestone holds. Thus, concrete needs to go a significant separation to arrive at the end-clients. Since concrete is a low-esteem, high-volume product, shipping it to the end-client represents a critical segment of the expense for concrete makers—it establishes practically 10% of the expense of deals. This cost will be sorted as Variable Cost since this expense relies upon the volume creation of concrete and these costs will rise and fall with the endeavors you make to build deals.
4. Pay rates and Wages(Direct Labor): Piece rate compensation earned, Incentive wages earned, Overtime compensation earned; (d) Earnings of easygoing work and so forth are the costs of the organization towards labour. This cost will be classified as Variable Cost since this expense relies upon the volume creation of concrete.