Business management techniques for engineers
Anglų namų darbas. Business management techniques for engineers Selecting and applying costing systems and techniques Ass 2 of. Contents Page. Appendix. Job Costing. Appendix. Absorption Costing. Appendix. Activity Based Costing. Job costing and Process costing. Marginal costing. Activity based costing ABC. Excel Spreadsheets. Spreadsheet formula example.
It is the simplest method which is most suitable for one-off make-to-order jobs or batches.
In this question I had to estimate how much it will cost for a small engineering company to design, build and install an open storage tank for waste oil and what profit company will get from this job. And the total costs for the company to make waste oil tank will be £ 1,254.84, after adding % profit from bought in items, bought in services and labour I get that selling price will be £1,451.42 and this is 14% profit.
Marginal costing is actually not a costing methodology, but the method which helps to have a closer look at particular situation, when focusing needed to estimate and compare the balance between fixed and variable costs.
In this situation companies production level is 12000 units which will be sold for £37 per unit, but a large high-street chain store has offered to take an additional 2030 units at a price of £22 per unit. My task is to determine if this project is financially viable. And after I have done all the calculations I can see that there is a very small loss of profit (1%) out of those 2030 units which will be sold for £22, but there is still enough profit from those 12000 units which will be sold for a normal £37 price. I think it is worth to accept this project because when the company is making more units it cuts the fixed costs from £8.33 per unit to £7.13 per unit.
In this question company makes 4 different products and I have to determine the cost of each product. For this task the best suits Activity Based Costing method. Here I am looking at 4 products which this company is making. I can see that product B is only 9% of all production, but it causes a lot of costs and consumes companies resources, so my decision would to stop production of it, and better increase production of D product which is not so expensive to make. That is a good decision because it will save companies resources, cheaper products will be made and it will cut-off fixed costs, like engineering hours, material kits, services etc.