VOLATILITY ANALYSIS OF GENERAL PRODUCTION EXPENSES
Production costs generally is a fairly complex cost estimation and analysis. First, the overall production costs is an indirect costs should be calculated into the cost of products through the distribution of a certain reasonable criteria. These criteria are often chosen are:
- direct labor hours.
The hours treadmill.
- Wages of workers directly engaged in production. . . .
The selection of the different distribution criteria can make general production costs attributable to the product will vary and therefore may affect the analytical results. Second, the cost of production include many different types of costs on various properties and also between businesses, so there can not be a single model to analyze this expense item. Third, overall production costs include costs such as the availability of raw materials additives, energy, fuel, and other expenses such as depreciation immutability machinery and factories, staff salaries workshop managers, insurance. . . These expenses must have the different analytical methods. If wrong application method would be misleading remarks, even contrary to the real situation.
Other than direct material costs and direct labor costs are variable costs, general manufacturing costs is a mixture of technical cost calculation of production cost differentials generally more complex.
The cost of producing complex overall costs in the calculation and analysis:
general production expenses are indirect costs and are charged to cost of products through the method of allocating
general manufacturing expenses, including the costs that could be variable and the costs have immutability 1. Estimates of flexibility: A cost estimate of the total cost represents a specific level of activity is seen as a static cost estimates. This estimate can not be used to measure the use of cost in activity levels. So we need to have estimates of the cost in a range from the minimum activity level to the maximum for any actual activity levels, we can also determine an estimated value proportional to comparative cost analysis. Cost estimates are called estimates flexibility. The estimates correspond to the actual level of activity is called the adjusted cost estimate on the number of products actually te.Vay, estimates are estimates flexibility built for different activity levels in range the suitability of the business. Thanks to the flexible budget can find a corresponding estimate of the scale for comparison when evaluating the cost. It is important when estimating flexibility is to study the volatility of costs under the level of activity. The basic steps for drafting the flexibility include:
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