This assignment requires selection of three companies, and then identifies their production’s major component and the way to calculate the unit costs by mentioning the costs type of each of them. So, first, the costs types must be clarified.
The types of costs are as follows (Accounting for Management, 2017):
- Variable Costs are that costs that change as the volume of production changes and are related to production units, such as the cost of materials used in manufacturing. The total value of the variable cost increases with the increase in the volume of production, and vice versa;
- Fixed Costs are the costs that are borne by the company regardless of the change in production. In other words, they are the costs that are paid by the company …show more content…
It has to figure out the total costs it incurred to produce a certain product quantity, then divide it by the total number of the produced units.
The three selected companies are:
1. American Eagle Outfitters is an American apparel company. One of its major products is the jeans. As it is mentioned before, American Eagle has to determine its costs, which include:
a. Variable costs, such as the raw material (the cloth, fabric for internal lining, threads, buttons, zips, label and trade mark), direct labor, machinery costs, and freight;
b. Fixed costs, such as the land, building, stores, rent, allocated depreciation, and maintenance and repair; and
c. Mixed costs, such as the general and administration costs (employees’ benefits and compensation, utilities and marketing and distribution (Goldstein, 2008).
2. Dunkin Donuts is an American coffee and donut chain. Its major product is the bagels and donuts. The costs of producing just the bagels with cream cheese are:
a. Variable costs, such as the ingredients and raw materials (flour, yeast, salt, butter, oil, water and cream cheese), supplies and packing materials (paper wrapping and boxes), and direct …show more content…
Fixed costs, such as the land and buildings, machinery allocated depreciation, maintenance and repair and advertisement; and
c. Mixed costs, such as the electricity costs that is used to run the machinery or other electrical devices as well as other utilities (gas, water, heat and telephone) and other administrative costs (BrewersFriend, 2008).
References:
Accounting for Management. (2017). Variable, fixed and mixed (semi-variable) costs - explanation and examples. April 17, 2017. Retrieved from: http://www.accountingformanagement.org/variable-fixed-and-mixed-costs/
BrewersFriend. (2008). Cost Breakdown of Beer, Home Brewing vs. Commercial. August 31st, 2008. Retrieved from: https://www.brewersfriend.com/2008/08/31/cost-breakdown-of-beer-home-brewing-vs-commercial/
Metzger, Scott. (2012). What Does Your Beer Really Cost? The New Brewer. January /February, 2012. Retrieved from: https://www.brewersassociation.org/articles/brewpubs-how-much-does-your-beer-really-cost/
Goldstein, Jacob. (2008). Global Poverty And The Cost Of A Pair Of Jeans. March 3, 2010. Retrieved from:
The types of costs are as follows (Accounting for Management, 2017):
- Variable Costs are that costs that change as the volume of production changes and are related to production units, such as the cost of materials used in manufacturing. The total value of the variable cost increases with the increase in the volume of production, and vice versa;
- Fixed Costs are the costs that are borne by the company regardless of the change in production. In other words, they are the costs that are paid by the company …show more content…
It has to figure out the total costs it incurred to produce a certain product quantity, then divide it by the total number of the produced units.
The three selected companies are:
1. American Eagle Outfitters is an American apparel company. One of its major products is the jeans. As it is mentioned before, American Eagle has to determine its costs, which include:
a. Variable costs, such as the raw material (the cloth, fabric for internal lining, threads, buttons, zips, label and trade mark), direct labor, machinery costs, and freight;
b. Fixed costs, such as the land, building, stores, rent, allocated depreciation, and maintenance and repair; and
c. Mixed costs, such as the general and administration costs (employees’ benefits and compensation, utilities and marketing and distribution (Goldstein, 2008).
2. Dunkin Donuts is an American coffee and donut chain. Its major product is the bagels and donuts. The costs of producing just the bagels with cream cheese are:
a. Variable costs, such as the ingredients and raw materials (flour, yeast, salt, butter, oil, water and cream cheese), supplies and packing materials (paper wrapping and boxes), and direct …show more content…
Fixed costs, such as the land and buildings, machinery allocated depreciation, maintenance and repair and advertisement; and
c. Mixed costs, such as the electricity costs that is used to run the machinery or other electrical devices as well as other utilities (gas, water, heat and telephone) and other administrative costs (BrewersFriend, 2008).
References:
Accounting for Management. (2017). Variable, fixed and mixed (semi-variable) costs - explanation and examples. April 17, 2017. Retrieved from: http://www.accountingformanagement.org/variable-fixed-and-mixed-costs/
BrewersFriend. (2008). Cost Breakdown of Beer, Home Brewing vs. Commercial. August 31st, 2008. Retrieved from: https://www.brewersfriend.com/2008/08/31/cost-breakdown-of-beer-home-brewing-vs-commercial/
Metzger, Scott. (2012). What Does Your Beer Really Cost? The New Brewer. January /February, 2012. Retrieved from: https://www.brewersassociation.org/articles/brewpubs-how-much-does-your-beer-really-cost/
Goldstein, Jacob. (2008). Global Poverty And The Cost Of A Pair Of Jeans. March 3, 2010. Retrieved from: