Can somebody help me with my accounting project, here are the instructions: Comp
ID: 2405328 • Letter: C
Question
Can somebody help me with my accounting project, here are the instructions:
Complete the Critical Thinking Problem A6-74 "Cost Behavior in Real Companies"Note: You must choose a publicly traded company for your analysis. You may not use Pearson or any other publishing company for this analysis.
Your essay must include a cover page, introduction, body, conclusion, and a reference page. Be sure to address all relevant parts of each question. Your response should be a minimum of 700 words in length (not including the cover page and the reference page). Cite all references you use. Note: You must use at least three references. Proper citation format for a reference includes the name of the author(s), the title of the work, the date of the publication, and the page number.
A6-74
Cost Behavior in Real Companies
Choose a company with which you are familiar that manufactures a product or provides a service. In this activity, you will be making reasonable estimates of the costs and activities associated with this company; companies do not typically publish internal cost or process information.
Basic Discussion Questions
1. Describe the company you selected and the products or services it provides.
2. List ten costs that this company would incur. Include costs from a variety of departments within the company, including human resources, sales, accounting, production (if a manufacturer), service (if a service company), and others. Make sure that you have at least one cost from each of the following categories: fixed, variable, and mixed.
3. Classify each of the costs you listed as either fixed, variable, or mixed. Justify why you classified each cost as you did.
4. Describe a potential cost driver for each of the variable and mixed costs you listed. Explain why each cost driver would be appropriate for its associated cost.
5. Discuss how easy or difficult it was for you to decide whether each cost was fixed, variable, or mixed. Describe techniques a company could use to determine whether a cost is fixed, variable, or mixed.
Thank you very much!!!
Explanation / Answer
Introduction:
Cost behavior is an important element which helps to understand the nature of costs involves for production of goods and provided services. It helps to determine the total cost and also helps in cost management. Generally, there are three type of cost i.e. fixed cost, variable cost and mixed cost. In the instant assignment Apple Inc., a real company is selected to analysis the cost behavior and its impact on the cost management as well as in the financial statement of the company.
Description of the company:
Apple In. is an American Company which is involves in the production of gadgets and smartphones. It’s also design, develops and sells consumer electronics, online services and computer software. The various products of the company are iPad tablet compute, iPhone, Mac Book, Apple watch, Apple TV etc. The headquarter of the company is situated in Cupertino, California. It is a multinational technology company. The company was founded in the year 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne.
List of Costs:
The ten costs that company is incurred are:
Classification of the expenses:
The expenses are generally classified under three parts i.e. Fixed, Variable and Mixed.
Fixed Expenses are:
Variable Expenses are:
Mixed Expenses are:
Description of potential cost drivers:
There are generally three types of cost as discussed earlier. They are variable, fixed and mixed. The variable cost is varying with the production. It is also known as marginal cost. For each unit of extra production, the variable cost is increased. So the variable cost is depending upon the production. The rate per unit of the variable cost are fixed and the total variable cost are changed and its depending upon the total volume of the productions. Suppose the total no of units produced are 10,000 and variable cost is $10 per unit. So the total variable cost is $100,000. The total cost will increase if the number of units produced are increased. In the other hand the fixed costs are remain fixed and it does not vary with the production. It is irrelevant and does not considered at the time of making decision of production. The total fixed cost is unchanged due to increase in the number of production but the per unit cost will changes due to increase in the production. As example if the total no units produced are 10,000 and total fixed cost for the same is $50,000. The total fixed cost will remain fixed in case of increase or decrease in the production but the per unit cost will changed due to change in the volume of the production. In case of mixed cost, it is the combination of the fixed and the variable cost. The fixed portion of this type of cost are remain fixed and the variable portion will vary with the production. In this type of cost it is important to identify the fixed and variable component and compute the variable cost per unit.
The cost driver for identifying the variable cost is production units. The increase in the production units will increase the total variable cost and the changes will equal to no unit extra production and the variable cost per unit of production. The identification of this type of cost are depending upon the understanding the nature of the cost. In case of mixed cost, the understanding is relying upon the nature of fixed and variable cost. First need to compute the variable cost per unit and then compute the total variable cost. After that the same will deduct form the total cost and the balance cost will know as fixed cost. This type of cost is not change equally with the number of production increase. This cost will consist of both fixed and variable component. So the variable portion will only change due to increase in the production.
Techniques to determine the nature of cost:
The techniques of determination of the costs are depending upon the understanding the nature of the cost. The fixed cost is remaining fixed so it is easy to identified. In case of variable cost it will increase equally with the increase of production. But for mixed cost it is challenging to identify the same. In this case first the variable cost per unit will be computed by using the formula of Variable cost per unit = Change in total Cost/ Change in number of units of production. After getting the variable cost per unit, then the fixed cost element will compute.
References:
Bu, D., Wen, C., & Banker, R. D. (2015). Implications of asymmetric cost behaviour for analysing financial reports of companies in China. China Journal of Accounting Studies, 3(3), 181-208.
Chen, C. E., Zhang, H., Ying, G. G., Zhou, L. J., & Jones, K. C. (2015). Passive sampling: A cost-effective method for understanding antibiotic fate, behaviour and impact. Environment international, 85, 284-291.
Dalla Via, N., & Perego, P. (2014). Sticky cost behaviour: evidence from small and medium sized companies. Accounting & Finance, 54(3), 753-778.
Jobs, S. P., Forstall, S., Christie, G., Lemay, S. O., Herz, S., Van Os, M., ... & Coffman, P. L. (2016). U.S. Patent No. 9,335,924. Washington, DC: U.S. Patent and Trademark Office.