|Type of paper:||Report|
|Categories:||Accounting Financial management|
The Proprietary Information
The proprietary information consists of a direct material, which the company owns them, and they make the final product. Besides, direct labor also forms proprietary as the organization traces labor to the individual's production unit. More so, direct costs are incurred directly by the company; hence, they can be considered proprietary (Edspira, 2018). Besides, profit or fee is the award received by an organization thus, forms part of ownership elements that the company assets.
Direct or Indirect Cost Elements
Direct cost elements, also referred to as cost object involves a high probability of being traced directly to a specific purpose such as a good or service. For instance, the company's raw materials like nails, furniture or vanish being put to the productivity of the organization such as making furniture can be traced easily (Edspira, 2018). Indirect cost elements stay with the company with little probability of tracing to a particular good or service. Furthermore, they affect the entire firm and not tailored to single objects (Mursau, 2018). For example, depreciation of the company and the accounting services, which affects the organization as a whole.
Classification of Material Cost
Material cost is classified differently since it implies to amount of money required for the production of goods or services. A good example consists of the budgetary money for a specific service or product (Mursau, 2018). Conversely, cost elements are resource costs that the activity consumes. Material cost forms part of the total cost.
There should be expectations for the contractors to track engine block as nuts and bolts because the availability of tools procure goods, but does not guarantee for quality work. Above all, there is the establishment of expectations of the direct cost of hard material, cost of hard labor and manufacturing overhead. The combination of it establishes the value of goods for a tiered manufacturing program (Baumers, 2016).
Agreement to the Statement
I agree with this statement because knowledge of the available assets, specifically the tools, in an organization grants an effective estimation of the value on goods and services. Furthermore, for proper acquisition of goods and services, there must be proper knowledge of how the process of manufacturing is done. Besides, an understanding of the direct cost material, labor and cost of goods is key to account and negotiation of goods and services.
Baumers, M., Dickens, P., Tuck, C., & Hague, R. (2016). The cost of additive manufacturing: machine productivity, economies of scale and technology-push. Technological Forecasting and Social Change, 102, 193-201. doi:10.1016/j.techfore.2015.02.015
Edspira, (2018). 3 Types of Manufacturing Costs (Direct Materials, Direct Labor, Manufacturing Overhead). Retrieved from https://www.youtube.com/watch?v=bgp_AAxUJpQ
Mursau, A. (2018). Master Budget (Cost Of Goods Sold Budget Setup & Calculations, Explained Thru Detailed Example). Retrieved from https://www.youtube.com/watch?v=HW0L8AfDIkE
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