Q – Please read the discussion below and prepare a Reply to this discussion post withcomments that further and advance the discussion topic.
Please provide the references you used.
Ensure zero plagiarism.
Word limit: 50 to 70 words please do not exceed the limit.
Discussion
Process Cost Systems Discussion
Introduction
According to Vercio (2018), process cost systems are widely used in industries characterized
by repetitive and continuous production of the same products or services where consistent
manufacturing is important. Industries such as food and beverage production, chemical
manufacturing, oil refining, pharmaceuticals, pulp production, and textile manufacturing find
using process cost systems important in effectively tracking production volumes and costs.
Business Identification
A custom jewelry manufacturer tracks and records the process cost system to guarantee
accurate, efficient production and cost allocation. The Jewelry manufacturer records all costs
incurred during the early stages of the manufacturing process associated with raw materials
such as metals, gemstones, and other critical elements before assigning them to specific
customer orders. The manufacturer actively tracks the labor cost throughout the production
process, which comprises molding, time spent by personnel on designing, setting stones, and
doing final touches. Besides that, the manufacturer sets overhead costs depending on the
designated allocation approaches, such as utilities, workshop rent, and equipment
maintenance. The manufacturer also allocates a unique identifier to link the jewelry with the
respective project or customer and maintains detailed information for each project, including
material usage, labor hours, and overhead expenditures. This is crucial as it helps calculate
the total cost per piece of jewelry, making it easier to determine the profit made (Schwartz,
2019).
Purpose of cost production report in custom jewelry manufacturing
The cost of production report is useful in any business. For instance, in a custom jewelry
manufacturer, the cost of production report is useful because it offers a detailed breakdown of
the total cost incurred during manufacturing. This helps to improve manufacturing operations
in different ways (Vercio, 2018). The custom jewelry business develops various unique
designs and materials, making it difficult to assign a fair selling price without clear insights
into how much it will need to produce a specific piece. However, a cost production report
provides transparent information to the manufacturer. It makes it easy to calculate the total
production cost per design and assess the aspects influencing costs, such as material choice
and design complexity. This overview allows for competitive pricing while ensuring the
business maintains healthy profit margins, thus increasing its ability to retain and attract new
customers.
Secondly, cost production report improves manufacturing operations by enhancing
operational and cost control efficiency. A custom jewelry manufacturer deals with
sophisticated processes, from design development to stone setting and finishing. Therefore,
the manufacturer can closely examine cost breakdowns to identify inefficient processes and
costly areas (Vercio, 2018). For example, suppose a manufacturer realizes labor costs are
high when developing specific designs. In that case, they can explore strategies that will help
them streamline production, such as optimizing resource allocation and providing employees
with additional training to decrease expenses without compromising quality.
Moreover, cost production reports aid in strategic decision-making, ensuring the
manufacturer makes informed decisions on product offerings and resource allocation. For
instance, the report can highlight that producing a certain design or style incurs lower costs
while generating more profits, allowing the manufacturer to prioritize the production of
identical items strategically. On the other hand, if the report identifies that certain designs are
incurring high costs without necessarily producing significant profits, the manufacturer can
reassess the feasibility of providing such options. Such a data-driven decision-making
approach results in long-term sustainability and business success (Schwartz, 2019).
In conclusion, process costing acts as a foundation for accurate pricing, which helps in
efficiency improvement and cost control. Therefore, leveraging this tool ensures that custom
businesses such as jewelry satisfy customer expectations and optimize profits and operations
to succeed in the highly competitive manufacturing niche.
References
Schwartz, J. (2019). Solid information helps address controllable costs. World Oil,
240(1), 25
Vercio, A. (2018). Process Costing: The Most Important Subject in the Management
Accountant’s Curriculum. Journal of Corporate Accounting & Finance, 29(2), 141-150.
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