Standard Costing Jewelry Efficiency
Q – Please read the discussion below and prepare a Reply to this discussion post with comments 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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