with units produced Installing body components for a vehicle Custom paint

With units produced installing body components for a

This preview shows page 6 - 9 out of 20 pages.

with units produced - Installing body components for a vehicle - Custom paint - Markup vs. Margin Pricing Markup Percent Method : the selling price represents a percent above the cost Theoretically, there is an unlimited % markup Selling Price = Unit Cost × ( 1 + Markup ) Margin Method : represents the percent of the selling price that is profit Can’t ever be over 100% Selling Price = Unit Cost ( 1 Margin ) Just-in-Time Inventory vs. Traditional System Just-in-Time Traditional System FAQ’s Builds inventory when an order is placed – “pull system” Builds inventory without a specific order – “push system” Little to no raw materials and WIP on hand Always has raw materials and WIP in inventory
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Similar to job-order costing Similar to process costing Inventory is continually produced Pro’s Less storage costs Enough supply to meet higher than expected demand No overproduction Consumer doesn’t have to wait Low risk of product damage and loss of raw materials Discounts on raw materials for buying in bulk Less direct labor cost Employees are always working Production time is faster Con’s No materials = no production Overproduction Employees might not always be working Higher risk of damage/destruction of products and materials Lost sales due to inability to fill orders without inventory Wasted resources Total Quality Management 1. Prevention Costs : aim to keep poor quality products from being produced a. Maintenance b. Trials c. Design reviews d. Engineering e. Audits f. Training g. Planning h. Reporting 2. 3. Appraisal Costs : ensures that the product meets customer demands a. Inspecting b. Testing c. Supervising Appraisal activities d. Process Acceptance 4. Internal Failure : when the products or services do not meet customer demands but are found before they have been delivered to customers a. Scrap b. Rework c. Downtime d. Re-inspection e. Retesting f. Design Changes g. Engineering Change Orders 5.
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6. External Failure : when the products or services do not meet customer demands but are found after they have been delivered to customers – these are the largest costs and the hardest to measure a. Consumer Recalls b. Warranties c. Repairs d. Lost Market Share e. Lost Sales f. Customer Dissatisfaction g. Returns h. Customer Complaints i. Chapter 5: Process Costing Equivalent Units of Production Equivalent Units : express the amount of work done during a period in terms of fully completed units of output - Weighted Average and FIFO methods although firms prefer to use the Weighted Average method because the extra costs of calculating FIFO do not justify the benefits they get from the information it offers Given: Production : Units in Process – beginning date – beginning % (B.U.I.P) Units completed and transferred out (U.C.T.O) Units in process – ending date – ending % (E.U.I.P) Costs : W.I.P – beginning date Costs added Weighted Average Method: 1. U .C .T .O + ( E.U .I . P×ending ) = Equivalent Units of Production 2.
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