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Essay / Research Paper Abstract
This 3 page paper looks at costing issues. The first part of the paper explains the difference between fixed and variable costs and uses examples from a distribution company as an example. The second part of the paper describes what is meant by a C-V-P (cost, volume profit) analysis, also known as a break even analysis, and how it is conducted. The last paper of the paper discusses some issues that may be important from when considering strategy for a firm, in the context of accounting and costing. The bibliography cites 2 sources.
Page Count:
3 pages (~225 words per page)
File: TS14_TEbuscosts.rtf
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Unformatted sample text from the term paper:
such as rent on the remises that are used, and costs such as insurance and utilities. The fixed costs for a distribution company may also include overheads that are in
place no matter what amount of business is undertaken, this can include the costs of head office staff as this is indirect labor. It can be noted that these may
increase if business increases, such as the need for new premises if business expands. By comparison variable coasts are those which are incurred as each service is provided. The variable
costs for a distribution will include the direct costs for the service provision; this will include the running costs of the vehicles such as the fuel and the direct labor
associated with driving and with loading the vehicles. There may also be road tolls. The majority of the other costs are overheads as they are not directly related to the
provision of the service. Question 2 A cost volume profit analysis may also be looked at as a break even analysis. The break even point for any firm
is where the total costs of the firm are equal to the total revenues. The total costs are the fixed costs plus the variable costs. A simple approach is
to look at each unit of production, for example, this may be each delivery made, and determine what the variable cost of each unit of goods or services are provided.
By taking the revenue received for each unit and deducting the variable cost the contribution level is known. The next stage is assessing the break even point is to calculate
all of the fixed costs, or overheads, knowing the contribution per unit it is then possible to divide the fixed costs by the contribution per unit, and determine how many
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