Week 3, DQ 1: Issues in Costing
Describe three issues/problems that a company could encounter when trying to determine the actual cost of a good or service to be used in the cost of goods sold. For each of your issues, provide an example of a company or industry where these issues could be present.
If three issues or problems were to be discussed about regarding to a company’s actual cost, I would have to say the following three:
Materials- with a company knowing how much to purchase and how much is used in order to produce a product, this will or can eliminate issues with overspending or under spending within the company’s budget. A good example would be the automobile company would be Toyota (during the time of a recall issue where the accelerator was sticking; causing over 4 million vehicles to be recalled).
Economical Environment- by watching the numbers and watching how the environment is (pertaining to the consumer) a company can calculate the needed supplies and products to produce to not have any overages or shortages, as well as to take into account of the demand. Good example of this would be Apple and the Iphone, when it first came out. Apple seemed at first did not realize the demand of the phone when it first came out; thus causing some delays in manufacturing and shipment to orders that had been placed. Now knowing how popular it became, Apple developed a plan to know how many to send out to the stores by creating a program in where consumers can place an order before the release date and pick the item up at a store.
Inventory of items in and out of the company- with knowledge as to how much is in stock or how much is needed to keep in stock, will eliminate some problems with a company. By strategically tracking, a company can keep its numbers close to their target that they want it to be. A good example of a company that seems to do a pretty good job at this would be Walmart. It seems that they at times will always have the shelves stacked with products that seem to have a high turnout. Even when they run out it seems within the next day or so, the have it refilled.
All in all there are a lot of companies that constantly look at reports in order not to falter. It’s just part of running and being a company