Accounting Assignment

Topics: Costs, Management accounting, Cost accounting Pages: 11 (1854 words) Published: April 1, 2014

Nike Inc.

Nike Inc. is an American multinational corporation that is engaged in the design, development, manufacturing and worldwide marketing and selling of footwear, apparel, equipment, accessories and services. It is one of the world's largest suppliers of athletic shoes and apparel and a major manufacturer of sports equipment, with revenue in excess of US$24.1 billion in its fiscal year 2012 (ending May 31, 2012). As of 2012, its employed more than 44,000 people worldwide. Their first products were track running shoe that is well-known until nowadays. The Company sells a line of performance equipment under the NIKE brand name, including bags, socks, sport balls, eyewear, timepieces, electronic devices, bats, gloves, protective equipment, golf clubs and other equipment designed for sports activities. It also sells small amounts of various plastic products to other manufacturers through its wholly owned subsidiary, NIKE IHM, Inc. In addition to the products the Company sells directly to customers through its Direct to Consumer operations, the Company has entered into license agreements that permit unaffiliated parties to manufacture and sell certain apparels, digital devices and applications and other equipment designed for sports activities.

Nike product

Nike produces a wide range of sports equipment specially sport shoes. They currently also produces shoes and jersey for the wide range of sport including track and field such as football, ice hockey, basketball and cricket. Nike also produces shoes for outdoor activities such as tennis, golf, skateboarding, association football, baseball, cycling, volleyball, cheerleading, aquatic activities, auto racing, and other athletic and recreational uses. It is obvious that Nike specialized in sport footwear.

Direct costs refer to materials, labor and expenses related to the manufacture of a product. Other costs, such as depreciation or administrative expenses, are more difficult to allocate to a specific product, and therefore are measured indirect costs. Direct material is a direct cost and includes any raw material that sums up as a part of the final product. The raw materials used in the manufacture of the final product. The costs of direct material used in making of a pair of shoe include the cost of producing fabrics, plastic, rubber and leather. Direct labor consists of the amount paid to workers to manufacture the product. The hourly wage paid to assembly line worker is a primary ingredient in the cost of make shoe. (Refer to appendix A & B)

Indirect cost is an expense (such as for advertising, computing, maintenance , security , administration) incurred in joint usage and, therefore, difficult to assign to or identify with a specific cost object or cost center (department, function, program). Indirect costs are usually constant for a wide range of output, and are grouped under fixed costs. Indirect materials are materials used in the production process, but which cannot be linked to a specific product or job. Alternatively, they may be used in such slight quantities on a per-product basis that it is not valuable to track them as direct materials (which involves including them in the bill of materials).Thus, they are consumed as part of the production process, but are not integrated in substantial amounts into a product or job. Examples of indirect materials are cleaning supplies, Disposable safety equipment, disposable tools, fittings and fastener, glue and tape. Indirect labors are defined as employees or workers (such as accountants, supervisors, security guards) who do not directly produce goods or services, but who make their production possible or more efficient. Indirect labor costs are not readily identifiable with a specific task or work order. They are termed indirect costs and are charged to overhead accounts. Manufacturing overhead (also known as factory overhead, factory burden, production overhead) involves a company's factory...
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