Analysis of Direct Costs

Topics: Cost accounting, Costs, Cost Pages: 1 (346 words) Published: May 27, 2012
Write a 1-2 page paper in which you discuss what is most likely to go wrong in the analysis of direct material and other direct costs and what could be done about it.

The analysis of direct material and other direct costs and what could be done about it is that when a particular organization prepares for the budget in relation to the cost of direct material or direct labor then, it has to consider the inflation rate and the standard rates in the industry. In relation to the direct labor cost, the organization has to analyze of the industrial standard of the payment made by the organizations to the labors. If the organization does not do so then, some kind of issues may arise. The organization may or may not be able to make sell and/or get their product out in timely matter for their customers. Moderately often costs are capable of instantly saved from merely organization price variances, typically a very easy savings to implement. One of the biggest challenges in analyzing other direct costs is ensuring that they have not been captured in another part of the total cost. As with labor and material costs, other direct costs are those costs that are able to accredit to specific cost objectives and are not previously identified as a direct material cost, direct labor cost, or indirect cost. Although these costs are usually stimulating as indirect, because the proposed contract requires a large, unusual, or one-time expenditure, it might be charged to a specific cost objective.

Works Cited
Acquisition Community Connection. (2010, September 10). Retrieved February 26, 2012, from Ch 1 - Defining Costs and Cost Analysis: Analyzing Direct Labor Costs and Analyzing Other Direct Costs. (n.d.). Retrieved February 26, 2012, from John Edward Murphy, C. C. (2009). Analysis of Direct Material and Other Direct Costs. In C. C....
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Cost Accounting Analysis Essay
  • Cost Analysis Essay
  • Essay about Costs and Direct Labor Cost
  • Costs and Direct Cost Essay
  • Cost Analysis Essay
  • Essay about Cost Analysis
  • engineering cost analysis Essay
  • Costs and Direct Labor Essay

Become a StudyMode Member

Sign Up - It's Free