Broadening Your Perspective 18-1
Managers must have an understanding of cost effectiveness, selling pricing, and budgeting when it comes to decision making across the organization. The organization must be able to accurately budget for variable costs as well as fixed costs while also maintaining an increase in profit and revenue. This paper will discuss the different view-points of decision making across the organization. When looking at the behavior of analysis cost it allows myself to think of it in the perspective of my current business. This is the study of how the specific cost of an item is a direct effect of the business model. I currently have an electrical contracting business that I started in 1992 and when the recession hit prices of material and labor prices remained up but in order to keep revenue coming in price of jobs had to be lower. The consumer became more vigilant in their spending because they did not know where the economy was heading, thus there was a shortage of work. In order to stay in business a costs analysis would have been a great way to prepare for the future. The economy is in a better state at the moment and consumers are beginning to spend again but jobs are priced lower due to the competition that arose from the necessity of electricians to find work. This is an example of Cost Behavior Analysis and having the knowledge of using it can depend on whether the company survives changing times. Martinez Company had decided to introduce a new product, however the new product can be manufactured by either of two methods which are capital-intensive method and labor- intensive method. Some might believe that the best model is the labor-intensive method because in order for Martinez Company to succeed it will be important for managers to gain knowledge of accounting. Accounting skills can be used not only to calculate payroll or the revenue generated by the sale of some products but it can also be used to forecast inventory needs,...
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