The balance point

28 December 2008 - 15:05

The balance point, in terms of accounting of costs, is that one point of activity (volume of sales) where the total income are equal to the total costs, that is to say, the point of activity where it does not exist utility nor loss.

To find the balance point is to find the number of units to sell, so that it is fulfilled the previous thing (that the sales are equal to the costs).

And to analyze the balance point is to find the balance point and to analyze this information so that, on the basis of her, to be able to make decisions.

For example, we can find and to analyze the balance point stops:

• to allow one first simulation us that allows to know us from what amount of sales will begin to obtain utilities.
• to know the viability a project, to the knowledge if our demand surpasses our point of balance.
• to see from what level of sales, I could be recommendable to change a Variable Cost by a Fixed Cost or vice versa, for example, to change disposal boards, by a fixed pay in a salesman.
• knowledge that number of units or sales is due to realize, to obtain certain utility.

To read the rest of this note”

Labels: Concepts, Costs, Finances, Tools of business, Step by step

Compártelo

Published in Finances | 23 Commentaries”

Costs in a company on watch

26 November 2008 - 22:17

When one is a company service, the usual thing is to only denominate costs to the costs incurred the benefit of the service.

These costs are conformed by the following elements:

Costs of diverse Provisions

Costs conformed by the purchases that the company realizes to be able to offer to give the service.

Costs of Manpower by the service

Costs conformed by the pays of the workers who offer the service.

Indirect costs

Costs conformed by elements that take part indirectly in the benefit of the service, such as: depreciation, energy, water, telephone, rents, maintenance, repairs, etc.

As we have seen previously, the accounting of costs does not have a method or standard system, but the company adapts the method or system that more is suitable according to its needs or objectives to him.

To read the rest of this note”

Labels: Accounting, Costs, Finances

Compártelo

Published in Finances | 12 Commentaries”

Costs in an industrial company

26 November 2008 - 22:04

When one is an industrial company (company dedicated to the production or product manufacture), the usual thing is to only denominate costs to the Production costs, that is to say, the costs which they are incurred within the production process.

These production costs are conformed by the following elements:

Cost of acquisition of Direct Raw materials or Material

It is the cost of acquisition of the goods that will be transformed into finished products or that will comprise of him, for example, consumptions, parts, labels.

Cost of Direct Manpower

Costs conformed by the wages and benefits of the workers who work directly in the production of the product.

Indirect expenses of Manufacture

Costs of the necessary elements for the manufacture of the product, but that take part in indirect form in the elaboration of the same.

To read the rest of this note”

Labels: Accounting, Costs, Finances

Compártelo

Published in Finances | 3 Commentaries”

Costs in a marketing company

26 November 2008 - 20:44

When one is a marketing company (company dedicated to the purchase and sale of products), the usual thing is to only denominate costs to the Costs of Acquisition, that is to say, the costs conformed by the value of the merchandizes that are bought, as well as to the payments related to this purchase, such as loads, insurances, rights of import, etc.

As we have seen previously, the accounting of costs does not have a method or standard system, but the company adapts the method or system that more is suitable according to its needs or objectives to him.

We see next an example of how to apply the accounting of costs in a marketing company:

We suppose that we initiated operations with a beginning inventory of 30 televisions with a cost of $100 each, soon we bought 10 televisions to $100 each, and later we sell 5 televisions to $300 each. If we have operative expenses of $400 (administrative expenses: $100 and expenses of sales: $300), which would be our net utility?

To read the rest of this note”

Labels: Accounting, Costs, Finances

Compártelo

Published in Finances | 3 Commentaries”

The accounting of costs

26 November 2008 - 13:07

The accounting of costs consists of the identification and measurement of the monetary payments which a business or company incurs, being understood the term payment as the consumption of goods, depreciation of assets, etc., and not only like exit of money.

The objective of the accounting of costs is the one to provide information on the costs which a business is incurring generally, a certain product, a certain area, etc., with the purpose of to obtain a better financial situation analysis of a business.

We can enter the costs, for example:

• of a business generally, with the purpose of to obtain an express Earnings statement, and not to have to wait for the Earnings statement of the end of the period done by the general accounting.
• of the product or service that we offer, with the purpose of to find its cost of sales, and to thus be able to know its utility gross (sales - sale cost), also, before having to wait for the Earnings statement of the end of the period.
• of each product that we produce, in order that comparing them with the income that each generates, to know the yield each and, for example, to know which are most profitable and which do not generate utility.
• of a certain product so that, determining which is the utility that we want to win, to be able to define its price.
• of a certain area or department of the business, with the purpose of to know its yield and, for example, to know if the income that it generates are majors that its costs.
• of a certain client, with the purpose of to know if what we spent in maintaining this client turns out to be greater than the income than it generates to us.

To read the rest of this note”

Labels: Concepts, Accounting, Costs, Finances, Step by step

Compártelo

Published in Finances | 9 Commentaries”