I want reply posts a below 3 post to the topic in 150 words each using APA format and include at least 3 reference from journal articles

I’m studying for my Management class and don’t understand how to answer this. Can you help me study?

Question:

A. Using the Internet, review at least 3 articles on Profit-Cost-Volume relationship. Summary (300 words or more) the articles in your own words.

B. As a manager, why is Profit-cost-volume important in planning? Support your response with numerical example(s)

C. Using the Internet, review at least 3 articles on Variable Costing. Summary (300 words or more) the articles in your own words.

D. As a manager, discuss how you would use Variable Costing in managerial decisions Support your response with numerical example(s)


POST1:

Planning and Managerial Application

In article 1, the relationship that is existed between profit-cost-volume was one of the most important elements for every business organization. Mainly the profits that are obtained by the business will completely rely upon the products that are sold by the company. The relationship between these three will specify completely about the organization structure and also specifies a particular plan that is needed to be implemented by the organization for getting more profits. If it is observed that there is a very high amount of sales then that can indicate that there are high levels of production and the company also needs to fix a cost for that particular product.

In article 2, the author said by the effective management of all the resources and conditions the manager present in the organization (Combrinck & et al., 2019). This can also assist higher professionals in the organizations for making crucial decisions that are related to the costs and profits of the company. The relationship between the profit-cost-volume will evaluate how the raise in the product cost will impact the profits of the organization. By carrying out a clear analysis of profit-cost-volume there will be a decrease in the losses and also there will be continuous improvement observed in the profits.

In article 3, All the operations that are carried out in the business will be expanded for the future requirements by the relationship between profit cost and volume. This relationship will be taken as one of the powerful tools for the recognition of the risks that can happen due to product selling (Gu & et al., 2018). Hence organizations will also get a clear idea regarding what products can have more sales and also the profits that can be gained can also be known by profit-cost-volume relationships. If the products that are manufactured are limited then the price for that particular product will be constant and also fixed more effectively. Therefore it is clear that the profit-cost-volume relationship has been playing a significant role in the organizations. This relationship can also be assumed as one of the best techniques and this is also can be better suitable for making appropriate decisions in the organization.

Importance of Profit-Cost-Volume

Business organizations can more effectively make effective planning and also very good insights can be provided by these relationships so that organizations can be more able to know the profits (Rastogi & et al., 2019). The main role of the managers is to handle all kinds of products.

The numerical example is that XYZ will have profits annually of $400000 from the sales and some of the information for production are below. Capability for the production of production is 13,000 units, fixed cost is $ 60,000, Variable cost per unit is$ 40. Then the cost for a product can be set by making use of the formula.

No.of units that are sold x Price per unit = No.of units sold x Variable cost per unit + fixed cost + profit

13,000*P = (13,000*40)+ $60,000 + $400000

13,000*P= $980000

P= 980000/13,000 = $75

Hence from this it is understood that the organization should set a cost of $75 for reaching the profits on a huge Scale.

Variable Costing

The term variable costing can be termed as the real cost for the particular product that is involving all the goods that are more needed for the production of the products. The main important thing is that this variable will not be stable it will be varying during the period with the variations in the levels of production. This concept of variable costing will also come under one of the methodologies and also this can be explained as one of the procedures for costing. This variable costing is also based on one of the volumes that is named to be the product volume. There will be a raise and also the downfall of the variable costing based on the production levels. If more sales are raised for a product then the manufacturing of that product will also be increased greatly then at this point in time-variable costing will be high whereas if the variable costing will be very low if there is less level of production in the company.

The cost that is fixed for the product should not be raised and if it was increased customers will not pay more interest to purchase the products due to the rise in the costs for the products. There is also another name included for this variable costing and that name is that direct cost. This kind of approach is followed by the business organization and in this costing, reports can be prepared internally. Regulating costs will also become simpler why because variable manufacturing costs have been taken into consideration. There will not be constant profits acquired for the organization there will be variations observed in the profits and also management will be more able to know the period costs. All the data will be supplied more effectively by the variable costing.

Variable Costing for Making Managerial Decisions

If I am a manager in the organization I will utilize more effectively the variable costing for taking some of the decisions that are more closure to the product costs. Based on the profits that are got by the products I would decide whether products can proceed or not. A numerical example of variable costing can be mentioned by using the formula.

Variable Cost = Variable cost per unit x No.of units that are produced.

One of the examples is that for the production of biscuit it costs about $10 and the labor cost is $35 then calculations for variable cost can be done by

Preparation cost for the one Biscuit = $10

Labor cost for Biscuit = $35

Equipment fixed cost = $800

If the business owner decides to raise the production by raising the production units for $130 and the variable cost is shown below.

Variable cost for the production of Biscuit = $10*$130 = $1300

Labor Variable cost = $35*$130= $4550

POST2:

Planning and Managerial Applications

The relationship between the profit cost volume is very important for the success of the organization and this is a method used for cost accounting and deals with the impact of various levels of costs and volume which help in getting required profits there will be different assumptions in the cost volume profit analysis which include selling price, fixed costs, variable costs are assumed to be constant and this involves several equations the cost price and other variables are plotted on the graph for better understanding and the cost volume profit analysis formula are break-even sales volume is obtained by dividing fixed costs with the contribution margin which is obtained by subtraction of variable costs from the number of sales (Conbrinck & et, 2018). The cost volume profit analysis will help in analyzing the profit with the help of cost and volume of a product this analysis will help in identifying the profit of an organization with varying changes in fixed and variable costs (Conbrinck & et, 2018).

The term contribution margin will help in identifying the breakeven point of sales. For identifying cost-profit volume analysis profits should be added to the fixed costs for obtaining desired outcomes (Gu & et, 2018). Now let us discuss contribution margin and contribution margin ratio cost volume profit analysis will also deal with the contribution margin of a product which is obtained by the difference between total sales and total variable cost. forgetting success in business and to get good profits the contribution margin should exceed the total fixed costs of the product and the contribution margin is calculated for single or per unit product. These are all the things to get the success of the organization and to get the profits (Gu & et, 2018).

Importance of Profit-Cost-Volume Relationship in Planning

The main importance of using the profit-cost-volume relationship in planning is that it helps in identifying the maximum number of sale volume for avoiding losses and it is an analytical tool which helps in identifying the relationship between volume costs and profits. Dynamic management will make use of cost-profit volume analysis for predicting and evaluating the implications and also help in taking decisions relating to fixed costs and marginal costs for getting profit plans on continuous bases (Rastogi & Singh, 2019).

Here is the numerical example which helps in supporting my response let us consider a company which are having profits of $700000 annually and that company is capable of producing $20000 units and fixed cost is $70000 and the variable cost per single unit is $50 then the cost of a product can be set by making the use of formula as shown below

The formula is,

Number of units which are soled by an organization X unit price if a product = ( number of units sold X variable cost per unit) + fixed cost of the product + Profit

$20000* unit price of product(p) =($20000X$50)+$70000+$700000

=$20000 X p=$100000 +$770000

=$20000Xp=$870000

P=$870000/$20000

P=$43.5

From the above example, we can understand that the organization should set $43.5as cost for getting the required profit.

Variable Costing

The variable cost is dependent on various factors and this cost is not constant and may go on decreasing or increasing depending on the company production (Gu & et, 2018). This cost may include the cost of raw materials and packing, and labor charges variable cost is a very important factor and helps in identifying or determining the products which should be continued or stopped manufacturing. It is a kind of rational thinking instead of continuing product manufacturing with negligible profits a manager will use variable costing in determining the variable cost by manufacturing the product continuously (Conbrinck & et, 2018). a variable costing statement is the one which helps in calculating all the variable expenses by deducting them from revue in getting contribution margin by subtracting all the fixed expenses and this will help in obtaining percentages profit or loss for a particular period.

Another name for the variable cost is the unit level cost it is named as a unit-level cost because it varies with the number of units that are produced (Conbrinck & et, 2018). The variable contribution which is also referred as variable contribution margin is defined by the amount of profit that could be earned by selling a product and this can be done by variable cost is associated with the product which also includes the cost of goods variable cost may vary from product to product and is mainly depend on the number of units produced this occurs because there will be a change in labor charges and the commissions which are taken by the mediators may change and the cost of raw material which is used in the production of a good is not constant and may change depending on various reasons. Variable cost includes only variable manufacturing costs and this will change with the volume of production which is not constant all the time and may change accordingly (Gu & et, 2018).

Uses of Variable Cost in Taking Managerial Decisions

If I am a manager for a particular organization I will make use of the technique named variable costing for obtaining success and I will make desitions more effectively by using this method to maintain the product costs (Gu & et, 2018). Variable cost may change under variable factors a good decision will help in development and growth and may also lead to building a strong success of the company.

Let us consider a numerical for determining the variable cost in and this can be obtained by making use of the following example and formula.

The formula for variable costing can be given as below

Total Variable cost = Variable cost per single unit x Number of units which are produced

Let us consider a local organization which is preparing and selling soaps and the variable cost can be obtained as follows

Manufacturing cost Of Soap =$25

Labor cost for product manufacturing=$50

Cost for the equipment=$1000

If the organization owner decides to raise the production by manufacturing some more units and for $50the variable cost is obtained as below

The variable cost for the production or manufacturing of soap which is equal to $25*$50=$1250

Labor variable cost is equal to $50*$50=$2500

POST3:

A. Understanding the cost-volume profit analysis helps managers in the decision-making process. Determining the three variables as they are inter-dependent is one the important role that a manager has to play. Also, grouping the expenses into variable and fixed can used to forecast performance of the organization or entity. The analysis involves estimating the variable cost/expenses to calculate profitability. Cost-volume profit analysis is helpful to determine short term strategies and cost f production and profit estimation. However, this measure cannot be used for long term analysis (Trifan & Anton, 2011).

Apart from the variables, CVP analysis is used to determine the sales this helps in estimating the income for the organization which is also known as the targeted income. Hence, the net income will include the cost of manufacturing, the variable expenses, the profits, contribution margin and the taxes. Another important consideration in CVP analysis is calculating the break even point. Break even point is the number of units the organization has to produce and sell in order to make a profit of zero. In short, it is the number of units where total revenue generated is equal to total expenses incurred (Trifan & Anton, 2011).

B. Managers can utilize the CVP analysis tools for planning. Managers can estimate the cost of manufacturing the product and the associated cost of work in process which includes labor, direct expenses, indirect expenses etc. This can be then be utilized to plan the actual selling cost of the product and also estimate the profits. Utilizing estimated profits, managers can plan their future actions of investments and provide these data to the senior management as a part of estimating company profits product wise. To help in planning and monitoring operations, they use it cost-volume-profit analysis (CVP), by identifying the necessary levels of operational actions: to avoid losses, to increase target profit, to planning future operations, to monitor the performance of the enterprise. They also analyze the operational risk of how to choose the appropriate costs for producing or service a product or more products (Lulaj & Iseni, 2018).

C. Variable costing called as direct costing or marginal costing, is an accounting technique in which firms utilize variable costs directly related to production to determine potential profits. Variable costs fluctuate due to disparities in production volume or sales volume. Examples of variable costs include raw materials, production supplies, and commissions. Calculating the variable cost along with the fixed cost is essential to estimate the total expenses for an organization. This provides a clear picture as opposed to having only the fixed expenses. Besides, if the actual variable cost is less than estimated, the generated profits are more therefore proving to be advantageous to the firm (Stoenoiu, 2018).

D. Variable costing includes direct labor, direct materials and manufacturing overhead costs. For example, if plastic cup manufacturer who produced 1000000 cups In the year 2019 would like to estimate his variable costing for each unit with the following information available:

Direct Labor: $75000

Direct Material: $15000

Variable manufacturing overhead

The variable cost per unit would be $305000/1000000 = $0.305

Therefore, as a manager it is imperative that fixed cost should not be calculated. The variable costing helps the manager determine if then the firm has a producing capacity for future products and this capacity would be determined by the variable costing (Achiria, 2019).

 

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Regards,

Cathy, CS.