discussion post for Madam Josephine only

posting #1

Why should an employee have some understanding of costing if they are not in the accounting

department?

When I worked for a lodging firm they would have us bill which properties we worked for down to the

second. I was always confused on why this was important until it was broken down for me. I worked for

over 60 hotels, not all at one time but when they were in need of my services. Sometimes it would be 12

hours a week, others may be as little as 30 minutes a week. In the grand scheme what they paid me for

an as needed service was WAY cheaper than having someone doing the job on property who would be

getting paid for a full day of work regardless of how many hours they actually needed them. An

employee should know or have an idea on costing because it is important to have an understanding on

what and how much it takes to produce or deliver their services. It really helps to establish where that

employee fits in the big picture of the success of the company. It also motivated me to be more efficient

in trying to get work done at a lower cost in order to keep those hotels instead of them wanting to hire

an on property replacement.

Explain how the method of costing used will impact the company with: (A) the quoting of customer jobs

and (B) gross margin/profit on the Income statement.

It is crucial for a company to be as close to accurate as possible when making quotes to customers.

Every business has a mission and specific goals. Without proper budgeting, meeting those objectives

would be impossible (Picincu, 2018). In using the same example, I would quote to a hotel how me

working for them would be significantly less than them hiring an on site coordinator. If at any point my

team went over budget (barring unforeseen circumstances) that was a HUGE headache. What has to be

remembered is that when you tell a customer a budget they are also making adjustments on their end

to make it work. So going over means taking away from another department or source which can not

only be a huge inconvenience but just not feasible. Furthermore for the company, not being able to

meet set goals or prices can be costly to the organizations bottom line as well as their reputation.

Reference

Picincu, A. (2018, Dec 23). Scope, objective & significance of cost accounting. Retrieved Sep 05, 2019,

from Small business chronicle: https://smallbusiness.chron.com/scope-objective-significance-cost-

accounting-79250.html

Posting #2

Why should an employee have some understanding of costing if they are not in the accounting

department?

Every employee in an organization can have a first hand affect on the costs associated with the business

being done. From the janitor to the CEO, having an understanding in what they can do to help drive

down costs is instrumental in remaining competitive. Every employee has heard the same words from

another stating this is a million or billion dollar company, we can afford it. While it is true that the

organization may not have an inherent issue with paying the bill, it does mean that those dollars cannot

be used for other purchases or proving financial profit to investors.

Explain how the method of costing used will impact the company with: (A) the quoting of customer

jobs and (B) gross margin/profit on the Income statement.

Costing methods change based on the applications they are being developed for. For instance, a

customer does not need to know the profit level a business is making on a particular job, they just need

to know they are getting a competitive price. The main 4 variations of costing include: job costing,

process costing, direct costing, and throughput costing (Bragg, 2018). Job costing and process costing

are typically used for official business reporting out for items like income statements, while direct

costing and throughput costing would go more towards a customer or value savings to a customer

(Bragg, 2018). Given this information, the most likely type of costing for a customer job would be that of

direct costing, which factors in all levels of costs used to make a product or perform a service (Bragg,

2018). Being consistent in the ways that a company reports out or quotes the goods/services that they

produce is just as important as being competitive. Financials for the obvious reasoning of stakeholder

and government oversight as fines or distrust may occur, and for quoting interpreting purposes.

References

Bragg, S (March 10, 2018). Alternative Product Costing Methods. Retrieved from:

https://www.accountingtools.com/articles/what-are-the-alternative-product-costing-methods.html