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Clevetta, how would outsourcing affect the allocation of costs?

Clevetta, how would outsourcing affect the allocation of costs?

 

I read an interesting article in The Economist about outsourcing. It says, “Outsourcing has transformed global business. Over the past few decades companies have contracted out everything from mopping the floors to spotting the flaws in their internet security. TPI, a company that specializes in the sector, estimates that $100 billion-worth of new contracts are signed every year. Oxford Economics reckons that in Britain, one of the world’s most mature economies, 10% of workers toil away in “outsourced” jobs and companies spend $200 billion a year on outsourcing. Even war is being outsourced: America employs more contract workers in Afghanistan than regular troops.” (“The Trouble With Outsourcing,” 2011, para. 2).

 

As the article says, “Can the outsourcing boom go on indefinitely? And is the practice as useful as its advocates claim, or is the popular suspicion that it leads to cut corners and dismal service correct”(“The Trouble With Outsourcing,” 2011, para. 2).

Suzanne

 

 

 

 

 

 

 

Sarah, a  difference between job order and process costing is how the results are reported. How are results reported for job order costing?

 

In process cost accounting, manufacturing costs are summarized on a production cost report. Production reports are prepared for each department, and they contain production numbers and cost data. They are also called a “Production Reconciliation Report”.  They can be prepared using spreadsheets or on company forms.  Since each department manager is held responsible for performance, it makes sense that each would produce their own report.

 

When equivalent units of production are different for materials and for conversion costs, three unit costs are computed: materials, conversion costs and total manufacturing.

 

All, what are the 4 steps in creating a Production Cost Report?  Explain each, and use examples!

Suzanne

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