The Cost Of Cost Management

Cost Management is used to outline the costs of planning a project. Estimating costs through data collection, design planning, and budgeting are used throughout facility planning to reduce costs

Direct labor assembly costs are, by their nature, directly traceable to individual products. Therefore the relevant cost driver for this cost is the number of Direct Assembly Labor Hours. The other 21 cost categories are indirect costs.

Cost measurement is the process of determining the dollar amount of direct materials, direct labor, and overhead that should be assigned to production. Cost accumulation is the process of associating costs with the units produced. Cost measurement is more about whether actual or estimated costs should be used, and cost assignment is about whether costs should be assigned to jobs or processes.

As defined by the OMB (2004), “Indirect costs are those incurred for a common or joint purpose benefitting more than one cost objective, and not readily assignable to the cost objectives specifically benefitted, without effort disproportionate to the results achieved” (p. 11). The costs in question include international conference, employee recreational activities and counseling services, investment counsel, lobbying, depreciation, and insurance. Despite seemingly

budget. As the project evolves, additional information is discovered and further estimates are produced. This is an extremely important process and we cannot emphasize enough the need for this re‐estimation or re‐budgeting process at each phase of the project. In any case, for the purpose of this article, we will call the revised budget the "actual budget." Another standard activity is to provide management with an expected cash flow. From a financial perspective this is an important activity, but it also can be used as your cost expectation.

Inherently, in all businesses there is overhead costs or non-direct costs. If management wants to know the true cost

According to this method, every unit of the product is assigned all direct, fixed, and variable costs. This method includes the cost of direct materials and labor as well as a portion of the overhead costs associated with it in the final costing of every unit of the product.

For instance, a business that uses the variable costing approach allows the management to analyze the actual production costs, and this allows controlling costs since one can identify the differences between the actual and budgeted amounts. Additionally, through variable costing the management focuses on controlling costs to establish better cost control practices. It is easier to control the variable production costs compared to fixed production costs, and the appropriate level of management then makes

Muddled is an ACFI2003 student and as many others has problems with several aspects of the course including a fundamental principle, the differences in the costing systems and cost management systems. The purpose of this essay is help Muddled understand the fundamental costing principle that management systems should reflect the fact that different costs are relevant for different purposes, and how this principle affects the way that job costing and process costing systems are designed. Along the way several costing concepts will be explained and laid out for Muddled to understand in a more simplified method. The axiom will be covered first with particular reference to the costing systems, the differences between the job

Project Cost Management – controlling the cost of the project, which includes estimating, budgeting, financing, funding, and managing costs of each task.

A direct cost can be traced to a product or service which includes: Direct labor- which is the cost of the labor that’s directly connected to a product or services. Direct labor is sometimes called touch labor, since direct labor workers typically touch the product while it is being made.( Ray H. Garrison, Eric W. Noreen and Peter C. Brewer p 39-40) An example of direct labor is an assembly line worker. Labor cost that cannot be physically traced to the creation of products, or that can be traced only at great cost and inconvenience, are considered to be indirect labot.( Ray H. Garrison, Eric W. Noreen and Peter C. Brewer p 40) Direct material are those materials that become an integral part of the finished product and whose cost can be traced to the finished product.( Ray H. Garrison, Eric W. Noreen and Peter C. Brewer p39-40) Manufacturing overhead is the third element so manufacturing cost, it includes all costs of manufacturing except direct materials and direct labor. Manufacturing overhead includes items such as indirect materials; indirect labor; maintenance and repairs on production equipment; and heat and light, property taxes, depreciation, and insurance on manufacturing facilities. Only cost associated with operating the factory are consider to be manufacturing overhead cost. A company also incurs other costs associated with its selling administive functions, but these costs are not included as part of manufacturing overhead. Only those

Indirect costs are costs that are incurred by the company and cannot be traced to any one finished unit. These costs are often referred as overheads. The rent is an indirect cost, cost of the indirect material, indirect labour and indirect expenses. As an outcome indirect costs and expenses are often allocated to the department, product, etc. For example, a car manufacturing company has some costs that are directly linked to it, such as the wages and marginal benefits of the direct labour working solely in that department. The heat for the entire building is an indirect cost to the car manufacturing company. Generally it will be assigned to all departments based on the number of square feet each department occupies.

In general, cost means the amount of expenditure (actual or notional) incurred on, or attributable to a given thing.

Direct material cost is the price laid down on items that are used in the fabrication of a product or that are used as service providers. The price caters for the transportation of the items from the manufacturer to the consumer, in-transit cover and the cost of any unforeseen events which may include damages that might occur, substandard work, and overruns. In the direct material cost, the buyer is always supplied with a copy of the contract form which is to be signed after he/she has gone through and is contented with the laid down rules. The same buyer sends a local purchase order to the manufacturer on the goods or items that he/she requires. In relation to other direct costs, the charges are endorsed on specific costs objective(s) such as include special tooling and test equipment, computer services, long distance costs, and telephone costs. Therefore, the buyer is expected to know whether the seller can be accountable in case of any eventuality and the system estimate ("Lesson 5 Analysis of Direct Labor", n.d.).

According to an accounting textbook, cost is defined as a resource sacrificed or foregone to achieve a specific objective. It is something given up in exchange. It is necessary for project managers to understand project cost management since project costs money and consumes resources.