c
 


 
  
 is a chain of mid-range American department stores. Its flagship store in Herald Square,
New York City has been billed as the 'world's largest store' since 1924, although today it ties
with London's Harrods in vastness of selling space. The company has designated additional
regional flagships in major urban centers and operates a total of 810 U.S. stores (as of
September 2008). Macy͛s is a big company which produced varies products every year such as:
clothing, footwear, bedding, furniture, jewelry, beauty products, and house wares.etc.
(Website: www.macys.com)

The reason Macy͛s is using a job order costing system because it is the company which is used
in situations where many different products are produced each period. For example the
clothing department at Macy would typically make many different types of jeans for both men
and women during a month. In a job order costing system, costs are traced to the jobs and then
the costs of the job are divided by the number of units in the job to arrive at an average cost
per unit.
  (NYSE: SWY), a Fortune 500 company, is North America's second largest
supermarket chain, with over 1750 stores located throughout the western and central United
States and Canada. It also operates some stores in the Mid-Atlantic region of the Eastern
Seaboard. The company is headquartered in Pleasanton, California. Supermarket News ranked
Safeway No. 4 in the 2007 'Top 75 North American Food Retailers' based on 2006 fiscal year
estimated sales of $40.5 billion. Based on 2005 revenue, Safeway is the tenth-largest retailer in
the United States.
Products: Bakery, dairy, deli, Dry Cleaning, frozen foods, general grocery, meat, pharmacy,
Photo Dept., produce, seafood, snacks, liquor, flowers, Western Union and lottery
Website: www.safeway.com

Safeway is using a job order costing system. The reason is that most of their products would be
unique and produced in discrete orders the company which is used in situations where many
different products are produced each period. For example, the food department at Safeway
would typically make many different types of food for during a month. The supermarket chain
would be continuously produced; Safeway would likely use process costing.

c
 

  (NYSE: TGT), headquartered in Minneapolis, Minnesota, is the fifth largest
retailer by sales revenue in the United States behind Wal-Mart, The Home Depot, Kroger and
Costco. The company is ranked 33rd on the 2007 Fortune 500. It sells more gift cards than any
other U.S. retailer and is the fifth largest U.S. seller of music. Target operates its retailing
business exclusively in the United States.
Products: Clothing, footwear, bedding, home decor, house wares, furniture, lawn and garden,
jewelry, beauty products, electronics, sporting goods, and pet products.
Website: www.target.com (Online store), www.targetcorp.com (Corporate)
The reason Target͛s is using a job order costing system because it is the company which is used
in situations where many different products are produced each period. They most likely use
job-order costing because in a job order costing system, costs are traced to the jobs and then
the costs of the job are divided by the number of units in the job to arrive at an average cost
per unit. For example, the department at Target would typically make many different types of
gift cards and selling music during a month.


 
  
We know that the characterized job order costing will be for main things. First characteristic is
all costs are collected and assign for each completed job, rather than for set time periods.
Secondly, all costs are collected and assigned to a specific batch or job. Thirdly, only one work-
in-process inventory account is required. And then the costs of complete goods are transferred
to the Finished Goods inventory until the units are sold. Besides that, cost is recorded on a job
order cost sheet, which can be either a paper record or an electronic one. Three element of
cost are raw materials, labor and manufacturing overhead costs.
When the job is done, the material, labor and manufacturing overhead on the cost sheet are
totaled. The total cost is divided by the total number of items produced to determine unit cost.
This unit cost is a valuable control figure and can be used as part of the pricing decision. When
it sold, the cost is transferred from Finished Goods to Cost of Goods Sold.
Job order costing is a valuable management tool for planning and control of costs for service
firms as well. For example, a consultant who is considering accepting a new client and in order
to quote a fair fee, the consultant must know the direct and indirect costs to the firm, must
monitor those costs as the job is done and must use the total cost to evaluate whether a
change in price is appropriate for the next engagement.
Barbara Winicur "Job order costing". National Public Accountant, The. FindArticles.com. 02 Jun,
2011. http://findarticles.com/p/articles/mi_m4325/is_n5_v38/ai_n25021988/
COPYRIGHT 1993 National Society of Public Accountants
COPYRIGHT 2008 Gale, Cengage Learning


 
  
Contribution margin is the difference between the direct net revenues of a program and direct
expenses. Calculating the contribution margin of a program is easy in place by a reliable cost-
accounting system that calculates the direct cost of treating from a specific group.

Contribution margin analysis to be working, so all variable costs must be accounted for,
including direct costs like labor and materials, and the indirect costs of services. Contribution
margin analysis is not a particularly sophisticated tool and can be an extremely useful decision-
making tool. By revealing how profitable an individual product or service really is, it helps
managers channel their resources effectively, and make informed decisions about issues like:
investment and pricing.
Contribution margin is also the marginal profit per unit sale. It is a useful quantity in carrying
out various calculations, and can be used as a measure of operating leverage. High contribution
margins are prevalent in the labor-intensive tertiary sector while low contribution margins are
prevalent in the capital-intensive industrial sector. The contribution from the existing unit is
estimated by subtracting direct expenses and allocated variable ancillary expenses.

Judith L. Horowitz "Contribution margin analysis: a case study - Financial Manager's Notebook".
Healthcare Financial Management. FindArticles.com. 02 Jun, 2011.
http://findarticles.com/p/articles/mi_m3257/is_n6_v47/ai_14333917/
COPYRIGHT 1993 Healthcare Financial Management Association
COPYRIGHT 2004 Gale Group


 
  
Break-even is the commonly methods for evaluating a new business enterprise or new product
line or manufacturing facility. It's a tool for analyzing how sales revenue, profit and expenses
vary with changes in one of the variables and is the point at which the company neither makes
a profit nor suffers a loss. The break-even point is equilibrium where sales revenue is equal to
costs. At the break-even point, no profits are earned and no losses are incurred. Calculating the
break-even point can provide a simple, powerful quantitative tool for managers. In its simplest
form, break-even analysis provides insight into whether revenue from a product or service has
the ability to cover the relevant costs of production of that product or service.
The break-even point has its origins in the economic concept of the point of indifference which
indicates the quantity of some good at which the decision maker would be indifferent .At this
quantity, the costs and benefits are precisely balanced. The managerial concept of break-even
analysis seeks to find the quantity of output that just covers all costs so that no loss is
generated. Managers can determine the minimum quantity of sales at which the company
would avoid a loss in the production of a given good.

One of the drawbacks of the break-even analysis is the assumption that nothing changes. That
is, the model assumes that the conditions that were present during the calculation stay
constantly. The break-even must be recalculated on a regular basis in order to keep the
information relevant and useful.

Chris Gattis, March 19, 2010 , Break-Even Analysis,Ezine articles

http://ezinearticles.com/?Break-Even-Analysis&id=3946274
Article Source: http://EzineArticles.com/3946274


 
   
The make or buy decision has been used standard cost in accounting methods. The make or buy
decision is the action of making a strategic choice between producing an item internally or
buying it externally .Make or buy decisions arise when a firm that has developed a product is
having trouble with current suppliers, or has diminishing capacity.

Make or buy analysis is conducted at the strategic. The strategic level is the more long-range of
the two. The strategic level includes analysis of the future, as well as the current environment. .
Issue like government regulation, competing firms, and market trends all have a strategic
impact on the make or buy decision. Make or buy decisions also occur at the operational level.

The two most important factors to consider in a make-or-buy decision are cost and the
availability of production capacity. Cost considerations for the analysis include: purchase price
of the part, transportation costs, receiving and inspection costs, incremental purchasing costs,
any follow-on costs related to quality or service.

They also used this approach to determine the maximum permissible component price that a
buyer should pay when outsourcing.

Balakrishnan, Jaydeep, and Chun Hung Cheng. "The Theory of Constraints and the Make-or-Buy
Decision: An Update and Review." ý
 

    

 

41, no. 1 (2005): 40ʹ47