Elements of Costs Determine the Price of A Product Or Service

It is important to keep in mind the various elements of costs like material, labour and expenses while assigning the prices to products or services.

With variety of businesses in the market, there are different types of costing methods. Among the many, one of the most popular is the Activity Based Costing (ABC). It is a method of costing which helps a company to establish competitive advantage. A business organization analyzes this competitive advantage based on the decisions and actions taken by the management after interpreting the data created by method of ABC. This data is used by organizations principally to achieve accurate price setting, explore outsourcing opportunities, and review or plan strategic decisions on process improvements.

This ABC method of costing link the cost which a business organization acquires through its products and services provided to the customers.  Using this method, an organization can extremely reduce its overhead since most of its current indirect costs will change to direct costs as they are being allocated to a particular product or service. Again, while assigning the prices to different products and services we must keep in mind the various elements of costs like material, labour and expenses. Analyzing all these elements, a product or service is allocated with its best price in order to incur profit from it.

Profit earned by a company is mainly dependent upon the costing of its product or service. To keep a track of money invested, revenue earned etc, an organization requires a well developed accounts department with expert professionals who are skilled in keeping records of all the expenses and earnings of the company. Students studying accounts need to study its various segments like methods and elements of costing. Apart from this, they also need to do various assignments on the subjects. Due to this, sometimes, students become exhausted as they fail to submit the projects on time. In such a situation, the online homework help comes to their rescue with best of the best solutions. These online help provide original content for accounting assignments and other subjects as well.

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