SEU Accounting Management and Accounting Discussion

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Description: The Role of Management Accounting

The value chain includes costs associated with research, product design, production, marketing, sales, distribution, and customer support after the sale. Which areas of the value chain do you think should be included in calculating product costs? Why? Where would the other costs be reported (if at all)? What is the cost behavior based on the variability of cost variances and revenue volatility?

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 response on this post plzValue chains, which depict the full production of a good or service, are conceptually similar to business models (Warren et al., 2018). The phrase “value chain” originates from economics, describing the steps taken from a product’s inception through its eventual distribution. This includes everything from finding a supplier for basic materials to establishing a promotional campaign (Anderson, 2019).How product costs can be calculated?     The price of a product is calculated by combining the costs of its components, one by one: the raw materials, the labor, and the manufacturing overheads. The price per unit is arrived at by dividing the entire production cost by the total quantity produced. Possible global value chain splitting due to power disparity and overt cooperation. The market encompasses all dealings, including readily communicated information about product attributes and producers of things at affordable prices (Hergert & Morris, 2019).Product sales and promotional expenditures are front-loaded because the value chain encompasses production, distribution, and retail. Production expenses at each value chain stage should also be considered. Sales promotion is an integral part of the value chain and, as such, must be accounted for in the final selling price of the product (Fisher & Krumwiede, 2019). Costs associated with making a product are factored in from the beginning of the manufacturing process when ideas are conceived. Costs like these are essential to the production process and can be used to increase the worth of a company’s final goods. Since these expenditures are directly proportional to product pricing, they can be factored into product valuation. In the end, the value of a product is based on all of these factors and any others that may be relevant. One more advantage of mass production is that these costs can be included in the planning stages.Some costs incurred in production are not included in the value chain of a product until academics discuss them. This is shown, for example, in the costs associated with elements like the organization’s database, servers, website, logo, and promotional efforts (Dekker, 2020). Because they are considered overhead, these expenses are sometimes overlooked during production. For this reason, the ledgers record these expenditures as “non-production costs.”Relation between cost behavior, cost variance, and revenue volatility     When there is any shift happens in the business line of a company the cost behavior occurs.  Revenue volatility refers to unexpected shifts in revenue, whereas cost variance describes shifts in expenses used to characterize a project’s efficiency. The cost behavior will improve if revenue and spending volatility are both reduced. Having more money coming in naturally leads to fewer expenses (Fisher & Krumwiede, 2019).

2:The value chain is the group of all the productive and non-productive activities of the firm. The value chain includes all the internal activities of any company accounting for the procedures from accumulating the raw material and finally changing it to the final product. Value chain analysis provides you the competitive advantage of the company countering the cost and value of the internal activities in transforming the inputs into outputs (Warren et al., 2018).Value chain in identifying the product costValue chain analysis is the cost analysis tool used by companies to have a cost-effective analysis of their competitive advantage. On the other hand, the transformation of the products includes two types of activities that may account for identifying the cost of the products. These are primary activities and support activities. Primary activities include all the inbound logistics including the receiving of the raw material and managing inventory, the transformational procedures of raw material to final products, the outbound logistics involving the distribution of the product, marketing, and sales activities, and the provision of customer services. I consider that all of these activities must include predicting the product price as every activity has its own significance in transforming the raw material into the final product. Ignoring any of the above methods can affect the quality of the product and therefore can affect sales (Tardi, 2022).Where other costs would be reportedOther than considering the primary productive activities, a business can use supportive activities for finalizing the product price. The supportive activities are the nonproductive activities in the production of the product in any form. These activities include the raw material accumulation processes, the processes of managing the human resources for the product assembling, maintenance of infrastructure, and the activities of developing technological advancements. Predicting the cost of a product from these activities can also be effective as the raw material containing and managing these resources by effective human resources can affect the production, supply, and other productive activities. Moreover, cutting the cost of these activities can affect the company by deteriorating the quality of the product (Tardi, 2022).Cost behavior of variability of cost variances and revenue volatilityThe cost behavior of any product is a measure of change in the price of the product by the changes in any of the primary activities. This behavior can be manipulated by numerous factors like sales, volume, price, and the efficiency or quality of the product. The continuous changes in the cost behavior can affect the revenue volatility and the cost variances as shifts in cost can reduce the trust of the customers in the product. Lowered sales can trigger losses as the revenue decreases far beyond the amount of cost invested as manufacturing cost (Sanjay Bulaki, 2020b).