Cost Accounting. What You Do Not Know. Read

When most people here or think about accounting, they often associate it with a practice that is carried out in large complex institutions. Another fascinating thing is cost accounting; many people associate it with production companies. For the records, that is not very correct. Let us look at some eye opening questions.

At PEOTEF

How much does it take you to serve that product to a client? Do you have a specific response or it depends?

How much does it take you to provide that service to that client?

Do you know what direct cost is? What about indirect or overheads cost? What if you knew how to classify these costs appropriately either by function, behavior or nature?

Let me ask this unusual question for those who own schools. How much does it cost you to train one student or pupil per semester? What costs did you take into consideration in this process? On what bases did you apportion your overheads?

Follow me.

What if as a business owner, you knew the cost of adding an extra service to your business? What if you knew the exact cost of adding an extra service to your line of services? What if you knew the exact cost of adding a new client to the number of clients you already have? Do you know the concept of Marginal costing and revenue?

When someone mentions something about a business breaking even; what comes to your mind? I'm sure you will definitely it is that time in a business when there is neither a profit nor loss. You are right. Permit me to ask. What happens in the case of a business that has been operating, and then launches a new product? Will their profit levels remain the same if they do not make profits on the new product? Is it possible to ascertain the cost of the new product and determine when that product alone will breakeven?

Thank you for your time. Keeping thinking (I am working on a book that will help you out in masterfully crafting answers to the above questions)

Ngong g George Fonyuy (Accountant, Auditor, Entrepreneur)