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Operation Management Essay

1701 words - 7 pages

#1 Why does the manufacturing industry use job order cost system?
A Job order
Why do some professional firms use job order cost system? Give 2 professional firms to use job order cost system for example.
A job order is a cost accounting method that focuses in quantity of product known as a job or lot. The costs of direct materials, direct labor, and manufacturing overhead applicable to each job are compiled to arrive at average unit cost, (p.778, Williams, 2012).
Characteristics | Job Order Cost System |
Type of Product | Unique products or services |
Approach | Customized to customer or client needs |
Cost Accumulation | Costs accumulated by customer, project, or job |
Type ...view middle of the document...

In my case my moved to MA I knew it was just going to be temporary. In my plan the idea of buying a house was not an option due to the condition of the market and the trends that shown that the prices will continue to drop. The best option for me was and still to rent based that it is a temporary location.
I worked in commercial real estate since 2001, and for me this is an easy question to answer.
First, we have to identify what are the costs related with buying and renting decisions:
The direct cost related to buying decision is divided into two categories: Purchase costs & yearly costs. The purchase costs included down payment and typical closing costs of the transaction. The Yearly costs are monthly and yearly expenses: mortgage payments, condos or community fees, renovation costs, maintenance costs, property taxes, and homeowner’s insurance. The interest part of your mortgage payment in some cases is tax deductible.
The indirect cost related to buying decision are loss opportunity costs and selling costs in case you have to move or any emergency that will affect your ownership.
The direct cost related to renting decision is initial costs: security deposit and /broker’s fee if applicable. The last is yearly costs which included monthly rent and the cost of renter’s insurance (if applicable).
The indirect cost related to renting decision is loss opportunity costs and penalty of breaking the rental agreement (equal to security deposit plus any penalty established in the contract).

The following graph show an example if I will buy a house taking into consideration my relocation.

Since I do not plan to stay in MA for more than 4 years it is better to rent than to buy in my case.
I included the following sources that are very helpful to help you to make the decision according to your current financial situation, and short or long terms goal with your assets.
Sources: http://www.freddiemac.com/pmms/
https://www.smartasset.com/first-time-home-buyer/affordability/rent-vs-buy?populate=1&utm_source=Google&utm_medium=cpc&utm_campaign=A2.%20Rent%20vs%20Buy&gclid=CK7un-2Dp70CFSqXOgodCS4AwA
other sources
http://www.nytimes.com/interactive/business/buy-rent-calculator.html?_r=0

#3
The break-even point is the level of sales at which revenues equal to expenses, and operating income is equal to zero.
* Contribution Margin per Unit= _____Unit Sales Price____
Contribution Margin Ratio
The variables that affect the breakeven point are:
* Unit contribution margin: Any change in the unit contribution margin will affect the break-even point. Variable costs that change in direct relation to volume of output. Variable cost change in direct proportion to revenue, affecting the operating income or breakeven point. Any additional $ will result in an increase in additional of variable cost. Unit selling price, any change in the unit selling...

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