Cost Classification: Hershey's Chocolates

2168 Words Aug 27th, 2009 9 Pages
Table of ContentsIntroduction1Part 111.1 Product Chosen - Hershey's Kisses.11.2 Cost Classification21.3 Explanations3Part 252.1 Production process.52.2 Type of product costing - Process costing62.3 Differences between management accounting (MA) and financial accounting (FA) - cost of inventory7Part 38References10Appendices12IntroductionThe Hershey Company (Hershey) was the chosen listed manufacturing company which to be discussed in this assignment. They are the largest North American manufacturer of quality chocolate and sugar confectionery products (The Hershey Company, 2009a).

Part 11.1 Product Chosen - Hershey's Kisses.

Hershey's Kisses are a type of chocolate manufactured by The Hershey Company. The bite-sized pieces of chocolate
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That is, the machine's total depreciation expense is the same each year regardless of volume produced on the machine.

Occasionally, there are also curvilinear costs, for example cost of electricity, when market demand for Hershey's Kisses rises, electricity costs will increase at an increasing rate and vice versa.

Besides that, most of the variable costs within Hershey's production department are thought to be controllable in short period of time; conversely, many fixed costs areuncontrollable in the short term (U.S Department of Education, 2007). For instance, Hershey's production managers could make decision on resources allocations which may influence the efficiency such as reduce direct labour's overtime or control of the quantity of raw materials used for production; however, Hershey's production manager may not be able to influence the factory rental charged by the landlord.

The value chain is a set of linked processes or activities which includes the upstream costs, downstream costs and the production costs or manufacturing cost (Blocher, Stout, Cokins, & Kung, 2005). Some upstream costs found in production of Hershey's Kisses would be Research and Development costs that conducted by Hershey to produce higher quality Hershey's Kisses; wages of the designer on designing new packaging of Hershey's Kisses would be the design
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