According to Alfred Chandler (1977), the structure involved ‘administrative coordination’ can bring higher profit, productive and lower cost. He describes it as “The visible hand”. He believe the traditional will be gradually replaced by the multi-unit ‘modern business enterprise’ The top of the mine-and-staff structure based organization is the top management, then middle management, lower management and foremen, supervisors and so forth. (See figure 1) The command send from the top manager to the middle manager, then the mission will be allocated to the lower level until to the front-line staff. A person in a line position is directly involved in achieving the basic objectives of the organization. A person in a staff position, by …show more content…
While, the indirect cost refers a cost that cannot easily and conveniently be traced to the particular cost object under consideration. (Seal, 2011, pp 35-36)
In other words, the direct cost is a direct relationship with the production process, while the indirect costs are not a direct relationship with the production process, the cost of services in the production process. Within a period of total indirect costs are essentially constant, it is also known as fixed costs and indirect costs. Although its total output within a certain range does not substantially change with production, but allocated to indirect costs per unit of product decreases with the increase in production. For example, a company produced can food. Each food cans have direct costs, including the cost of ingredients, pots, you can label, wages involved in the production of canned food, canned and tag content of workers and machinery in the process of actual power consumption. There are also indirect costs including multi pack packaging; administrative costs, including salaries of administrative and management personnel, equipment, etc.; premises rented; total power utility costs and other buildings, as well as marketing and
Direct labor assembly costs are, by their nature, directly traceable to individual products. Therefore the relevant cost driver for this cost is the number of Direct Assembly Labor Hours. The other 21 cost categories are indirect costs.
As defined by the OMB (2004), “Indirect costs are those incurred for a common or joint purpose benefitting more than one cost objective, and not readily assignable to the cost objectives specifically benefitted, without effort disproportionate to the results achieved” (p. 11). The costs in question include international conference, employee recreational activities and counseling services, investment counsel, lobbying, depreciation, and insurance. Despite seemingly
Direct material costs change due to the quantity, range, quality and price of materials required according to the specification for the order each time a unit of the product or service is produced. Direct labour costs are driven by the number of hours required and the rate per hour each product unit that has been set for each labour grade.
Variable costs are expenses directly associated with the product or service e.g. raw materials, components, packaging.
According to this method, every unit of the product is assigned all direct, fixed, and variable costs. This method includes the cost of direct materials and labor as well as a portion of the overhead costs associated with it in the final costing of every unit of the product.
unit, two types of costs are distinguished. Firstly the direct costs, consisting of the direct
Indirect manufacturing costs are a manufacturer's product costs other than direct materials and direct labor. Indirect manufacturing costs are also referred to as manufacturing overhead, factory overhead, factory burden, or burden.
All the costs by a company can be broken into two categories, fixed costs and variable costs. Costs that are independent of output are called fixed costs. Fixed costs remain constant throughout the relevant range and are usually considered sunk for the relevant range. Buildings and machinery are included inputs that cannot be adjusted in the short term. They are only fixed in relation to the quantity of production for a certain time period. The cost of all inputs is variable, in the long run.
Effective organizational structures define how job tasks are subdivided, grouped, coordinated, and managed. Six key components of organizational structures include division of labor, departmentalization, chain of command, span of control, centralization, and formalization (Remme, Jones, Van der Heijden, & De Bono, 2008, p. 79). Each element influence how employees interact with each other to reach organizational goals. Different structures are common in similar organizations among high performing organizations (Reimann, 1974, p. 707). The most appropriate structure will depend on the unique needs and culture of the organization.
A direct cost can be traced to a product or service which includes: Direct labor- which is the cost of the labor that’s directly connected to a product or services. Direct labor is sometimes called touch labor, since direct labor workers typically touch the product while it is being made.( Ray H. Garrison, Eric W. Noreen and Peter C. Brewer p 39-40) An example of direct labor is an assembly line worker. Labor cost that cannot be physically traced to the creation of products, or that can be traced only at great cost and inconvenience, are considered to be indirect labot.( Ray H. Garrison, Eric W. Noreen and Peter C. Brewer p 40) Direct material are those materials that become an integral part of the finished product and whose cost can be traced to the finished product.( Ray H. Garrison, Eric W. Noreen and Peter C. Brewer p39-40) Manufacturing overhead is the third element so manufacturing cost, it includes all costs of manufacturing except direct materials and direct labor. Manufacturing overhead includes items such as indirect materials; indirect labor; maintenance and repairs on production equipment; and heat and light, property taxes, depreciation, and insurance on manufacturing facilities. Only cost associated with operating the factory are consider to be manufacturing overhead cost. A company also incurs other costs associated with its selling administive functions, but these costs are not included as part of manufacturing overhead. Only those
Manager’s of an organization has to use structure to help the company run efficiently. “The five types of organizational structures are functional, divisional, matrix, team-based, and virtual network” (Draft, 2013, p.316). Functional structure in an organization that is developed by grouping departments by the skills, level of knowledge, activities done daily, and the resource used. “This structure places specific departments from the bottom to the top” (Draft, 2013, p.318). For example, specific departments such as: human resources, accounting, engineering, and manufacturing are placed at the top, while there are mostly seen at the bottom in other organizations. While common functions such as; people, facilities, and other resources are combined together as a single department instead of being divided into multiple departments.
Direct costs are costs directly related to producing the products and services of a project. On the other hand, indirect costs are costs not directly related to a project’s products or services, but are indirectly related to performing the project.
5. Indirect Costs: A reasonable allocation of indirect costs in research and development costs. However, general and administrative costs not directly associated with research and development should not be included.[iii]
Organizational structure involves, in addition to task organizational boundary considerations, the designation of jobs within an organization and the relationships among those jobs. There are numerous ways to structure jobs within an organization, but two of the most basic forms include simple line structures and line-and-staff structures.