Glaser Health Products Essay Example
Operations costs are primary recurring costs associated with central operations other than cost of goods sold that are incurred in order to generate sales. They include depreciation on factory equipment, depreciation on factory building, cost of repairing parts improperly manufactured in the machining department, supplies for the machining department, electricity for the assembly department, lost materials (scrap) in a machining department, direct labor in the assembly department, supplies for production scheduling, cost of repairing parts improperly manufactured in the machining department, heat, light, and power for the factory.
Sales costs are incurred directly in the selling of the health products. They are also referred as charges to customers for the goods or services provided to them during the period. Glaser Health Products Essay Example. The sales costs for Glaser Health Products include: advertising manager’s salary, salespersons’ salaries, salespersons’ travel expenses, advertising supplies used, and supplies for the sales office, sales commissions and packing supplies.
Administrative costs are also known as general expenses and are incurred in the administration or general operations of the company. The administrative costs for Glaser Health Products include: depreciation on office equipment, cost of hiring new employees, payroll fringe benefits for workers in the shipping department and leasing of computer equipment for the accounting department.
Costs with the Appropriate Activity Levels
Product-level activities are performed to support a particular product line. They are incurred only when a new product is introduced (Jackson, Sawyers & Jenkins, 2008). In the case Glaser Health products, product level costs include assembly foreman’s salary, cost of hiring new employees and paint for the assembly department.Unit-level activities are performed each time a unit is produced and are generally considered variable cost. Crosson & Needles (2010) says that unit-level costs include the direct material cost and direct labor costs. When costing is concentrated at the unit level, it makes sense that the number of units produced should be correlated with the amount of overhead costs allocated to each unit. Glaser Health Products unit level costs include: supplies for the machining department, depreciation on factory equipment, heat, light, and power for the factory, cost of repairing parts improperly manufactured in the machining department, supplies for production scheduling and depreciation on factory building.