This 5 page paper looks at a case study supplied by the student and shows how a company that is closing down operations can calculate the minimum cost in a final order, how this may different form normal costing exercises and issue for other companies regarding cost and quality competitiveness. The bibliography cites 2 sources.
Name of Research Paper File: TS14_TEcost01.rtf
Unformatted Sample Text from the Research Paper:
on the deal and not make a loss. This will mean looking to the cot that the company has paid, or the value of the stock to the company. There
are several approaches that can be taken. The pigments that are to be used may have a brochure price of ?220, but this is not the cost to the company.
There was a cost to the company of ?200. Before this order came along it looks like the company was going to have to get rid of the pigments at
a cost to the company of 10. This means there is a liability for the company holding onto this stock. Therefore, even if the pigment is not charged for there
will be a net gain as the company will not have pay to have the pigment disposed of. If the company decides that the minimum price is a break even
price on the costs paid then this element of the costs ill need to be ?200. However if there is the desire to minimise the loss that may be incurred
then a zero costs is possible on the pigment. Theoretically, even a discount applied to the rest of the inputs may be applicable, as a loss of ?5 or even
?9 would be less than a loss of ?10. However for the purposes of this paper, and as it is known the customer wants the product then the minimum price
for the pigment will be set at zero. For the rest of the order there are other inputs that are in stock or can be bought in. The other
chemicals are in stock, which have been paid for at a rate of ?350, therefore, if the minimum cost is set so as not to achieve a loss, then this