Business Finance
Issues in Costing - Describe 3 issues/problems that a company could encounter. .

Question Description

Describe 3 issues/problems that a company could encounter when trying to determine the actual cost of a good or service to be used in the costs of goods sold. Provide an example of a company or industry where these issues could be present.

Final Answer

Issues in Costing

There are several problems or issues that an organization can face when annoying to define the actual costs of goods sold. 

  First problem which I would like to discuss is determination of how much compensation of different workers should be credited to their job on a specified task.  For instance, an organization engaged in business of drugs makes different kinds of drugs.  The sales force of organization goes out in the market to sell out their drugs.  At this point the amount paid to the sales force should be credited to each variety of drugs?  This kind of problem creates hurdles to identify production cost of selling drugs.

  The second problem relates to the variability in inputs prices over a specific time period.  For instance, the Pepsi procures sugar in larger amount.  Let us suppose that the sugar price fluctuates from purchase to purchase.  It might be difficult to clarify the accurate per unit price of sugar that puts into a certain amount of soda.

  The above problem can happen with fixed costs.  If Pepsi procures latest equipment, how much of the cost of that equipment must have to be credited to any specific batch of soda.

  Above are few examples of problems why it may be difficult to define the actual production cost of goods sold.

Duke University

The tutor managed to follow the requirements for my assignment and helped me understand the concepts on it.

The tutor was knowledgeable, will be using the service again.

Awesome quality of the tutor. They were helpful and accommodating given my needs.


Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors