Question

suggest ways to reduce costs for a business based on cost and production chapter. Provide a...

suggest ways to reduce costs for a business based on cost and production chapter. Provide a rationale as well.

Homework Answers

Answer #1

SOLUTION:-

The cost of production is the cost of processing of raw materials and of transfoeming those raw materials into finished goods. In other words, the cost of peoduction comprises all expenses related to the plant. Absolute cost of production is the cost of pirchase of raw materials. This covers the material procurement costs & expenses incurred to deliver the priducts to your factory site from the manufacturer site. Tax paid on purchase is not included in direct material costs as an input tax credit item.

The direct cost of materials represent a large protion of the total cost of production. There are a variety of methods for monitoring direct cost of the material. Let me share a few: Invite quotes from as many suppliers as possible Suggest signing a deal with the shortlisted supplier for a long term. This will offer the manufacturer a quality guarantee and in effect would be able to popular the price accordingly. Offer cash payment against cash discount. To exchange for prompt payment most vendors would be able to trade off discount.

Look out for ways to save money for your insurance plans and financial accounts. Save money on insurance by comparing the most affordable rate with the providers; then ask your current lender or insurance agent to suit that offer. If necessary merge the insurance premiums or bank accounts. Compare insurence plans to ensure that the coverage is not over-insured or duplicated.

Create your e-mail list of customers and introduce a referral system. A recommendation from an established customer is much more likely than conventional marketing to result in a sale. Less Network, less commercial. Customers are more likely to employ a company with a name they recognise. Use the expense of ads by doing it in-house. Increase the use of social media and rising conventional commercialisation.

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