Cost Management Systems
The Enriquez Machine Parts Company Case in Chapter 13 (pp. 534-539) illustrates the use of a job-order costing system. Review the sources documents, the flow of costs (Exhibit 13-1, p. 539), the analysis of transactions, and the accounting for factory overhead, including budgeted overhead application rates and the disposition of under- and over-applied overhead for an understanding of a job-order costing system.
Complete Internet Exercise 13-77 (p. 575) on the job-costing system at Dell Computer. Address the requirements for this problem by visiting Dell Computer’s website (www.dellcomputers.com)
Q1.
On the Dell company’s website, I selected an Inspiron PC for home utilization that it advertised. Dell’s product page for the Inspiron was outstandingly pointed out and offered general information regarding the workstations, including those perceived as enlightening for a possible buyer. Also, the page encourages the different choices regarding modifications that can be done on the PC. The various choices for modifying the PCs included the screen size, hard drive size, memory, processor, shading, and working framework (Laptop Computers & 2-in-1 PCs, n.d.). The company’s product page was unmistakable in the distinction between the choices, which costs range from $199.00 to $799.99. the client builds the laptop; hence the firm begins the price of the devices as the standard price before building a highly advanced laptop. Therefore, the Inspiron laptop model can have more than one cost depending on the customization preferred by the client.
Q2.
The company’s total revenue for the financial year, as aligned with the management discussion and analysis of the financial statements, is given as $56 940, which presents a difference of 10% from the previous year’s financial statements (SEC Filing Details, n.d.). This transformation occurred due to the decline in the income from the client fragment. Also, all the sections in the company’s income statements experienced a certain degree of decrease. Notably, the reductions were additionally a result of competitive pricing dynamics and competition from alternative devices such as iPads and smartphones.
Q3.
Based on the assessment of the recent consolidated statement of Dell’s operations, I established that the total cost of goods is approximately $44 754 million. At the same time, the selling, engineering, and administrative expenses accrued accumulated to $9 174 million. The additional assessment of the recent statement showed that the current year’s depreciation and amortization expense is about $1144 million. Besides, assuming 3 billion operating expenses additional to the depreciation and amortization are all fixed expenses. The following tables present calculations of the variable costs of goods sold percentage. The variable costs are included in the cost of goods sold, engineering, administrative, and operating expenses. Based on the calculations, I believe such numbers are reasonable and realistic.
The average variable cost of goods sold percentage is as follows
| Cost of goods sold | $44754 |
| Selling, administrative, and engineering expenses | $9174 |
| Total | |
| Less fixed cost | |
| The variable cost of goods sold | |
| The average variable cost of goods percentage | |
| Hence, the variable cost of a laptop |
While the average contribution margin percentage is calculated in the table below;
| Sales revenue | $56940 |
| Less variable cost | $43526.15 |
| Contribution margin | |
| Contribution ratio | |
| Breakeven in Dollar=fixed cost/contribution cost |
References
Laptop Computers & 2-in-1 PCs. (n.d.). Dell Technologies. Retrieved from: https://www.dell.com/en-us/shop/scc/sr/laptops/inspiron-laptops
SEC Filing Details. (n.d.). Dell Technologies. Retried from: https://investors.delltechnologies.com/sec-filings/sec-filing/10-k/0001571996-21-000007