The main concepts of managerial accounting are focusing on several points to increase the performance of the organization financially and to lead the organization in the market by making it successful on the short and long-term projects and services. Moreover, Managerial Accounting known as cost accounting also been used to help management to have panch of the process that translates the data throughout the analysis, interpreting, identifying, measuring and all these processes to be useful for managers to hit the organization goals and objectives. Managerial Accounting have an important use in many ways to track and the need of developing business by subject it in measuring the business performance and enhancing the services of the organization to cover all the costs and increasing the income. However, this will give a better view for dissgen making to shows the right results for the organization to start certain project.
There are two main costs variable and fixed cost which located at all organization that produce goods or services and the best example in Saudi Arabia is Saudi Aramco that provides petrol and gas over all the world. This Company located in Dhahran in the west side of Saudi Arabia. Saudi Aramco has high revenue and it is considered as one of the largest gas and petrol producer in the world. The variable cost in Saudi Aramco is associated with the amount of gas and petrol it produces also the variable cost goes up and down based on the production volume About. (2018).However, the fixed cost in Saudi Aramco will not change or affect by the volume of production even if there is a change in the number of production. For moreover, the fixed cost will remain the same even if no production in Saudi Aramco DiLallo, M. (2017).
on the other hand, there is Amazon.com the best example of the service industry that Fixed Cost and Variable Cost Amazon analysis mostly work in the e-commerce industry which directly means that most business is done online by connecting to the world wide web www. Amazon Users has to check the website online to start to make a purchase after looking at the needed products and then gather it to the cart to be ready to make the payment through the online process. Although Amazon may be low-cost fixed brick and mortar, the cost mainly found of data stores that own trillions of terabyte information is a major fixed cost for the company. Amazon is a traditional and cost-effective business model that uses the Internet to get maximum leverage from its fixed assets. Once the sales volume is sufficient, the gross profit from all sales exceeds the fixed cost base and becomes a profit. The same strategy that Amazon uses for its flexibility in price is the advantage the company uses to overcome its fixed costs. The same strategy is used to overcome variable costs. Amazon also uses docking shipments to reduce operating costs. The comprehensive allocation model generates high activity at variable low costs. Although Amazon’s fixed costs dominate operating costs compared to variable nominal costs, its high activity reduces the fixed cost per unit, allowing it to gain competitive advantage through cost management. The key to Amazon’s success is that sales volume contributes to being the manufacturer of the price he uses for its benefit when overcoming fixed and variable costs.
The term mixed costs often in the service organization such Amzon.com which they refers based on the behavior it self of costs and expenses.To identify the mixed costs in the service organization by consisting of a fixed component and a variable component.the best example in Saudi Arabia is Souq.com that has been bought by Amazon recently which the process these costs by considering it on the annual expense of operating an automobile is a mixed cost.In most cases of the expenses are fixed, because it will not be change in total as the number of annual miles change and that in the logistic part of Amazon AccountingCoach. (2018).
However, job order costing system in the organization used to evaluate and to apply the manufacturing costs of single products or a group of products. In addition, job order costing system been used only when there is a difference in products manufactured and this is will affect directly to the cost by increasing the amount. furthermore The job cost record will report the direct materials and direct labor actually used on the top of that adding the manufacturing overhead assigned to each job Bragg, S., & Bragg, S. (2018).
Caplan, Dennis, “Management Accounting Concepts and Techniques” (2006). Accounting and Law Faculty Books. 1. http://scholarsarchive.library.albany.edu/accounting_fac_books/1“
About. (2018). Saudi Aramco. Retrieved 11 September 2018, from http://www.saudiaramco.com/en/home/about.html
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Former Amazon Employee Explains How The Company’s Business Model Really Works. (2018). Business Insider. Retrieved 14 September 2018, from https://www.businessinsider.com/amazons-profits-what-people-dont-understand-2013-10
DiLallo, M. (2017). You Won’t Believe What Saudi Arabia’s Oil Production Cost Is — The Motley Fool. The Motley Fool. Retrieved 14 September 2018, from https://www.fool.com/investing/2017/03/19/you-wont-believe-what-saudi-arabias-oil-production.aspx
Bragg, S., ; Bragg, S. (2018). Job order costing system. AccountingTools. Retrieved 14 September 2018, from https://www.accountingtools.com/articles/job-order-costing-system.html