Analysis of Direct Costs

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Write a three to four (3-4) page paper in which you:

  1. Predict the main costs (e.g. labor cost, material cost) associated with the production of VectorCal’s drone navigation system. Provide a rationale for your response.
  2. Compare and contrast the direct and indirect costs associated with the drone navigation system that both your company and VectorCal would assume. Predict whether or not your company could easily control these costs and thus reduce production expenses. Justify your response.
  3. Compare your company with VectorCal relative to the price of acquisition, semi-variable costs, and allocated direct and indirect costs of the drone navigation system. Justify your response.
  4. Use at least three (3) quality resources in this assignment.


    : Wikipedia and similar Websites do not qualify as quality resources.

Your assignment must follow these formatting requirements:

  • Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
  • Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.

The specific course learning outcomes associated with this assignment are:

  • Outline the process to forecast the likely price of an acquisition, calculate semi-variable costs, and allocate direct and indirect costs.
  • Examine the various cost classifications, the different allocation bases, and the application of cost-accounting standards.
  • Determine how to validate costs and certify cost and pricing data.
  • Use technology and information resources to research issues in cost and price analysis.
  • Write clearly and concisely about cost and price analysis using proper writing mechanics.

Grading for this assignment will be based on answer quality, logic/organization of the paper, and language and writing skills, using the following rubric.

Analysis of Direct Costs
Running head: Week 3 Assignment 1: Proposal 1 Week 3 Assignment 1 : Proposal Toconnicer Parker Strayer University Business 315 Professor Larry Murphy, MBA April 22, 2017 Q-Tech (short for Quality Technologies) is a private limited company owned by ten shareholders. The company deals with the assembling, servicing and monitoring of drones that are used for the navigation of aero businesses. Q-tech is a local company that has been motivated by the government to spearhead privatization and do this through the rise of the infantry industry through tax reduction and partial funding. This is a business company which has a separate legal entity from its owners and shareholders. It possesses limited shareholders who are liable to claim in the case of the termination or a business fail. The company has shareholders who are given a lot of responsibility. This responsibility includes selecting the staff such as the chief executive officer and the managing director. The owners played their own significant role which was basically to contribute an initial capital to sustain, formulate and run the organization. It is the mission of Q-Tech to provide quality and efficient products by providing the best in client satisfaction. Our vision is to be the leading company in providing robotic services to poor businesses to help boost their company. Our product deals with the assembling of drones that are used for the conveyance of goods along the airport and also the software installation used by these drones. In order to achieve goals and make sure our vision is seen, we had to choose our staff very carefully. We have a Chief Executive Officer who is the overall person in charge of all activities by the controlling the business operations. Our managing director oversees and supervises the work done within the company. The accounting officer looks into the checks and balances of the company annually to make sure we stay financially secure. The Financial Officer oversees the operation of cash inflows and out flows, recommends the financial budget and root lines the recession and the peaks of the company’s capital. We also boasts of company engineers, technicians, software engineers and subordinate staffers. The people give professional advice, do actual physical work, carry out software maintenance and also manage the company databases. Our target clientele is a company that deals with drone navigations and its related software. We also facilitate professional, quality and efficient locomotives to the airport industry. We therefore target the clients in the airport industry such as service clients, partial customers, aircraft owners and the airport management. VectorCal is a foreign investing company and the only existing company that provided what our company is about. They have been enjoying a monopoly in this field and has thus created room for individual pricing. Its prices are costly as they do not follow the strategy of the market demand and supply as such they have been using the qualitative forecasting method. Because only the top manager meets and makes the decision without market research this has made them use outdated market trends and market analysis. This has led them to disregard the ever changing market. Their research is mostly based on emotions and personal experience. They are subjective in a nature and they are slow in meeting the market demand as they set their own prices (Parmelee & Michaelsen, 2010). Q-TECH is a young developing company with realistic ideas, we shall therefore evoke the quantitative forecasting techniques. This is because it is objective in nature and heavily relies on mathematical computation, specifically the time pattern approach which uses past events and involve the market pattern so as to predict the expected market demand in the future. This technique is less costly and faster for the company to adopt. The method is very handy since it fully depends on new products that are launched in the market through advertising and personal selling. Q-Tech’s client’s demand is the company’s top most priority. The government’s consideration on the act of pricing has favored Q-TECH over VectorCal. The reason being is that VectorCal’s commodities are higher due to their high pricing and taxation enforced by the government to the foreign companies. Q-Tech, on the other hand, takes a different approach which is as follows: Semi variable cost which entails the rent allocation of the office space and includes room for expansion. Insurance premiums to compensate the company in cases where risks are involved and can occur. This also adds value to our loan repayment strategies and influences the raw materials for the assembly and servicing of the drones, costs of software updates and the cost of labor involved. The semi-variable costs are needed for proper speculative, establishing sustenance and the use of local materials (Haworth, 2005). There are also allocated costs where the expense obtained in carrying out assigned tasks such as the installation of drones, sales cost needs, services and assemblies and the monitoring of installed projects facilitate in the day to day running of the business Indirect cost: Since this is a new company, the expected indirect cost is mainly the advertising cost, but also, we cannot disregard such costs as security, supervision and maintenance. This cost influences the introduction of new products in the market to encourage mass selling and proper knowledge of the product. This duty is widely concerning as potential investors will gladly wish to invest more due to high returns as security in the company is well established. REFERENCES Fedorowicz, J., Gelinas Jr, U. J., Usoff, C., & Hachey, G. (2004). Twelve tips for successfully integrating enterprise systems across the curriculum. Journal of Information Systems Education, 15(3), 235. Haworth, M. (2005). Tips for better succession planning. The Journal for Quality and Participation, 28(3), 13. Hormozi, A. M., Sutton, G. S., McMinn, R. D., & Lucio, W. (2002). Business plans for new or small businesses: paving the path to success. Management Decision, 40(8), 755-763 Parmelee, D. X., & Michaelsen, L. K. (2010). Twelve tips for doing effective Team-Based Learning (TBL). Medical teacher, 32(2), 118-122.

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