Mci Chapter3

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Chapter 2 – MCI Assignment

Having had previous experience in a manufacturing plant, it seemed that I understood some of the basics of accounting. After reading this chapter, I saw different aspects I did not really take into account. Specifically, the idea of sunk cost, opportunity cost, out of pocket, these ideas were never something I thought of that would affect the business. Understanding these concepts, I see now how I could have applied them to my previous job. Understanding the cost of maintenance from both a short and long term, previous purchases, all of these different cost now made more sense with what I was able to control, direct and indirect material cost. I began to see the bigger picture of what it would take to run a plant. Applying these concepts to my business, MS Furniture Group, I begin with the different classifications of the cost that I will incur with my business, which can lead to cost saving opportunities for my overall bottom line. First step, I can classify my business as mass customization. I will have a high volume of training tables to produce, but offer different customization options, dependent on what the customer wants. This will help in delivering a quality product to customers that meet their specific needs. Looking at my direct cost of labor, I have a very controllable cost, that with improved management of labor, including better management of overtime, and labor per piece, I can look at some cost saving opportunity. I also have a controllable cost in my material handling aspect of the business. Coordinating better with manufacturing to have material available at peak times, will show give a better management of labor. One of the newer concepts from reading the material is opportunity cost and sunk cost. With how my product is made, machine maintenance is a key factor to keep the business running and making sure I…...

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