The Importance of Cost Estimation and Profit Planning in Business

Hello Sierra, Thank you for your insightful post on Cost Estimation and Profit Planning. I agree with you mentioning that God should be put first in all things for a greater 'reward.' All businesses should have costing systems. It is important for business associates, managers, and accounting specialist to select the system that works best for their organization. It is important for the organization to know the difference between process costing and job costing when it comes to making decision for the organization. Process costing is best suited for organizations that produce a larger number of related products. This specific system allows costs to be distributed to the designated departments which allows for increased accuracy when tracking productivity and performance. Job costing is acceptable for organizations that produce specific services or products for a consumer. The system is dedicated to tracking costs for each job an organization does and ensures that the consumers final product meets their requested specifications. The two types of costing systems are job costing and process costing. "Costing is the process of accumulating, assigning, and classifying direct labor, direct materials, and factory overhead cost objects, which most commonly are products, projects, or services" (Blocher et al., 2021). This information is often used to "make decisions, manage decisions, manage costs, and inventory, and evaluate performance, costing systems are important in an organization and managerial settings" (Labro, 2019). Costing systems have very few characteristics that make it possible for management to choose the best option for their business. Costing systems are used to help businesses stay within cost limits and budgets. Companies are able to utilize these systems to "estimate costs and determine how much to charge their customers for a product or service" (Blocher et al., 2021). It is important to evaluate the disadvantages and advantages of each system when making decisions for an organization. Process costing is cost effective and manageable, but it lacks on providing as many details as job costing. Job costing is compelling when it comes to managing and tracking cost for an organization's individual projects, but it can be very costly and excessively time-consuming. The Biblical integration I feel fits this assignment best is Proverbs 24:3-4 states "By wisdom a house is built, and by understanding it is established." (ESV, 2001). Thank you for your diligent work on this week's discussion board, you provided great detailed information.