Answered Essay: Describe three issues/problems that a company could encounter when trying to determine the

Describe three issues/problems that a company could encounter when trying to determine the actual cost of a good or service to be used in the cost of goods sold. For each of your issues, provide an example of a company or industry where these issues could be present.

Expert Answer


There are several problem that company might encounter when trying to determine the actual cost of goods anad services to be used in the cost of goods sold and these are material cost, labour cost and overhead cost. the first issue that company face is the material cost as material cost is the cost that the company pay the price to purchase the raw material for manufacturing the particular product, as raw material are frow indirect materials as theses are for ex sugar we need to make pepsi and the amount which we pay for the sugar is the material cost . the second issues is the cost of labour , as the labour cost is the cost that what an employee get the amount for the task he perform. for example in pepsi there are number of sales people who try to sold the pepsi in the market. so it is very tough to descide how much to amount paid to the sales people for their job. as it is very difficult to descide that what is the actual cost of the production and distribution of the particular product. variability in the input price is the another problem that the company face as for the pepsi the price of sugar is different in different part of the company . so it might be difficult to find out the accurate per unit price of sugar in that particular soda.

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