Costing Activity



Costing for an activity within an entity

Overview of the company

Northpower was establishes in 1920 and it is the largest multi-utility contractors in New Zealand with an excellence and innovation status. They have been operating right through North Island of New Zealand along with the Perth and Melbourne in Australia.

Company has two distinctive divisions which are Northpower Network and Northpower Contracting. This division has been supported by the Northpower support team which includes Human Resources, Business Improvement, IT, Safety, Finance and Business Development direct via a well-built managerial supervision team.

This company has been categories in service provision as it has been offering and performing a public service; subject to government regulation (northpower.com).

Task One: Questionnaire

Cost

Resources are sacrificed in order to achieve the objective of the company like in Northpower a service provided to customer required certain cost. For company like Northpower which are involved in multi service to the public a huge amount of cost is incurred. This cost can be termed as relevant cost as they change when certain changed are made keeping in to consideration of the public needs as they give more importance to the innovation things (Warren C., Reeve J., Duchac J., 2009).

Relevant Cost

The relevant costs has been termed as expected future costs that differ among alternative courses of action and resources and can be highlighted if you change or delete any economic activity. Relevance is not an attribute of a particular cost; the same cost may be a circumstance relevant and irrelevant in another. The specific facts of a given situation will determine what costs are relevant and which irrelevant. When there is the demand of a special order spare capacity exists in this case, the only costs that change if we accept the order are the raw material, energy, freight, etc.. The depreciation of the equipment remains constant, so that the former are relevant and irrelevant to the second decision (Vinter, 2010).

As Northpower involved in many activities from those activities we have chosen

Chosen Activity: Northpower Telecommunications

Category

Examples of Costs(as relevant to chosen activity)

Direct

Direct costs are costs that can be traced directly to a product. They may be product-specific (e.g. unique materials and components, or the wages of dedicated production staff who work on only one product). They may also be traced by a process of attribution (e.g. wood used to make chairs, tables and desks can be traced to the three products based on quantities used; wages of production staff who work on all three products can be traced to the products based on records of hours worked) (www.flexstudy.com).

In both cases the traceability is highly accurate and there is unlikely to be any doubt or disagreement as to how much direct cost is fairly attributable to a product.

However, there are many costs involved in production, or in the delivery of goods and services, which are general "background" costs. These costs cannot be directly traced to products, but must still be incurred in order to produce the output (e.g. rent of a factory, depreciation and maintenance of general factory equipment, ...