Analysis of Direct Costs Essay

IntroductionDeveloping and building a lick is one thing while developing a glide scheme is completely another aspect. A radio-controlled aircraft quite a little be considered a toy without a well-engineered design and functional piloting placement. The pilotage system is brinyly apply to give commands to the garget to under scoop up actions that be matched with the phylogenesis of the pigeon berry. With all the funds that are put into the development of the drones, the navigation system is developed in manner that cannot be prone to right(prenominal) interference interchangeable hackers, terrorist or eachone that would take over the drones navigation system. It must(prenominal) contain a system that leave alone be able to take commands from a single base irrespective of the geographical condition that the drone is in (Bhimani, Horngren, Datar, Rajan, et al, 2012). A prediction of the main represent that is associated with the VectorCals drone navigation system s prain. There are two main be associated with the harvest-tideion of VectorCals drone navigation system, they are purpose application and genuine represent. There are also two types of bray cost associated with the production of the navigation system, substantiative and direct dig up movement. take away labor is labor consumed in areas that have a direct connection with the production or provision of service, and it is produced by skilled workers and business operators. An vitrine would be workers who are in the production line of the navigation system. These employees are welders, cutters, engineers, equipment operators, technicians of equipment, mechanical, production supervisors and any employee directly related to the production of the navigation systems. indirect labor is labor consumed in the administrative areas of business that support production and trade. Employees who are onthe administrative side of the business are what cause an expense, and this cost is indi rect because they are not directly responsible for the production of the navigation systems themselves. These employees include engineers, assistants, secretaries, drivers, human resources, trainers, marketers and accounting, all employees indirectly related to the production and sale of the product.VectorCals navigation systems have two types of hearty costs as well, direct clobbers and indirect materials. Materials or supplies are the basic elements that are change into the finished product through the use of labor and manufacturing overhead costs in the production process. The material costs can be direct or indirect materials are those that can be identified with the production of the finished product, which can be easily seen as part of the product and represents a significant cost of the finished product. Indirect materials are part or supplies that are pertaind in the production process of the article, unless not classified as direct materials. A good example would be nuts and bolts used in the production process, and as such(prenominal) are considered an indirect materials manufacturing cost. A comparison of the direct and indirect cost that is associated with the navigation system within VectorCal and my company. The main cost within the development of a navigation system for VectorCals or extraneous assure absolutes drone, will be in labor and material cost.The labor cost will mainly be used in the acquisition of highly trained and experienced computer programmers. The programmers will have to work in a team since the navigation system is quite a complex task and numerous ideas are required. One team of programmer can be operative on the global positioning and track system of the drone while another team will be entitled in safeguarding the system from unauthorized access and interference. It also all important(p) to note that, the drone navigation system will need eternal maintenance and improvement, which is a continuous labor cost. T he labor cost can be predicted to vary from $12 million to $16 million whole on the system development without taking into consideration the maintenance labor cost. Material cost of the drone navigation system whitethorn involve the use of highly specialized pieces of electronics and equipment. In some cases where drones are used for long distance missions, a satellite may be used. The material cost can be predicted to vary from $4 million to $7.5 million depending on the functionality of the drone.The main cost may be high thothis is mainly due to the fact that it is being developed from scratch. After the navigation system is developed, it can be used on multiple drones with the altogether requirement of maintenance and upgrading the system. The main cost can be considered to be a one off cost that is extremely crucial. The total main cost will range from $16 million to $23.5 million and may need further analysis of hidden costs. The direct cost is seen to be almost similar wi th extremely little difference in range. that the indirect costs have quite a big difference. VectorCals indirect cost will be quite minimal since they will adopt an already working rationale in the development of their drone navigation system. This means that they will follow an example of an already working system and thus reduce mistakes and repetitions that would cost the company quite vast sums of money. The only way to control both the cost is by emulating an already successful idea and learning through it. This reduces mistakes and tends to guide new developments in what to do and what not to do.The result will be saving m and huge expenses (Chadwick, 2002). Compare your company with VectorCal relative to the worth of acquisition, semi shifting costs, and allocated direct and indirect costs of the drone navigation system. The acquisition cost of a fixed summation is the economic sacrifice to acquire the asset and make it ready to be used in an activity. It includes the p urchase price and any other necessary expenses such as freight, broker tips, registration procedures in the case of goods whose domain must be registered like a drone or airplane. The cost of purchasing function, platform construction, assembly, testing and staff training By comparing Remote Control Unlimited and VectorCals relative price of acquisition, VectorCal price will quite high compared to Remote Control Unlimiteds price, since it is already running and has firm root within the market.Also VectorCal has a proven credibility within the market, a thing that Remote Control Unlimited will be form to acquire. The semi-variable costs are composed of fixed and variable costs, such as salaries are fixed costs, but overtime is considered a variable cost. both companies direct costs are incurred when purchasing products to ensure the production of the navigation systems, but the indirect costs are those related to administrative salaries, dominance costs, and membership costs. Set ting up a business and running it to gainfulness is not a simple issue, but it can be modify with goodplanning and market research.ReferencesBhimani, A., Horngren, C., Datar, S., Rajan, M. et al. (2012) Management and Cost Accounting. 5th ed. Edinburgh assimilator Hall, p.369 378.Chadwick, L. (2002) Essential Finance and Accounting for Managers. Harlow, London, New York, Massachusetts, San Francisco, Toronto, Son Mills, Sydney et.al PearsonEducation, p.280-281 Direct Labor, Direct Materials, and Overhead, (nd). http//academic.regis.edu/dbush/Accounting/Accounting%20Help/DL%20DM%20OH/acc_dl_dm_o.htm Candace Webb, Demand Media, (nd), Labor Cost Vs. Material Cost. http//smallbusiness.chron.com/labor-cost-vs-material-cost-11368.html Definition of Acquisition Cost, (nd), http//www.investopedia.com/terms/a/acquisition-cost.asp Direct vs Indirect Costs, (nd), http//www.uaa.alaska.edu/research/OSP/direct-vs-indirect-costs.cfm