Comment this post by PN Many companies depending on the market they are working prepares their financials just as a tool to see crystal clear whether it makes sense to keep investing. The cost method

Comment this post by PN

Many companies depending on the market they are working prepares their financials just as a tool to see crystal clear whether it makes sense to keep investing. The cost method is geared for manufacturing companies whom takes very seriously the cost per unit of products. The standard cost method is classified as a forecast calculation method and a method of operative tracking of the production process, allowing the establishing of the product cost before the beginning of the production process and the inspection of the cost budget by determining the deviations of the effective costs from the default costs, during the production process.

The improvement of the financial accounting and cost calculation methods involves the application of some more operative and more efficient methods and techniques of cost calculation, which finally lead to higher quality results. According to the standard cost method concept, the production costs must be calculated in advance, using for this purpose forecast sizes, which have appeared with different names as: default costs, estimated costs, standard costs, normalized costs, preliminary costs, budgeted costs (Manea, 2012).

The investor may acquire enough ownership in the stock of another company to permit the exercise of significant influence over the investee company. The equity method is usually practiced in huge corporations that have 20% or more over another company (usually limited liability company). The consolidated statements can be used to see whether there was a loss as one entity. Let’s say that I own three companies which it has subsidiaries. By doing the consolidated statements, I am looking at the general picture of the whole investment as a single result. One company would not do so well, but the others reached what was expected. Probably, by looking at the consolidated, the loss might be minimal.