Greetings to my all Steemit members. Hopefuly you all are fine and enjoying your best life on STEEMIT I am also fine Alhamdulillah . And today I am going to share this Engagmment challenge contest. And I am happy see that Engagement contests are started . And this is very interesting content. I would like to participate in this contest that is organized by @yolvijrm

What is cost and how important is it for entrepreneurs?

The term Cost refers to the financial value that must be required to produce a product or service and includes materials, labor, and overhead and other organizational costs. The Whole Business Pie Here's why it's so important for entrepreneurs to understand and control costs

• Profitability:
  By reducing costs without compromising quality, entrepreneurs can improve profit margins, which are essential for business growth and investor attention.

• Pricing Strategy

Knowing the safety margin allows entrepreneurs to set competitive prices that cover costs while appealing to the target market.

• Cash Flow Management:
  Managed costs can prevent these from occurring and because of such cost containment, entrepreneurs have many opportunities that lead to growth and investment within these opportunities. Making and managing a cash blow situation becomes much more difficult

• Decision-Making

It helps a lot of people who are entrepreneurs to decide where we would be better off investing in these people and how we should expand or out of many operations. All of this makes them much more delicious

• Scalability

Controlling costs is the key to efficient growth A cost-effective plan allows a business to grow without dramatically increasing costs.

Source

Establish the difference between costs and expenses, giving examples of this through a real case.

• Cost:

And we go to whatever content we have to achieve or we can say that we refer to the amount that we spend to prepare and the time and time of these expenses. They are associated with the creation of services that the business can later generate a lot of revenue, and generally we should not consider them as part of our inventory until the product has been sold. Time they become an expense

• Expence:

On the other hand, we talk about expenses that are necessary and ongoing to run a business. Day-to-day expenses are represented by items we include in the income statement as expenses that are directly incurred. It's not directly related to making them, but I support the operation

Real-Case Example: Tesla, Inc.

• Cost(Assets)

• Cost (Production Cost)
  What we have is a very strange spice, Tesla, which covers the costs of manufacturing every electric vehicle

• Material Costs
  Batteries, metals , software Components

• Labor Costs
  Salaries of workers assembling cars

• **Overhead: **
  Cost of running the factory , Machinery depreciation and facilities

Costs are also considered and recorded as inventory costs. It's a lot of work and it shows how much time Tesla was putting into the product they were after.

SOURCE

• Expenses (Current Period):

• Operational Expenses:

Tesla incurs and incurs many costs, such as having an assembly line and paying workers' wages and all marketing costs and utility bills for its factories, and now it's making a profit. It is also used to record it as an expense on the statement and we reduce Tesla's income in the period we incur the expense.

• Cost of Goods Sold (COGS):

All the direct costs we have incurred in manufacturing vehicles such as raw materials used and labors used are recorded for CEOGS and when we If Tesla sells someone, say, the costs and expenses involved in producing that car are recorded in the same period, it has affected Tesla's gross profit for the quarter.

• Summary:

In the case of Tesla, all expenses incurred on fixed assets such as factories and facilities, while other expenses associated with regular operations, such as salaries and utility bills, are included in the income for the period. The classification also affects how the company's relative health and profitability should be reported, and the costs spread over time and any costs incurred immediately. But it affects the net income

What are the benefits of performing a good cost determination?

If costing is done correctly, many strategies can have operational financial benefits, and here we have to see why it is so important.

• Improved Profitability
  If we were to determine the cost-value relationship, many companies would have to set reasonable prices for their products or services, making sure that they could complete all the tasks and make a profit. A margin of 100% can also be obtained, so we cannot set the price to people because we can reduce the profit. Understanding the actual cost structure Companies identify high cost areas and control costs so we can earn higher profits.

• Enhanced Budgeting and Financial Planning

Knowing the actual costs enables many organizations to create more accurate budgets in advance. Realistic budgeting can help us forecast the costs and flows and our needs, which is the correct determination of the increase in the budget.

• Competitive Advantage

Businesses that use hi correctly can set prices without sacrificing profitability and attract customers and also help them maintain market share. Allows for monitoring and controlling costs more effectively than competitors who lack cost insight, increasing chances for operational excellence

• Informed Financial Reporting and Compliance

Accurate cost accounting allows and contributes to accurate financial reporting and also increases efficiency and ensures compliance with accounting standards. The wealth also increases and the company also gets a lot of help in maintaining the company.

SOURCE

How do you determine the costs of your business? If you are not an entrepreneur, how would you do it?

Checking out the business front includes reviewing the product and everything related to the business and how to approach it, whether for an existing business or starting one. Let's check in thinking

• Identify Direct Costs**

• Materials:

Any raw materials or parts needed to manufacture the product or provide the service should be listed.

• Labor
  Production is na yaar cam directly calculate the salary or labor or fee for any person in the form. For example if you were running a shop or a hotel then food. will include the wages of the staff who make direct summons as well as co-workers

• Determine Indirect Costs (Overheads)

• Fixed Costs

These are the fixed costs that we incur that do not fluctuate with the level of production, but I would like to present them to you as if we were to buy an extra house, given on feedback. If so, what will be done will be the fixed price

• Variable Costs:

All of these costs of production or sales vary greatly depending on what materials we use and for an e-commerce business, this means that inventory can include all kinds of costs.

• Semi-Variable Costs:
  It seems like Daltys car is a low fixed part but can increase along with the production. For example if our electricity can be a basic cost but due to heavy use of machinery then electricity is also used more. For this reason, its area can only increase

• Calculate Cost of Goods Sold (COGS):

To calculate the cost of goods sold, all direct interests, materials, direct labor and any other costs incurred in producing the goods during a period shall be included, especially the profitability on the basis of managerial management. is done to gain an understanding of

COGS = Beginning Inventory + Purchases during the period - Ending Inventory

• Allocate Overheads Appropriately

project here we through service liner when we hypocrite accurate estimates are allocated various costs we use these metrics based on them such as direct labor is ensured. That each product must simply reflect its share of total overhead

• Use Software and Tools for Accuracy

Accounting or cost management software that we should use to track costs and do my calculations. Color businesses are starting to grow a lot so this can be done using different tools such as QuickkBooks Xero

So I completed all tasks. And I hope you will appreciate it.

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