log #83

Charging too little can hurt your profits, limit your ability to reinvest in your business, and prevent you from delivering the level of service your clients deserve. Monthly fees can range from as low as $100 to $500 or more, depending on the level of service and customization required. I was reviewing my 2021 financials today and was surprised at how little of a percentage it makes up of my total revenue (about 3%) given how much time me and my 2 employees spend on it.

Value-based pricing

But the hourly rate is becoming outdated with the dominance of technology. Tech makes once time-consuming work quick, and in many cases, effortless. This means that regardless of a service’s value to your clients, you’re capping your pricing based on how long it takes to deliver that service. A full charge bookkeeper has a larger responsibility and full oversight over a company’s finances. If you’re not there already, it’s worth upskilling to get to that point, as you’ll be able to justify higher pricing packages.

The Pricing Playbook: Double Your Firm’s Prices in 4 Easy Steps

• Many of the busiest firms I see are stretched too thin, doing too much for too little pay.
• Their expertise spans from business accounting and bookkeeping, payroll, and aiding new business formation.
• Call us today for more information or to schedule a consultation to discuss your needs.
• Business services to include incorporation, accounting, bookkeepingbookkeeping & payroll.
• Therefore, you generally want to charge a small client less because they have fewer needs.
• Typically, you’ll want to charge your more frequent clients at a lower rate because you’re seeing them more often and reviewing their books on a regular basis.

I have no employees other than myself, no other major sources of income, very little overhead or complex deductions to deal with. It’s advisable to discuss billing methods upfront to understand the expected costs. You have several options for handling your bookkeeping, but some important factors can influence the cost. To learn more about the cost of bookkeeping, follow this small business Accounts Receivable Outsourcing guide.

• Templates, workflows and automations all give you time back in your day that you can spend building your client base and adding value for existing clients.
• Calculating an accountant’s costs goes beyond comparing national averages.
• The Board is advising its licensees to follow the guidance as provided in the following links to ensure that everyone has developed a plan to re-open while practicing safe guidelines.
• You can hire them as needed or for specific tasks, which is helpful if you don’t need full-time bookkeeping.

Firm Management

So, it’s important to know how much to charge clients based on location. Another option is to offer an hourly rate for the first job with a new client. Once you feel comfortable with their business and how they work, then use those hours to calculate a fair value-based fee to charge in the future.

Paramount Tax & Accounting Las Vegas South

Most people don’t want the most expensive option, but they also feel dissatisfied with selecting the base option because it lacks certain features. Fixed-fee pricing allows you to increase profit as you increase efficiency—the more efficiently you can work, the greater the profit margin. If you think they’re too high for you to set reasonable rates, consider lowering them.

A standout feature of Professional Business Solutions is the presence of an IRS Enrolled Agent on their team. This qualification is pivotal in managing complex IRS situations, offering clients bookkeeping expert guidance in navigating challenging tax scenarios. In addition, Donna Calif’s status as an NTPI Fellow and a member of the National Association of Tax Professionals (NATP) demonstrates the firm’s high standards in tax and accounting practices. Established in 2000 by Anthony McKenzie, McKenzie & Thomas Financial has become a respected firm for over 20 years. In addition, the bookkeeping firm saves clients the stress of processing payroll.

What sets McKenzie & Thomas Financial apart is their ability to combine the wide-ranging capabilities of a large firm with the personalized attention of a bookkeeping las vegas smaller one. In addition to their primary services, the firm provides financial calculators for diverse needs, including automobile, cash flow, college, credit, and home and mortgage calculations. Stars Accounting Las Vegas, led by Lior Yamit Retterath, has been providing expert accounting and bookkeeping services for over a decade. They provide new business setup, tax returns, bookkeeping, audit representation, payroll management, and individual services. The company will fully handle your tax filing or merely guide you in the process at a reduced fee.

You’ll simply take a photo of your receipt, upload it into the system, review it for inaccuracies, and save it. From income and expenses to profit and loss, QuickBooks generates financial statements instantly. In the other states, the program is sponsored by Community Federal Savings Bank, to which we’re a service provider. Explore how corporate dividends are taxed, affecting shareholder value and company strategy, with insights on qualified vs. unqualified dividends. But it’s also worth knowing how you can use other services, such as Sales Forecasting Wise, with Quickbooks. It’s important to note that if you choose the free trial, you will lose the promotional pricing.

• This can help businesses make informed financial decisions and improve their financial management.
• Because the product is cloud-based, it’s accessible anywhere with an internet connection.
• For instance, not only does it come with a user-friendly interface, it is designed to guide its users while using any of the features.
• First, if you make any mistake in an accounting entry, you can change it with ease.
• This will help you to build a solid business with the right data always at your fingertips.

Why Choosing the Right Server for Your Accounting Firm Matters

You can download the QuickBooks Online mobile app from the Google Play Store or Apple App Store. Since your software for accounting is connected to the cloud, they can use their own login to access reports like the general ledger, balance sheet, or cash flow statement whenever they need. We offer flexible plans and pricing to meet your needs and budget. Whether you just want help tracking receipts or you’re looking to automate complex workflows and support a large team, we have options for you. Key business tools and third-party apps work better together when they’re under one roof.

• QuickBooks Desktop is a cost-effective, productive, and versatile tool for accounting.
• As a result, you can only access your files directly from the computer.
• QuickBooks Online is a leader in the accounting industry with it being the bookkeeping software of choice for many accountants, certified public accountants (CPAs) and bookkeepers.
• Also, install the software properly and if it stops working again, use the diagnostic tool to troubleshoot the problem.
• Cloud computing allows users to access the system from anywhere in the world.

Industry Professional Advises Gym Owners to Avoid Expensive Access Control Vendor Dependence

Oliver Westwood is a seasoned cloud computing specialist with over a decade of experience in cloud hosting, IT infrastructure, and application hosting for financial professionals. For businesses that rely on hourly employees or need to track billable hours, QB Desktop has a built-in time-tracking feature. Banking services provided by our partner, Green Dot Bank, Member FDIC. While similar quickbooks accountant to the Desktop and Online versions, it’s optimized for Mac platforms, offering a user-friendly experience. Now, you can get access to the 2024 version on the Intuit website. The international versions are typically available in local languages and include region-specific features such as tax compliance tools.

The right fit for all kinds of businesses

Experience blazing-fast performance, 24/7 expert support, and seamless QuickBooks Enterprise hosting—all at the best price. Experience blazing-fast performance, 24/7 expert support, and seamless Thomson Reuters hosting—all at the best price. Yes, QuickBooks allows you to organize transactions using multi-level categories for more efficient financial tracking. QuickBooks Online Accountant is free for accountants, offering tools for managing multiple clients.

• In conclusion, Quicken is a good option for basic financial management, but it may not be sufficient for growing businesses due to its limited features.
• All you need to do is to inout the required information in English and the software will transform it to Spanish.
• Just be sure to take time evaluating the features against your needs so you choose the optimal fit.
• In fact, the pandemic that occurred in 2020 made a difference between online businesses and brick-and-mortar stores.
• Both were developed by INTUIT but Quicken was sold to H.I.G Capital in 2016.
• It does cost more to access this, which is approximately $22.50 more per month plus $6 per employee, per month.
• In this episode, Harlem chocolate Factory founder Jessica Spaulding recalls a few of her early money management mishaps, and three big lessons learned.

Reports can be customized to fit the needs of the business and can be exported to Excel or PDF format. Payroll can be one of the most time-consuming aspects of running a business. QuickBooks automates payroll processing, calculating employee wages, withholding taxes, and even filing tax forms for you. With QuickBooks, you can pay your employees via direct deposit, print checks, or even generate pay stubs, all within a few clicks, making payroll management straightforward and efficient.

What is QuickBooks and how does it work?

Our Terms of Service apply to all QuickBooks Online subscriptions. QuickBooks Online can be accessed from any web enabled mobile device with a web browser. The experience is optimised on any iOS device (iPad, iPhone or iPod Touch) and Android tablet or Smartphone with the QuickBooks online gross vs net app. When you use QuickBooks Online, your data is stored on our servers in the cloud.

That is why bookkeeping individuals usually hesitate to invest in companies with negative SE, deeming them to be an unsafe or risky investment option. Nonetheless, while SE is certainly one of the components that can aid investors in gauging a company’s financial health, it is not an absolute or definitive determinant for the same. These four components utilised to calculate a company’s shareholders equity allow investors to gain a better insight into the company’s financial management. A company’s retained earnings can be located in its balance sheet under shareholders equity and also determine its retention ratio.

Why Companies Repurchase Stock

All the information needed to compute a company’s shareholder equity is available on its balance sheet. Shareholder equity represents the total amount of capital in a company that is directly linked to its owners. Retained earnings are part of shareholder equity, as is any capital invested in the company. If a balance sheet is not available, another option is to summarize the total amount of all assets and subtract the total amount of all liabilities. It represents the residual interest in the assets of a company after deducting liabilities. Note, however, that share buybacks reduce the company’s cash reserves because the company taps its own cash reserves or takes on debt to repurchase its shares.

What Are Golden Shares (Explained: All You Need To Know)

It shows that for every debit, It shows that there is an equal and opposite credit for every debit, and the sum shareholders equity formula of all the assets is always equal to the total of all its liabilities and equity. For starters, shareholder equity tells you the total return on investment versus the amount invested by equity investors. A note when calculating total assets includes both current and noncurrent assets. If you aren’t aware, current assets are any assets you can convert to cash within one fiscal year.

What is Shareholder Equity? How to Calculate Shareholder Equity?

• Let us consider an example of a company PRQ Ltd to compute the Shareholder’s equity.
• This makes the equity section a running tally of how well the business has performed.
• Unrealized losses, for example, would have to be negative because a company’s stock value cannot fall below zero.
• If it’s not directly available, you might find it in the notes of the financial statements.
• By multiplying the result by 100, the ROE is converted into a percentage.

The last item in the shareholders’ equity formula is treasury stock, a.k.a reacquired stocks or treasury shares. Treasury stock refers to the total number of shares a company repurchases from investors. A company may keep its stocks in the treasury for using them in the future. They may also sell the stocks at a premium to get money for running the business. Alternatively, some companies use treasury stock to thwart a hostile takeover attempt.

What Is Equity and How Do You Calculate It for Shareholders? Here’s What You Need to Know.

No, total equity can be negative if a company’s liabilities exceed its assets. This situation, often called “negative equity,” may indicate financial trouble. Total equity shows the portion of the company’s assets that are owned outright by shareholders, which is crucial for evaluating ownership claims and control. It helps in determining the book value of a company, aiding in mergers, acquisitions, or sale negotiations. Total equity serves as a measure of a company’s net worth, helping stakeholders assess its stability and long-term viability.

• By using the above calculation, one can calculate the total asset of a company at any point in time.
• When a company pays out a portion of its earnings to shareholders, it reduces retained earnings.
• It grants shareholders voting rights in corporate decisions, typically one vote per share, allowing them to elect board members and influence company policies.
• The liabilities count is normally built while the firms arrange funds to spend on assets.

The statement gives shareholders an overview of the company’s performance. It is also utilized by third parties like lenders who want to know if the business is performing its debt obligations and maintaining minimum equity levels. The information used to determine the shareholders’ equity of company https://www.bookstime.com/ ABC Ltd. is presented above.

Kindly note that the returns are only illustrative and they are not guaranteed. The returns do not indicate the upper or lower limits of the return that you may get with your policy and the value is dependent on a number of factors including future performance. PVIFA is used to discover the present value of many regular payments, such as monthly contributions. Both apply interest rates and time, but for different financial planning purposes based on whether payments are made once or repeatedly. Because that’s what the Present Value of the future cash flows is equal to.

By doing so, you’re effectively determining the present value of your future annuity payments, taking the time value of money into account. This comparison is particularly important when evaluating investment opportunities with varying cash flow patterns and interest rates. In such situations, calculating PVIFA can help investors make well-informed decisions regarding their financial future. PVAD tables are a financial tool used to determine the PV of a series of equal payments, where each payment is made at the beginning of each period, rather than at the present value annuity factor table end.

What Lower Interest Rates Mean to Annuity Payouts

• PVIFA enables institutional investors to quickly calculate these values with greater precision and consistency across various investment scenarios.
• If you want to know how much your savings will grow over time, you use FVIFA.
• Additionally the present value of annuity table is available for download in PDF format by following the link below.

If you expect higher returns or inflation, you may choose a higher rate. Let’s find out, by calculating the Present Value of the loan repayments. We’re only going to be focusing on the ordinary annuity since that’s the one that’s more common. Strictly, this relates to an ordinary annuity (as opposed to a deferred annuity). And since the pension payments are an annuity, we can say that it depends on the present value of an Annuity.

• Additionally this is sometimes referred to as the present value annuity factor.
• Speak with one of our qualified financial professionals today to discover which of our industry-leading annuity products fits into your long-term financial strategy.
• The time value of money plays a critical role in determining whether an annuity is financially advantageous over a lump-sum payment, and PVIFA is an indispensable tool for making such calculations.
• Understanding its formula and application requires a clear grasp of the time value of money concept and selecting appropriate discount rates.
• In this equation, n represents the number of cash flows or periods, and r signifies the discount rate – the interest rate used to calculate the present value.

Present Value Interest Factor of Annuity: Calculation, Usefulness, Tables, and More

Assume you’re now 20 years of age and that you’re considering investing in a 40-year fund that is promising to pay you $10,000 every year until you turn 60 of age. If the appropriate discount rate is 18%, up to how much should you be willing to pay to buy this fund today? When dealing with the Future Value, it’s common to denote this as “interest rate” instead of “discount rate”. And once you get your head around the ordinary annuity, it’s much easier to understand the deferred annuity.

Using the Discount Rate for the Present Value Interest Factor

For the annuity table to be useful, you must begin with basic knowledge of your payment details. Any product that pays out at the end of a period is considered an ordinary annuity. This applies to stock dividends, bond coupons and annuity contracts. An annuity factor is a multiplier that is used to calculate the total amount of money that will be paid out over time under the terms of an annuity contract.

Want to get past your fear of financial mathematics and equations?

Thus, you can either calculate the Present Value of an Annuity using the “full formula” or traditional formula, or you can use the Annuity Factor approach. To verify this, let’s calculate the Present Value of an Annuity for the example question we saw earlier in this article. In this specific case, the Present Value of an Annuity Factor is the number we multiply the cash flow by, in order to calculate the Present Value of an Annuity. But, if you’re just starting out, we recommend working with the formula exclusively, so you really understand how it works. And once you get comfortable with using the formula, feel free to use the Present Value of an Annuity Factor to calculate things faster.

What Is Present Value Interest Factor Annuity Table

It is a simple table that features the PVIFAs of common combinations of rates and terms. For example, each column might feature a different rate while each row features a different term. Companies often use the present value interest factor to make smart financial decisions about starting new projects. These parts work together in the PVIFA formula to calculate the correct present value. Alternatively, of course, if you want to get past your fear of numbers, equations, and financial mathematics, check out the course below. Now, although we’ve solved this particular question using the formula/equation, there is another way.

The purpose of the present value annuity due tables (PVAD tables) is to make it possible to carry out annuity due calculations without the use of a financial calculator. These tables are easily “googlable”, but we’ve provided our own versions below. The first one here relates is a Present Value Discount Factor Table for single cash flows (NOT annuities). An annuity can be described as a constant stream of cash flows for a defined period of time.

Present Value Interest Factor of Annuity (PVIFA) – Formula, Table & Calculator

These types of cash flows are sometimes dubbed/called an annuity stream. Enter the interest rate, the number of periods and a single cash flow value. Press the “Calculate” button to calculate the Present Value Annuity Factor (PVAF). The concept of the time value of money could be explained most simply by the phrase, a dollar today is worth more than a dollar in the future. An annuity table is a simple tool that provides an easy way to determine the current present value of your annuity. A table allows you to skip the more complicated calculations necessary to determine the present value.

The consistency convention entails that accounting practices must be consistent yearly. Only when accounting rules are adhered to consistently from year to year will the results of different years be comparable. The principle of valuing the stock at cost or market price, whichever is lower, must Online Bookkeeping be adhered to to achieve comparable results from year to year. Likewise, if depreciation is charged on fixed assets using the diminishing balance method, it must be done annually. To comply with the accrual method, companies record adjusting entries as of the final day of the accounting period.

Full Disclosure Principle

Revenue recognition establishes the conditions under which income is considered earned and reported. The Financial Accounting Standards Board (FASB) has outlined guidelines under the Accounting Standards Codification (ASC) 606, which provides a structured framework for recognizing revenue from customer contracts. This standard emphasizes identifying performance obligations and recognizing revenue once those obligations are satisfied. The book value of an asset is the amount of cost in its asset account less the accumulated depreciation applicable to the asset.

Maximize Your Tax Refund This Year with White Raven!

A fact, occurrence, or event that cannot be quantified in terms of money is not recorded under this principle’s accounting books. Thus, non-quantifiable items such as employee skill levels or excellent customer service quality are unacceptable. Although compliance with GAAP is not mandatory by law for all businesses, many companies follow these principles to ensure the how is sales tax calculated integrity of their financial reporting. As a result, GAAP is a crucial component of modern accounting, providing a common framework for businesses to report their financial information accurately and consistently.

Tax-Free Savings Account (TFSA) Guide: How It Works and How to Maximize It

This information is used by different internal and external users of the organization for various purposes regularly. The financial statements are prepared regularly because it helps them in the decision-making process, and no firm can wait for long to know its results. The normal interval for the preparation of the financial statements is one year. According to the Companies Act, 2013 and the Income Tax Act, an organization has to prepare its income statements annually. However, in some cases, like the retirement of a partner between the accounting period, etc., the firm can prepare interim financial statements.

She states that accounting software will allow for the electronic recording, storing, and retrieval of those many transactions. Accounting software will permit Joe to generate the financial statements and other reports that he will need for running his business. This explanation of accounting basics will introduce you to some basic accounting principles, accounting concepts, and accounting terminology. Once you become familiar with some of these terms and concepts, you will feel comfortable navigating through the explanations, quizzes, quick tests, video training, and other features on AccountingCoach.com. These principles, which serve as the rules for accounting for financial transactions and preparing financial statements, are known as the “Generally Accepted Accounting Principles,” or GAAP.

• Accounting concepts provide a standardized approach to recording financial transactions, ensuring transparency, consistency, and accuracy.
• Net realizable value (NRV) is the cash amount that a company expects to receive.
• Recording every financial transaction is important to a business organisation and its creditors and investors.
• Still, as they cannot be measured in terms of money, they are not recorded in terms of money.
• A current asset account that reports the amount of future rent expense that was paid in advance of the rental period.
• Conservatism Principle – accountants should always error on the most conservative side possible in any situation.

• However, businesses should recognize expenses sooner, when there’s even a reasonable possibility that they will be incurred.
• A balance sheet liability account that reports amounts received in advance of being earned.
• The full disclosure principle mandates that all information relevant to a company’s financial position and performance be included in its financial statements or notes.
• This principle dictates that revenue should be recognised when it is both earned and realisable.
• All of these assumptions lead to very different evaluations of the worth of that asset and how it contributes to the company’s financial situation.
• Whether you’re a student, a professional, or a curious reader, the content of Fundamental Accounting Principles is segmented in a way that supports both continuous reading and targeted exploration.

This notion prevents revenue from being recognised prematurely, aligning financial statements with the actual delivery of products or services and improving the trustworthiness of reported revenues. The accounting concept is a process that helps prepare and record the financial transactions in an organisation, along with organising the fundamental accounting concepts bookkeeping processes. When you implement accounting concepts effectively, it encourages businesses to integrate and interpret financial transactions into meaningful accounting processes.

By understanding these three factors, we can calculate the Cost of Direct Materials Used (CDM), an essential element for cost accounting. Calculating beginning inventory involves a meticulous assessment of the value of raw materials on hand. This may include materials purchased but not yet used, as well as materials inherited from a prior period. The perpetual inventory system offers a real-time, continuous tracking of direct materials. This system leverages technology, such as barcode scanners and RFID tags, to update inventory records with each purchase and usage event. A business’s approach to tracking direct materials is inextricably linked to the inventory system it employs.

Carriage inwards: Transportation costs matter 🔗

The calculation of direct materials used is crucial for accurately gauging manufacturing costs and inventory management. This concise guide details the method for determining the cost of direct materials used in production. Resource-based costing is a method that assigns costs directly to the specific resources—such as labor, equipment and materials—used in a project or production process. It involves identifying the cost rates of each resource and multiplying them by the quantity or duration of usage. This approach gives a detailed breakdown of where money is spent and supports more accurate budgeting, forecasting and performance tracking.

Tips for Calculating the Direct Materials Ending Inventory

Wages paid will be considered while calculating the direct labor expense as they are related directly to manufacturing the company’s product. Understanding the cost of direct materials aids in defining the pricing strategy. Calculating these costs helps determine the minimum price at which a product can be sold to achieve profitability during production cost estimation. It’s important to regularly track direct materials costs, not only to monitor production expenses but also to evaluate turnover ratios and inventory costs effectively. Be aware that direct materials costs can fluctuate significantly due to changes in purchasing conditions and manufacturing efficiency. A standard costing system may be used to allocate these costs more consistently across production cycles.

This involves selecting appropriate costing methods (e.g., FIFO, LIFO, weighted-average) and adhering to accounting standards. The direct material used formula is used to calculate both the quantity and cost of material used in production. Effective management of this inventory affects everything from cost control to satisfying customers’ orders on time.

This real-time insight informs better pricing strategies and profitability analysis. Inventory accounting plays a critical role in accurately valuing and reporting direct materials. It ensures financial statements reflect the true cost of goods sold and the value of inventory on hand. Work-in-Process (WIP) inventory represents materials that have entered the production process but are not yet complete. It includes raw materials, labor, and overhead costs incurred up to that point.

Examples of Calculating Direct Materials Used

This total is essential for pricing decisions, budgeting, and ensuring financial accuracy in cost reporting. Direct material is the raw material that is directly used to produce an item. To calculate the cost of materials used, you get the sum of every direct material cost consumed in the accounting period. The account for direct materials incorporates the cost of materials used and not materials purchased to estimate the production cost.

Streamline Your Calculations with Sourcetable

• While specialized accounting software is essential, spreadsheet software remains a powerful and versatile tool for direct materials management.
• ABC costing is especially valuable in manufacturing, where understanding the true cost of each product line is crucial.
• Purchases represent all direct materials bought during the accounting period at their invoice price.
• This type of wastage happens when materials are ruined in ways that aren’t normal for the production process.
• Being adept at this calculation not only aids in better inventory management but also enhances cost control and pricing strategies.
• Each method, like FIFO (First-In, First-Out), LIFO (Last-In, First-Out), or weighted average, works differently with cost flow assumptions.

This level of detail helps project managers monitor budgets in real time and make adjustments when needed. Job costing also supports more accurate bidding and forecasting for future projects. By understanding where money is spent, construction firms can reduce waste, control labor costs and improve project profitability across multiple job sites.

Accounting Methods and Considerations

• Accurate inventory accounting directly impacts key financial metrics such as Cost of Goods Sold (COGS), gross profit, and net income.
• While less helpful for marginal decision-making, absorption costing remains essential for compliance with accounting standards and for presenting a complete financial picture of operations.
• By following these steps, you can ensure that your material costs are accurately accounted for, which leads to better financial management and success in your business endeavors.
• Calculating direct materials used is crucial for maintaining efficiency in production and inventory management.

Direct materials ending inventory is vital for accurate financial reporting. It helps you gauge the cost of materials still available at the end of a period. Subsequently, determine the ending direct materials inventory, which is the value of unused materials at the period’s end. ABC assigns overhead costs based on activities that drive indirect expenses. For example, if safety inspections are frequent on high-rise projects, those projects bear higher compliance costs than smaller residential builds. Improper allocation or lack of budgeting for indirect costs can lead to underpricing bids, resulting in financial strain, overpricing and loss of competitive advantage.

Standard Costing in Construction

It’s a key component in determining profitability and helps businesses accurately price their products. Understanding direct materials used also aids in inventory management and cost control. Accurate cost accounting is a fundamental requirement for profitability analysis cost of direct materials used within manufacturing organizations.

This approach is especially useful in design-build projects, where staying competitive requires balancing affordability, performance and stakeholder expectations from the outset. Target costing is a proactive cost management method that begins with a competitive market price and desired profit margin. Design, production and operational processes are then engineered to meet that cost constraint. Target costing emphasizes early planning and collaboration across departments to achieve cost objectives without compromising quality. It is often used during product development to align profitability goals with customer expectations and market conditions. The quantity of direct materials needed to complete a unit of product is determined by the “bill of materials”.

Instead of continuously updating inventory records, the periodic system relies on a manual count conducted at the end of an accounting period—monthly, quarterly, or annually. Material Requirements Planning (MRP) systems are powerful tools that help manufacturers plan and manage their direct material needs. MRP systems use demand forecasts and BOM information to calculate the quantity of each material required and the timing of its procurement. These are essential to the final product and their cost can be directly attributed to each unit produced.