Essay on "Starbucks Coffee Company Process Costing Report"

Essay 4 pages (1164 words) Sources: 3

[EXCERPT] . . . .

Starbucks Costing

Process Costing at Starbucks

Process Costing

Process costing is a method of determining the cost to a company for each unit of output they produce within a certain timeframe, and determining how much cost is in each timeframe and how many units each timeframe produces (Hortens, n.d.). This makes sense for organizations that produce on a continual and constant basis where costs could be measured over time, rather than those that make customized or specialized products, or who produce a single unchanging product in specific batches as per consumer demand -- in other words, any organization or task where job order costing would be more effective (Hortens, n.d.). A standard manufacturing company would benefit from the use of process costing, for example, because the costs for each month of manufacturing will remain largely consistent, and trying to determine costs based on specific batches rather than simply by time would lead to over-complications and less meaningful information -- if the same number of materials are used and the same number of units are produced each time period, then there is no need to track individual batch costs and in fact tracking costs over time makes statistical information and projections much more easily accomplished (Hortens, n.d.)

Process costing takes all of the costs of operation, from the fixed costs of overhead to the variables costs of materials, labor, etc., and determines how much operations over each specific time period will cost -- in the case of the manufacturing firm, how much the costs are for each month (Hortens, n.d.). From there, with the average number of units produced each month known, it can be determined how much each individual unit of output -- each unite produced -- costs the company (Hortens, n.d.). Then, a determination of the appropriate pricing for each unit (a price that allows the company to make a profit) can be determined, and costs can be known and more easily projected for the future, as well.

Costing at Starbucks

A company the size of Starbucks, with operations taking place on such a broad scale, can make use of both job order costing and process costing at various points of its operations and value chain. As the world's largest specialty coffee and tea beverage retailer, Starbucks' operational needs run from the purchasing, shipping, and processing of coffee beans form around the globe to retail outlets with an even more diverse and far reaching spread, to the actual provision of beverages to consumers in relatively small retail locations (Starbucks, 2012). The scale and structure of these operations and the costs they incur for the company are quite different, and thus it makes sense of Starbucks to use both of the costing processes, one each for these two areas of operation.

Though of course there are fluctuations in the number of coffee beans shipped from point a (which could be any number of countries from which Starbucks procures it coffee beans) to point B (an even large number of distribution centers and then retail locations), over the long-term the process of coffee bean procurement can be seen as essentially constant and continual (Starbucks, 2012). For this reason, it would make sense to use the process costing method, with costs for this part of operations determined on a time scale rather than on a per-shipment basis. This will help Starbucks regulate its cost of procurement and make accurate long-term projections.

Making beverages for consumers also takes place on a continual basis, but the… READ MORE

How to Reference "Starbucks Coffee Company Process Costing Report" Essay in a Bibliography

Related Essays:

Starbucks the Company That I Am Writing Case Study

Starbucks

The company that I am writing about is Starbucks. Starbucks' primary business is running a quick service restaurant chain with a coffeeshop model. The company is the third-largest quick… read more

Case Study 4 pages (1244 words) Sources: 1 Topic: Business / Corporations / E-commerce

---

Starbucks Strategic Management Starbucks Has Emerged Term Paper

Starbucks Strategic Management

Starbucks has emerged as the premier specialty coffee brewer since its founding in Seattle in 1987. Since then, the chain has amassed a network of roughly fifteen… read more

Term Paper 7 pages (1876 words) Sources: 7 Topic: Business / Corporations / E-commerce

---

Starbucks Corporation Competing in a Global Market Term Paper

Starbuck's Case Study

Briefly describe the history and evolution of Starbucks.

Seattle entrepreneurs Jerry Baldwin, Zev Siegl, Gordon Bowker founded Starbucks in 1971, locating their coffee importing business in Seattle's… read more

Term Paper 14 pages (3967 words) Sources: 4 Style: APA Topic: Business / Corporations / E-commerce

---

Starbucks Management Analysis Company Overview Starbucks (NASDAQ Research Paper

Starbucks Management Analysis

Company Overview

Starbucks (NASDAQ: SBUX) is today the global leader in coffee retailing, supply chain and quick service restaurant (QSR) development for beverages and light foods. As… read more

Research Paper 12 pages (3274 words) Sources: 4 Topic: Business / Corporations / E-commerce

---

Starbucks Is Engaged Primarily in the Retail Research Paper

Starbucks is engaged primarily in the retail coffee shop industry. The company, based in Seattle, operates in dozens of countries around the world, but its primary market is the United… read more

Research Paper 10 pages (2886 words) Sources: 7 Topic: Business / Corporations / E-commerce

---

View 100+ more related papers  >>