Amazon is an American technology company that deals with the sales of books, movies, electronics, and toys as middlemen or directly between the world's retailers and the company. It is one of the biggest companies in the information technology industry. It is widely known for being the largest online marketplace in the world. It distributes downloads and also has a publishing platform, has a studio for both television and film, and also produces electronic devices. The company allows businesses to access the extensive network of the world's best suppliers for simplified orders and reasonable discounts (D'Angelo, 2020) . Its users are provided with a solution to their purchasing demands by allowing them to assign the responsibility of purchasing to their agents.
The main admins manage the agents, payment methods, shipping addresses, and reports according to the business' needs. The company's product lines consist of baby products, electronics, beauty products, health care items, kitchen equipment, jewelry, and scientific supplies. Amazon has its service range in marketing and advertising, financial services, healthcare, manufacturing, media and entertainment, travel and hospitality, and telecom. The company is both a merchandise and service organization since it promotes the sales of goods by presentation in retail outlets. It is a system that supplies public needs to people worldwide.
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Methods of costing are the different specific processes or procedures applied in determining and presenting the costs of goods and services. It is a system of cost accounting and ascertaining. There are several methods, including contrast, process, batch, and job costing. The company uses the first-in-first-out (FIFO) process costing. It is an inventory method that dictates items to be sold in the order they are bought. This method is employed because the company sells products according to the order of purchases. It shows the company's actual flow of goods. The two primary costing methods are process costing and job costing.
Job costing
Job costing is a method that involves tracking costs and receipts for each item. This method analyzes each item in detail by breaking down the costs associated with materials and labor. It can be used by the company where the costs vary depending on the items. It can be helpful because it tracks down the costs in detail and also allows the company to evaluate the possibility of reducing expenses in the long term.
Process costing
It is a method employed when there is series production of similar goods, and the costs of each specific unit of output cannot be differentiated from each other. The cost of each product is assumed to equal that of every other product. In this method, the costs are accrued over a specific time and outlined, then assigned to all the units produced during that time. The company can apply this method since it is easily adaptable to change when there is a need.
The company’s overhead costs range from the cost of sales, the fulfillment costs, research, and development expense, marketing expenses to general and administrative fees. The main costs of sales of Amazon are the consumer purchase price of the products that are sold on e-commerce, shipping costs, costs associated with deliveries and sortation, and costs of video and music content. Its fulfillment costs consist of staffing, retail stores, and costs involved in the processing of payments. These costs increased because of more costs associated with higher sales volume.
The research expenses include payroll expenses for the employees who conduct the projects and design and maintain the e-commerce platform. The company's servers and networking expenses contribute significantly to costs. If Amazon uses the ABC system, the cost drivers will be purchasing, administrative, and marketing expenses (Jenkins, 2020) . This would be the best method since it focuses more on costs, allowing for the best pricing method.
References
D'Angelo, M. (2020, April 28). Amazon Business: What It Is and How It Can Benefit You. BUSINESS NEWS DAILY .
Jenkins, A. (2020, October 28). ABC Analysis in Inventory Management: Benefits & Best Practices. ORACLE NETSUITE .
