Examining cost categories can help firms find new ways to streamline their manufacturing operations and provide detailed information about their expected revenue. As an international fashion accessories manufacturer, Fossil Group, Inc. has a complex structure that incurs numerous costs throughout its operations. Conducting research on examples for each source of financial expenditures may reveal crucial yet obscure components. This case study will explore the cost categories of Fossil Group, Inc.
The first category of direct materials consists of raw resources necessary for product manufacturing, such as leather. An example of an indirect material for this business is a metallic pin used to hold parts of its products together. Direct labor that adds cost to Fossil Group’s accessories can be represented by assembly line workers of the company’s jewelry factories. Indirect labor costs are incurred by workers who do not directly participate in the production process. For example, with the rise of online marketing, Fossil Group hired a new Chief Digital Officer who oversees the growth of e-commerce sales for the firm. A significant manufacturing overhead for the company consists of royalty fees on fashion designs provided by outside sources. A critical period cost for Fossil Group, Inc. is its lease on the warehouse and distribution center in Dallas, Texas.
In conclusion, the cost categories of Fossil Group, Inc. present a clear picture of typical business expenditures and allow analysts to comprehend the formation of the price of its finalized products. Accounting is a critical aspect of manufacturing companies, as it helps with classifying input resources and efforts in detail. This case study plays an essential role in understanding modern standards for documentation and financial analysis.