Value Added Essay Example | Topics and Well Written Essays - 1500 words - 3

Value Added - Essay ExampleThe unit winnings is arrived at by calculating the discrimination between the production cost and the sale price. In order to determine the wide judge added is obtained by adding all the prize added signifiers of all the units. Essentially, the difference between revenue and outside purchases is equivalent to derive value added. In ground of analysis, the figure obtained of value added offers a range of interpretations. For instance, integrated companies usually regard value added as a higher portion of revenue whereas companies that are less integrated consider it as a lower portion of revenue. Another method of approximating total value added is by combining total labor expense, operating(a) profit, and depreciation expense in that order (Mowen, Hansen, & Heitger, 2012). According to standard procedure, the operating profit must come before depreciation expense. Labor expense includes such items as benefits, wages, and salaries. The figure of tota l labor expense is usually considered as a return to labor while the value of operating profit is generally considered as a return to capital. Capital comprises of items such as land, properties, and capital goods. Normally, it is considered fundamental to follow the standard procedure when arriving at the different figures. Factors of production are usually considered in terms of value added when determining the figure of value added in macroeconomic calculations. Calculating value added in case accounts usually involves capital and labor (Mowen, Hansen, & Heitger, 2012). Alternative definitions usually consider value added as the extra features, which blossom over standard expectations of a given product or a service. Such items do not involve the cost of the product. According to some theoretical approaches, value added is considered as the difference in the prices incurred by a company over a product and the price paid by a node for the same customer. As such, arriving at th e figure of value added is through the determination of the difference in the prices. The figure is obtained by subtracting the companys cost from the customers cost and then adding the figure of work to the results. Theoretically, value added could be understood in terms of the different enhancements that a business puts on a particular product with the objective of increasing the value of the product (Mowen, Hansen, & Heitger, 2012). In this manner, value added is considered as a determination of the different qualities that are created on a given product or service. Value added gouge increase the price of a give product or its value. Generally, value added is considered as one of the ship canal in which a firm enhances the competitive advantage of its products or services. Other perspectives on value added hunt it as an increase in the value of goods or services as they transit from one detail of production to another.