Drawing from Personal Experience
The best way that an individual can gain analytical skills is through self-education and practice. There are numerous ways to teach these skills to another person. I have learned that creating a sets of steps allows me to utilize analysis of processes, and I practice in my classes by creating steps to help memorize paths to obtain answers. I am currently taking a class in managerial accounting, which involves different systems that are used to assign cost to products. These processes can be broken down into sets of steps that can by analyzing information about a company.
To be able to decide which system to use to assign cost to a company’s products, we must first know certain information about the company at hand. The type of business plays a large role in deciding which method should be used to assign cost. For example, a retail company who buys the products they sell at wholesale prices would simply use the wholesale price as their cost, adding a markup to arrive at their selling price. However, a company that manufactures it’s own products might use a job-order costing (JOC) system. JOC follows two steps, the first of which is to add direct costs as necessary as a product moves down an assembly line from raw materials, through work in process, to finished goods. The second step is to account for any indirect costs, such as factory employee wages or depreciation. These overhead costs are applied using predetermined rate, allocating overhead based on the number of direct labor hours. Analysis of these two steps have helped me understand why the process is used, as indirect costs are difficult to assign to individual units of production. JOC allows managers to appropriately assign the direct costs, as well as overhead based on the rate of production.
Creating an outline for processes has helped to sharpen my analytical skills. I am able to more wholly understand why certain processes are carried out in certain manners. Step-by-step plans highlight the details that take place within a process, and that is one of the things that is going to help strengthen your reasoning skills. I believe the most I create outlines, the more I will begin to understand business practices. In the grand scheme, anything can be looked at as a process — the key to success is just to take it one step at a time.
