Amazon Inc. and its Method of Calculating Cost

Managerial Accounting
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Date Managerial Accounting                                                Amazon Company and history Amazon, Inc is an online retailer operating globally and based in Seattle, Washington. The company deals with a wide array of merchandise from electronics, apparel, books, sports gear, games, software, home tools, baby toys, automotive products and other merchandise goods (Marketline, 2018). Amazon also provides services like advertising, order fulfillment, web services, cloud services, publishing and even credit cards. On the manufacturing side, the company produces and sells various electronic devices like e-readers, Fire TVs, Fire tablets and Echo.  The company sells its products through the portal , and international websites operating in the various regions (Marketline, 2018).  In the early phase of the company’s growth, Amazon and its subsidiaries were the biggest internet retailer of music, books, DVD, and video. Jeff Bezos, the current CEO started and incorporated Amazon in 1994 in Washington State and reincorporated it in 1996 in Delaware. In May 1997 the company undertook an initial public offering (IPO) and listed in NASDAQ as “AMZN” (Marketline, 2018). When Amazon was created, the company started to sell books to customers and delivered them all over the U.S.  While there were other previous booksellers offering services, Bezos also integrated elements of technology in the company to achieve through the support for online services. The company also made video and music sales in the late 90’s, and started expanding internationally. Nonetheless, the company made losses in the initial years of operation.  In 2007, Amazon introduced the Kindle e-readers targeting the e-book market and followed this with the Kindle Fire in 2011, a tablet computer at a time when e-books were growing in popularity (Marketline, 2018). The Amazon Web Services (AWS) was started in 2012 to expand beyond the retailing domain, and AWS is now Amazon’s cloud computing segment. Cost calculation method Managerial and cost accounting is a specialty in accounting where there is a re-recording summary, analysis, and interpretations of details on costs. The costing methods focus on products, and the costs are incurred for materials, labor, and other manufacturing costs. Ensuring the control and analysis of the costs of the production process is necessary to obtain the cost per unit and total costs. In the service sector, cost calculation is more complicated since there may be uncertainty on the quality and productivity of services. Nonetheless, even the service sector has adopted the product costing methods.  Amazon mostly uses the job-order costing approach, but also integrates activity-based costing in the calculation of costs. One of the features of e-commerce is an overreliance on technology, and there is a need to improve the supply chain. Amazon has sought to leverage electronic commerce to improve logistics, where ord...