value added unit 8 pev

v11cyw

Hi just trying to get some last minute reision in for exam in the morning, could anyone explain how to rememeber and how to apply value added.

nabutt

difference between cost of materials and labor to produce a product, and the sale price of a product is the value added

i just learn that n i came accross one question in which we just hav to calculate that value added n i just take out cost of prod from sales price ...... hope it help

v11cyw

so just to clarify value added is the profit left once you have a selling price less any cost that go into the production of the product like material labour heat & light e.c.t ?

Khurram Taj

Value Added

it is a method of measuring productivity to calculate the Value Added Per Employee. Let me explain to you in bit detail, the Value added is a difference between the value of the inputs in the business and the value of outputs.

The inputs of the business are the cost of materials and bought in services and the value of outputs is the sales revenue of the business. So value added calculated by:-

Value added = Sales revenue - Cost of sales and bought in services

Value added per employee = Sales revenue - Cost of sales and bought in services/ Number of employes.

I hope it will be helpful for you.

Best regards

Khurram Taj

v11cyw

Hi thank you for your reply could you give me any examples of bought n services.

exam panic

I thought value added is b4 fixed overhead, not gross profit

Khurram Taj

yes offcourse,

Services in order to bring a product to the value of its selling price,
Best regards

Khurram Taj

v11cyw

thank you khurram, much more understanding now.