Cost of Production in Australian Manufacturing: An Economic Analysis

This report provides an analysis of the cost of production within the Australian manufacturing sector, focusing on the application of economic concepts. The introduction highlights the importance of cost management for business growth and profitability. Task 1 examines the cost of production in the Australian manufacturing sector, covering various aspects like research, legislation, licenses, employment, finance, grants, workplace safety, insurance, and industrial training. Task 2 evaluates the cost of production using economic concepts such as scarcity, supply and demand, and cost-benefit analysis, differentiating between direct and indirect costs. The report emphasizes the need for efficient resource allocation and balancing supply and demand factors to achieve economic growth and productivity. The conclusion summarizes the importance of effective resource utilization and balancing economic factors for overall economic development. The report includes references to books, journals and online resources.

Economics for business

Table of Contents
INTRODUCTION...........................................................................................................................1
1. Cost of production under manufacturing sector in Australia:.................................................1
2. Evaluate cost of production under manufacturing sector by using economic concept:..........2

INTRODUCTION
Economics reflects any country's growth in terms of its Gross Domestic Product and this requires skilled
analysts in order to know about country's economy. Cost is the major tool for making any product or service. Each
firm is keen to reduce their cost of production in an effective manner so that they would able to make their product
cost at an optimal level. Under this project, the economies for business will be described. The costing structure in
this country is analysed in an effective manner under this report.
Task
1. Cost of production under manufacturing sector in Australia:
Cost of production is the main aspect for producing any product. This assist the firm to fix their selling
price after knowing the cost of production of the product (Newbold, Carlson and Thorne, 2012). Producers
are accountable for producing a different range of products covering like- food, textile, footwear, clothing and
leather, beverage and other tobacco product, chemical products, pulp and paper. Metals and plastics and other
kinds of products.
There are some topics which are covered under the manufacturing industry. These are: research, main legislation
and initiatives, licence and permits, employment, finance and tax, grants workplace health and safety, insurance,
intellectual property industry training, main government firms, industry groups and much more. Some of the m are
discussed in details:
Research: Research is a most important tool of planning for any business. This might uncover economic and
industry trends, frame or enhance business and assist the firm to keep pace with the industry.
Main legislation and initiatives: Legislation usually plays a broad part for running the business in a legal way.
Hence, this is important to well familiar with the laws which could apply to manufacturing industry (Pearson
and et. al., 2013).
Licences and permits: Kinds of licences and permits needs are totally based on the nature of manufacturing
business and production of goods. There are few businesses which needs licence requirement for production of the
goods. These are: therapeutic goods, alcohol, fuel related products, tobacco products, etc.
Employment: If any company is planning to recruit staff, then there is a need to comply with Australia's national
workplace laws and specific needs in manufacturing industry (Anderson and et. al., 2014).
Finance and taxes: There are various number of finance and tax tools which are connected to the manufacturing
industry that covers Goods and Service Tax, importing goods.
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Grants: Grants and assistance are provided to improve firm productivity and innovation or assist business
affected by job losses. It is an extra to a variety of grants and assistance open to from entire industries. Grant
schemes vary over the time, but usually includes:
 Enhancing manufacturing technology and invention
 Helping with exporting
 Enhancing energy efficiency
 Acquiring particular firm advice
Workplace health and safety: Manufacturing businesses have common health and safety obligation to design
safely, test their goods and stop risks to workers at the time of entire production process.
Insurance: There are number of insurance available in the manufacturing industry such as workers compensation
and so on. However, insurances vary from business to business (Bachmann, Elstner and Sims, 2013).
Industrial training: This is one of the most important part for business survival. Advance manufacturing
methods, safety process or marketing strategies could assist to improve competitiveness and emerge business.
2. Evaluate cost of production under manufacturing sector by using economic concept:
Every company is striving hard to limit the cost of the product. This can be possible by way of avoiding
the wastage cost and emphasise on optimal use of cost. This can be possible by recruiting the cost accountant who
can analyse the cost and use resources in an optimum manner. The production department is keen to lowering the
cost of the product. This department is the major concern of these issues which could related to the firm. Basically,
the cost is bifurcated into two major parts: direct cost and indirect cost.
Direct costs are those which are related to the cost of production for producing any units. As, these covers: direct
material, direct labour and direct overheads.
Indirect costs are those which are not directly related to cost of production of any product. But they assist in
making these product. These covers: Factory overheads, selling and administration overheads (Boons and et.
al., 2013).
The issues in terms of economic concept:
There are main issues which are used to know while using the economic concept.
Scarcity: This is the most common concept in economics. In this planet, there are limited resources to meet
unlimited wants. Therefore, there is always an option which are to be made.
Supply and demand: The supply and demand is the major concept that is driven by the supply and demand. For
example, if people wants to take more beer, then the demand of the beer will be high and the price of the product
will also goes up. But if the demand of any product goes down, then the price of the product will goes down.
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Cost and Benefits: The concept of costs and benefits comprises a large domain of economics which are required
to do rational expectations and rational choices. In any situation, people are likely to frame the choice which has so
most benefits to them.
Putting it all together: There is wide scarcity of resources in the overall economy thus the resource should be
used in effective ways in order to balance all the factors which are linked with the development of overall
economic procedures (Gilchrist and Zakrajšek, 2012). Various choices had to be developed in relation to
benefits and cost factors which are related with effective use of resources. As there is changes in the economy thus
there should be balance between demand and supply factor so that economy can achieve overall growth and
productivity in long run.
CONCLUSION
From the above report it can be concluded that the resources of the economy should be used in effective
ways so that there is balance between all the factors which are evolving in the overall economy. The demands and
the supply factors had to be balance in order to achieve equilibrium stage. There is unemployment in the economy
this can be eliminated if effective use of resources are implemented in order to increase overall growth and
productivity.
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REFERENCES
Books and Journals:
Newbold, P., Carlson, W. and Thorne, B., 2012. Statistics for business and economics.
Pearson. Blau, F.D., Ferber, M.A. and Winkler, A.E., 2013. The economics of women, men and
work. Pearson Higher Ed.
Anderson and et. al., 2014. Statistics for business & economics, revised. Cengage Learning.
Bachmann, R., Elstner, S. and Sims, E.R., 2013. Uncertainty and economic activity: Evidence
from business survey data. American Economic Journal: Macroeconomics. 5(2).
pp.217-249.
Boons, F., Montalvo, C., Quist, J. and Wagner, M., 2013. Sustainable innovation, business
models and economic performance: an overview. Journal of Cleaner Production. 45.
pp.1-8.
Gilchrist, S. and Zakrajšek, E., 2012. Credit spreads and business cycle fluctuations. The
American Economic Review. 102(4). pp.1692-1720.
Online
Nature and Scope of Economics. 2017. [Online]. Available through:<http://www.tutorsonnet.com/nature-and-
scope-of-economics-homework-help.php>. [Accessed on 21st August 2017].
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