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**Cost Maps for a Bakery Business** As an expert in International Accounting Standards (IFRS) and Australian Accounting Standards (AASB), I will create cost maps for a bakery business to help identify, categorize, and analyze the various costs involved in running the business. **Cost Categories** To create a comprehensive cost map, we will categorize costs into the following categories: 1. **Direct Costs** * **Raw Materials**: Flour, sugar, yeast, butter, eggs, and other ingredients used in baking * **Direct Labor**: Wages and salaries of bakers, decorators, and other production staff * **Packaging**: Costs of packaging materials, such as bags, boxes, and ribbons 2. **Indirect Costs** * **Overhead**: Rent, utilities, insurance, and other expenses related to the bakery premises * **Marketing and Advertising**: Costs of promoting the bakery, including social media, print ads, and events * **Distribution**: Costs of delivering products to customers, including fuel, maintenance, and vehicle depreciation 3. **Fixed Costs** * **Depreciation**: Depreciation of bakery equipment, vehicles, and other assets * **Rent**: Rent paid for the bakery premises * **Salaries and Wages**: Salaries and wages of management, administrative, and sales staff 4. **Variable Costs** * **Ingredient Variance**: Variance in the cost of raw materials due to changes in market prices * **Labor Variance**: Variance in labor costs due to changes in production volume or labor efficiency * **Packaging Variance**: Variance in packaging costs due to changes in packaging materials or suppliers **Cost Map** Here is a visual representation of the cost categories and their relationships: ``` +---------------+ | Direct Costs | +---------------+ | | v +---------------+ | Raw Materials | | (Flour, Sugar, etc.) | +---------------+ | | v +---------------+ | Direct Labor | | (Bakers, Decorators) | +---------------+ | | v +---------------+ | Packaging | | (Bags, Boxes, etc.) | +---------------+ +---------------+ | Indirect Costs | +---------------+ | | v +---------------+ | Overhead | | (Rent, Utilities, etc.) | +---------------+ | | v +---------------+ | Marketing and | | Advertising | +---------------+ | | v +---------------+ | Distribution | | (Fuel, Maintenance, etc.) | +---------------+ +---------------+ | Fixed Costs | +---------------+ | | v +---------------+ | Depreciation | | (Equipment, Vehicles, etc.) | +---------------+ | | v +---------------+ | Rent | | (Bakery Premises) | +---------------+ | | v +---------------+ | Salaries and | | Wages | | (Management, Admin, etc.) | +---------------+ +---------------+ | Variable Costs | +---------------+ | | v +---------------+ | Ingredient | | Variance | +---------------+ | | v +---------------+ | Labor Variance | +---------------+ | | v +---------------+ | Packaging | | Variance | +---------------+ ``` This cost map provides a clear visual representation of the various costs involved in running a bakery business, categorized into direct, indirect, fixed, and variable costs. By analyzing and understanding these costs, the bakery can identify areas for cost reduction, optimize production processes, and make informed decisions to improve profitability.
