Final answer:
Managers focus on the major cost objects in job costing by analyzing various costs involved in the production such as total, fixed, variable, marginal, and average costs to calculate average profit and determine potential profit, which helps in making strategic production and pricing decisions.
Step-by-step explanation:
The major cost objects that managers focus on in companies using job costing, such as an advertising campaign, include various elements. Managers must understand the relationship between production and costs and realize that every factor of production has a corresponding factor price. They analyze short-run costs by considering total cost, fixed cost, variable cost, marginal cost, and average cost. This involves understanding how costs like labor and physical capital contribute to the total cost of producing a firm's output, which varies depending on the industry and nature of the product or service.
Calculating the average profit requires a deep dive into cost patterns to determine potential profit margins. This involves evaluating the fixed costs, which remain constant regardless of output, and the variable costs, which fluctuate with production levels. The sum of these costs is the total cost. By understanding these costs, managers can make informed decisions about the profit-maximizing quantity to produce and the appropriate pricing strategies.
The cost analysis will ultimately contribute to decision-making concerning the pricing and production quantities, along with the required data analysis of sales and revenue against the market structure in which the firm operates.