Fixed cost

Poor customer service or brand image) Opportunity – presence of a situation where performance can be improved by undertaking new initiatives (Eg. Arnotts – demand for healthier food) Symptom – mere evidence that a problem exists (Eg. Loss of market share, drop in sales) Role of the researcher – once a problem or opportunity has been senses, the researcher comes into the picture First responsibility is to work with the managers to clearly articulate the management problem whose symptoms have…

Accounting profit calculates total revenue subtracting explicit costs. Explicit costs are the physical costs of production such as capital spent in production. Economic profit also calculates total revenue, but also subtracts implicit costs, which are the opportunity costs of production. One uses Economic profit to calculate the total value of a company, because it includes buildings, equipment, and other things not included in explicit costs. 7) Describe and explain the Production Function. …

Strategic benefits of CPA 1. Cost and revenue management Without the allocation of marketing, sales, and service costs to individual customers, there is no way of knowing whether the investments made in business development are justified. CPA enables account managers to bring marketing expenditures per customer in line with current revenues per customer and with future revenue potential. Revenues are managed through pricing. There are three important issues related to pricing: discounts, the…

Costing and pricing methods reviewed Cost-orientated pricing Many small businesses determine their basic price based on their costs. The idea is to set your price high enough to cover your costs and still make a profit (Van der Walt et al., 1995). Cost-plus pricing Many small businesses use this method. Here you determine the cost of the product and then add a set percentage to the cost for the profit margin. This method is popular and easy to use. Assume you are the manufacturer of steel…

The best course of action for the firm would be to sell the production facility at $2 million, because in order to to continue doing business in the next two years, the costs to operate will be greater than the potential profits expected by the company. By the end of four years, company will have already spent $16.5M, vs. the total anticipated return of $14M. With this in mind, the company will have lost $2.5M by the end of four years. In addition, the plant will have no resale value by the end…

down the variable and fixed cost structure, and understanding the special order, I believe that going to a fixed cost structure would be in the best interest of the company. Outlined are the risk associated with this change, the probability of reaching the projected net income, and the results of the special order. Comparison of Cost Structure As suggested, Wall Street Burger Shoppe used the fixed cost structure in the months June to October. I found that while using the fixed cost structure…

Cost-volume-profit (CVP) analysis is a strategic decision made by the management of the company. The cost-volume-profit analysis is very helpful for the managers to make product decisions by estimating the expected profitability of the choices because different choices will affect the selling price, variable costs per unit, fixed costs, units sold and operating income. According to Alvis (2016), CVP analysis expands the use of information provided by breakeven analysis. Therefore, this paper is…

parallel way since it's twofold the first wage and you can now bear the cost of twice as a great part of the great. 2. Describe the utility maximizing condition in words. To maximize satisfaction, the consumer should allocate their money income so that the last dollar spent on each product yields the same amount of extra marginal utility. When making a purchase decision, a consumer tries to get the greatest…

business will be producing maple baseball bats. After some research, I found that these kind of baseball bats can be produced for about $60 per unit. Fixed monthly cost for my company are $2375, which includes rent and utilities. With that information, a cost function of C(x)=60x+2375, where x is the quantity of units, can be used to determine the monthly cost of running the business. The Price-Demand equation for my hypothetical company is x=f(x)=8500-25p. Using this equation, I can find the…

3. STATIC BUDGETS A static budget contains elements where expenditures remain unchanged with variations to sales levels. Overhead costs represent one type of static budget, but these budgets aren't confined to traditional overhead expenses. Some departments may have a fixed amount of money set in budget to spend, and it is up to managers to make sure such amounts are spent without going over-budget. This condition occurs routinely in public and nonprofit sectors, where organizations or…