Rent is a fixed, committed cost because it does not change due to differences in activity levels. In other words, rent is always a cost that will be due regardless of business activity level. It is generally considered a committed cost because once you sign the lease you are committed to paying rent for the life of the lease (Walther, 2012). Property taxes on land and building are fixed committed cost due to the fact that it does not change as per stipulated tax period. This tax does not affect…
Specification for Improvement Process: It allows potential users the ability to Make comparisions with alternative technologies. Half life concept focuses on reducing the defects from the process over time whereas Experience curve focuses on reducing cost of product over time. Experience Curve is much faster than Half line curve whereas both uses empirical data to check performances and…
According to Ronald Coase, founder of the Coase Theorem; the Coase Theorem is a theory in legal and economics that affirms that when there are complete competitive markets with no transaction costs, an efficient set of inputs and outputs to and from production-optimal distribution is selected regardless of how property rights are divided. In addition to that, according to Investopedia, “the Coase theorem asserts that when property rights are involved, parties naturally follow the most efficient…
historic painting or a valuable sport card. Marginal utility is additional satisfaction or gain someone gets form using or purchasing an additions unit of a…
rate is the total of indirect cost for a specific reporting period, divided by an allocation measure. Overhead rate is the percentage that we get after comparing to the total overhead expenses with the total expenses. Overhead rate has differentiate into 2 types which is blanket overhead rate (single overhead rate) and departmental overhead rate. Blanket overhead rate (single overhead rate) is the most simplistic tradisional costing system. It assign indirect cost object by using a single…
Negotiated transfer price refers to the price agreed by both divisional managers after the negotiation stage. Negotiated transfer price can be stated as the alternative solution between cost-based price and market price (Agarwal, 2015). In this case, the manager of Electrical Division will negotiate with the manager of Brake Division first before they determine the transfer price for A2 electrical fitting. In order to adopt this approach…
real-world instances in a reasonable amount of time 3. Personalizing prices and customizing the menu offered can lead to significant profit improvements. 1. The method could not solve the case where customers are assumed to be homogeneous and fixed costs are neglected. Redesigning product lines in a period of economic crisis: a hybrid simulated annealing algorithm with crossover (Tsafarakis, S. ,…
for higher prices, while buyers would offer less for certain goods or services. Through deals, they would come to a mutual agreement of price acceptance. Price is the only attribute in marketing mix that yields revenue, all other attributes produce costs (Kotler, 1997). Companies often use different pricing techniques to stimulate early purchase specially to accommodate differences in customers, products and locations. Marketers often refer to such pricing as discriminatory. Price…
Oligopoly What is oligopoly? Oligopoly refers to a situation with a few firms on the market and the central assumption that differs from the competitive model is that the firms understand that their actions affect the market price. There is an industry of different models, but most of these are in some way or another variations on the two really central models of oligopoly. These are: 1. The Cournot model, where the strategic variable is a quantity choice. 2. The Bertrand model, where the…
While developing the company Outdoor Rental, we saw the impact of the objective function and the constraining inequalities and how they limited and/or maximized profit. The objective function represented our production by telling our company how much we are going to make based on how many of each vehicle we purchased, and assuming that we are renting out our full capacity. Our purchasing was represented by the constraining inequalities because these inequalities determined how much money we…