increasing additional output per additional unit of variable input‚ but eventually decreasing additional output per additional unit of variable input after the optimal capacity of the fixed input has been exceeded. Let’s look at a simple short-run production process where there is a fixed input‚ a stapler‚ and some variable input‚ labor. This process consists of two steps‚ namely‚ folding a document twice and stapling it. The stapled document is the output. When there is just one worker doing the job
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on the information presented in the scenario/case study discuss Albatross Anchor’s competitiveness in relation to (please address all items in the below list and provide support for your conclusions): 1. Cost a) Cost of Production: To understand the cost of production we must first understand what two costs are valuable to company along what can make a company gain or lose profit. First we look at Variable cost which “depends on what materials and labor are needed for the company” and in this
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MERTON TRUCK COMPANY 1) No. of Model 101= x‚ no. of model 102=y.Unit contribution/model= S.P – (Variable costs + Fixed cost).For Model 101‚ variable cost=36000 /unit‚For Model 102‚ variable cost=33000/unit.Fixed cost for both the model= 8600000 Therefore‚ total contribution z=39000x+38000y-36000x-33000y-8600000Z=3000x+5000y-8600000 The Constraints are:Engine assembly: x + 2y <= 4000Metal stamping: 2x + 2y <=6000Model 101 assembly: 2x <=5000Model 102 assembly: 3y <= 4500x‚y>=0.Solving
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Case Study Report on Whiz Calculator Company Introduction Whiz Calculator Company is currently considering the new method of planning and controlling selling cost. The old method was unsatisfactory in the new president ’s point of view. The old way of planning and controlling the selling expenses was as follows: 1. Selling expenses were budgeted on a "fixed" or "appropriation" basis. Each October‚ the accounting department sent to the branch managers and to other managers who were in charge of
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CHAPTER 6 COST BEHAVIOR TYPES OF COST BEHAVIOR PATTERNS 1. Variable Cost 2. Fixed Cost 3. Mixed / Semi-variable Cost Cost Structure – the relative proportion of fixed‚ variable‚ and mixed costs found within an organization or firm. 1. Variable Cost - its total dollar amount varies in direct proportion to changes in the activity level. Example: Number of Trucks Radiator Cost per Total Radiator
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are a 12% increase in the production of dresses‚ which will cause a 12% increase in variable costs. A 10% increase in clothes will cause an 10% increase in variable costs. A 30% increase in labor hours will cause a 30% increase in variable costs. Three examples of a fixed cost are a 12% increase in airline costs but the fixed costs remain unchanged. A 50% increase in marketing advertisements and the fixed costs remain unchanged. Lastly‚ a 60% increase in units of production but the fixed costs remain
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Component Technologies‚ Inc 1) Prepare the manufacturing staff’s calculations for the three alternatives (please refer to the attachments): a) In the first set of calculations‚ the staff used a discount rate of 20%‚ a five-year time horizon‚ and ignored taxes and terminal value. What is the relative attractiveness of these three alternatives? During the period of 5 years (from 1994 to 1998)‚ if the discount rate is 20%‚ Waltham plant is the only one that has a positive amount in NPV. The
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of fixed costs include rent or mortgage payments‚ interest on loans‚ executive and office salaries‚ and general office expenses. Variable costs are those costs or expenses that vary or change directly with output. These costs are associated with production and/or selling and are frequently identified as "costs of goods sold." As compared with the fixed costs‚ which continue whether the firm is doing business or not‚ variable costs do not exist if the firm is not doing business. Thus‚ by definition
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plants any plants‚ its weekly costs will change‚ as fixed costs are lower for a nonoperating plant. Table 1 shows production costs at each plant‚ both variable at regular time and overtime‚ and fixed when operating and shut down. Table 2 shows distribution costs from each plant to each warehouse (distribution center). TABLE 1 Andrew-Carter‚ Inc.‚ Variable Costs and Fixed Production Costs per Week TABLE 2 Andrew–Carter‚ Inc.‚ Distribution Costs per Unit Questions to answer Evaluate
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to many factors both production and marketing related. From a production perspective‚ there were 3 major areas of concern all of which were unfavorable with respect to Variance Analysis (As shown in Exhibit 3): 1. Direct Labor 2. Variable Overhead 3. Fixed Cost The $139‚200 unfavorable Direct Labor Variance can be attributed to many reasons however it is most likely linked to the management team. Due to the early retirement of the sales manager‚ the production manager being hospitalized
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