What’s your real cost of capital? By James J. McNulty‚ Tony D. Yeh‚ William s. Schulze‚ and Michael H. Lubatkin Harvard Business Review‚ October 2002 Issue of the article: valuing investment projects Number of pages: 12 Daniel Miravet Campos Part 1. Executive summary This article is fundamentally based on the exposition of a new method to calculate the cost of capital for a company (MCPM)‚ to meet the inefficiencies of the current one (CAPM). In valuing any investment project or
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Cost classification is the process of grouping costs according to their common characteristics. A suitable classification of costs is of vital importance in order to identify the cost with cost centres or cost units. Cost may be classified accounting to their nature‚ i.e.‚ material‚ labor and expenses and a number of other characteristics. The same cost figures are classified according to different ways of costing depending upon the purpose to be achieved and requirements of particular
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WHAT ARE COSTS AND PROFITS? HUNGRY HELEN’S COOKIE FACTORY • Helen‚ the owner of the cookie factory‚ buys flour‚ sugar‚ flavorings‚ and other cookie ingredients. • She also buys the mixers and the ovens and hires workers to run the equipment. • She then sells the resulting cookies to consumers. 2 TOTAL REVENUE‚ TOTAL COST‚ AND PROFIT • The amount that Helen receives for the sale of its output (cookies) is its total revenue. • The amount that the firm pays to buy inputs (flour‚ sugar‚ workers
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Case Study Inventory The Cost of Inventory The general principle for cost inclusion into inventory for US GAAP and IFRS is similar but not exactly the same. First let us look at US GAAP. The basis of accounting for inventories is “cost‚” which is explained in ASC 330-10-30 paragraph 1 as “the sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location.” These costs are divided into two different categories‚ the
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analysis of the needs of the business and how the new equipment will help the business to function and the cost of the product will determine what the managers of the business decides. Marginal costs are change in total costs divided by change in output. Marginal revenue is the change in total revenue divided by change in output. Increase in fixed costs means that when the fixed costs cannot be changed it is the short run and when the fixed costs change it is the long run. The second questions
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Cost/Benefit Analysis Evaluating Quantitatively Whether to Follow a Course of Action You may have been intensely creative in generating solutions to a problem‚ and rigorous in your selection of the best one available. However‚ this solution may still not be worth implementing‚ as you may invest a lot of time and money in solving a problem that is not worthy of this effort. Cost Benefit Analysis or CBA is a relatively* simple and widely used technique for deciding whether to make a change. As its
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2-22 Variable costs and fixed costs. Consolidated Minerals (CM) owns the rights to extract minerals from beach sands on Fraser Island. CM has costs in three areas: a. Payment to a mining subcontractor who charges $80 per ton of beach sand mined and returned to the beach (after being processed on the mainland to extract three minerals: ilmenite‚ rutile‚ and zircon). b. Payment of a government mining and environmental tax of $50 per ton of beach sand mined. c. Payment to a barge operator. This
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Discussion Section Principles of Microeconomics Suggested Answers for Problem Set #1 Professor Scholz 1) Portray the following hypothetical data on a two-variable diagram: Enrollment Data: Nowhere U Academic Year 2000-01 2001-02 2002-03 2003-04 2004-05 Total Enrollment 3000 3100 3200 3300 3400 Enrollment in Economics Courses 300 325 350 375 400 Measure the slope of the resulting line‚ give an algebraic representation of the line‚ and explain what the slope means. Answer: Find the slope of
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Ravinder Gahlout(12P098) Srinivasan Ramesh(12P108) Vipul Garg(12P118) Submitted By: 2012 Table of Contents Introduction 3 ASIC Division - Cost Pools 4 Cost accounting system at ASIC: 5 Internal and external customer: 6 Situation at ASIC division (as on March 1996) 7 Western Digital Proposal 7 Capacity Analysis 8 Diferential Manufacturing Cost Budget 10 Introduction Sub Micron Devices started its operations in mind 1980s. The company was located in Phoenix‚ Arizona‚ and had 400 employees
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The cost flows for a process-costing system are totally different from those of a job order costing system. True False 3. Process systems are characterized by a larger number of homogeneous products passing through a series of processes. True False 4. The production report is the document that summarizes the manufacturing activity that takes place in a work-in-process department. True False 5. Many service organizations and just-in-time (JIT) manufacturing firms operate
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