CHAPTER 2: RELEVANT REVENUES AND COSTS The primary goal of a firm is to maximize profits. This implies‚ of course‚ that each decision a manager makes is consistent with that goal. Although managers are expected to rely on internally-produced reports‚ such as balance sheets and income statements‚ to help them make decisions‚ most of the information that appears on these statements is period-based rather than decision-based. A balance sheet shows the sum total of a firm’s assets and liabilities
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COSTACCOUNTING TERMS 1. Define cost object and give three examples Cost object is defined as “Anything for which a separate measurement of cost is desired”. The term cost object and cost objective is synonymous. Cost object may refer to a process‚ a cost centre‚ and cost units. Cost unit is a quantitative unit of product or service in relation to which cost are ascertained. Cost centre is a location‚ function or item of equipment in
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fixed costs‚ semi-fixed costs‚ and variable costs. Fixed costs are those which do not change with the level of activity within the relevant range. These costs will incur even if no units are produced. For example rent expense‚ straight-line depreciation expense‚ etc. Fixed costs are those which do not change with the level of activity within the relevant range. These costs will incur even if no units are produced. For example rent expense‚ straight-line depreciation expense‚ etc. Mixed costs or semi-variable
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Which fluids have the highest density? The lowest? What does this tell us about which fluids will be on the top or bottom in the same container? Density is the comparison of the volume of an object to the matter. The fluid with the highest density is honey‚ while alcohol stands in the place of the lowest. The density of the fluids determines where each layer should be arranged in the glass container. Honey had a high density of 1.52g/mL‚ and with the high density comes high viscosity‚ which is why
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Overall Cost Leadership Porter defines “Overall Cost Leadership” as the strategy in which a company differentiates from others by having the lowest prices of the market. One example of this strategy correctly performed in Australia is Woolworths. According to Jhon Steen (2009)‚ in order to accomplish such prices‚ Woolworths focus on two main points: Logistics and Economics on Scale. They have learned to manage the supply chain in a very efficient way‚ investing in technology and reducing the
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leLECTURE 5a Cost Estimation/Segregation Techniques Cost estimation is a term used to describe the measurement of historical cost so as to be able to predict future costs for management decision making. That is‚ historical information is analyzed to provide estimates on which to base future operational To do cost estimation‚ it is important for the Accountants to be able to ascertain the activity level as well as cost drivers which exert main influence on the company activity. A cost driver is
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Historical Cost Mean? A measure of value used in accounting in which the price of an asset on the balance sheet is based on its nominal or original cost when it was acquired by the company. The historical-cost method is used for assets in the United States under generally accepted accounting principles (GAAP). Cost concepts and terms 1. Cost The amount of expenditure (actual or notional) incurred on or attributable to a specified article‚ product or activity is referred to as cost. 2
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____ 1. A cost is not relevant if it: A. B. C. D. E. Does not differ for each option available to the decision maker. Changes from period to period. Is a future cost. Is a mixed cost. Is a fixed cost. 2. Variable costs will generally be relevant for decision making because they: A. B. C. D. E. Differ between options. Are volume-based. Have not been committed and differ between options. Differ between options and have been committed. Measure opportunity cost. 3. Fixed costs will often be
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Chapter 4. Costs and Cost Minimization Problem Set 1. Suppose the production of airframes is characterized by a CES production function: Q = (L½ + K½)2. The marginal products for this production function are MPL = (L½ + K½)L−½ and MPK = (L½+ K½)K−½. Suppose that the price of labor is $10 per unit and the price of capital is $1 per unit. Find the cost-minimizing combination of labor and capital for an airframe manufacturer that wants to produce 121‚000 airframes. The tangency condition
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best in year 2001. AirAsia continues to spread out the way for low-cost aviation through the innovation‚ efficient and passionate approach to businesswith a route a network that extent through over 20 countries. There are some companieswhich link withAirAsia such as AirAsia X‚ Thai AirAsia‚ Philippines’ AirAsia Inc.‚ AirAsiaJapan and Indonesia. In addition‚ for the vision part in AirAsia‚ AirAsia aims to be the largest low cost airlinein Asia and serving the 3 billion people who are currently underserved
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