machine hours and outgoing shipments‚ which are the activities’ three respective cost drivers‚ follow: Luxury Exclusive Setups 50 30 Machine hours 16‚000 22‚500 Outgoing shipments 100 75 The firm’s total overhead of $3‚080‚000 is subdivided as follows: manufacturing setups‚ $672‚000; machine processing‚ $1‚848‚000; and product shipping‚ $560‚000. REQUIRED: a) Calculate the unit manufacturing cost of Luxury and Exclusive electric sleeping bags by using the company’s current overhead
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COST ACCOUNTING M.ASAD ABBAS PAF KIET TABLE OF CONTENTS Executive Summary ......................................................................................................3 Introduction .....................................................................................................................4 Costing Strategy of Vesta Apparel.............................................................................5 Full Cost of the Primary
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an economic activity is desirable and should be undertaken as long as the marginal benefits exceed the ____. 6). The closest example of a risk-free security is 7). The primary difference(s) between the standard deviation and the coefficient of variation as measures of risk are: 8). The ____ is the ratio of ____ to the ____. 9). If demand were inelastic‚ then we should immediately: 10). Producers’ goods are: 11). Marginal revenue (MR) is ____ when total revenue is maximized. 12). Suppose we estimate
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different quality material from standard; Buying materials from a non‑usual source due to urgency; Utilising different labour from standard; Price changes due to economic conditions; scarcity of supplies; Choosing to incur additional discretionary fixed costs; More (or less) overtime hours used than budgeted. 2. Efficiency/usage/quantity variances: Standard is out of date‚ set without due care; Inefficient use of material/labour‚ deliberate or otherwise; Poor supervision/equipment/maintenance.Changes in
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single variable • Building a demand function and then a revenue function • Definitions e.g. Non-linear and dynamic functions; Decision-making under certainty‚ uncertainty and risk Practice Questions: x2 20 (a) Find an expression for the marginal revenue first using the limit definition and again using rules for differentiation. 1. Revenue function of producing and selling x units of a product is: R(x) = 20 x − R(x+h) = 20( x + h) − ( x + h) 2 ( x 2 + 2 xh + h 2 ) = 20 x + 20h
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the following: Profit maximizing output: *_MC=MR___Q=110________ Approximate mark up over cost ___*__There would be no mark up over cost___ In the long run‚ the price falls to $7.50. Why does this happen? *The business operates at the minimum average total cost (ATC)‚ which at $7.50 is equal to the marginal cost. Price‚ Cost What is the new profit maximizing output? _*_Minimum Average Total Cost (ATC)____Q=90_________________ $12.50 MC $10.00 ATC P=MR $7.50 $5.00 $2.50 $0.00 10 20
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Written by: Edmund Quek CHAPTER 6 THE THEORY OF COST LECTURE OUTLINE 1 2 2.1 2.2 2.3 2.4 2.5 2.6 3 3.1 3.2 3.3 INTRODUCTION SHORT-RUN THEORY OF COST Distinction between fixed cost and variable cost Total cost Marginal cost Average cost Relationship between marginal cost and average cost Optimum capacity LONG-RUN THEORY OF COST Cost minimisation in the long run Long-run average cost Productive efficiency References John Sloman‚ Economics William A. McEachern‚ Economics Richard G. Lipsey and
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charge the equilibrium market price and experience zero economic profit in the long run For firms with market power‚ strategies become more complex For a single-price producer‚ the optimal strategy is to increase production until marginal revenue is equal to marginal cost‚ which yields maximum profit Some firms with market power‚ however‚ are able to charge different prices to different customers Price discrimination refers to the practice of charging different prices to different customers for the
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STANDARD COSTS Setting a budget is never easy as it involves predicting the future and therefore uncertainty. The process is not about getting the budget absolutely right; it is about not getting it too wrong. This budget process may be applied to most revenue budgets that deal with income and costs‚ but there is also a requirement to produce a capital budget that covers the purchase‚ sale and replacement of fixed assets. There is normally an investment limit dictated by funding availability and
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employees (NSHR). For the success of the project PRINCE2 (PRINCE2[1]) Process Model has been adopted as shown below Figure2 and than translated in the project vertical chain shown in Figure3. Figure2 TCE literature Transaction cost economics (TCE) theory become popular during the 80s and 90s‚ however its first definition can be found in the famous Coase’s paper on “The Nature of the Firm”. Coase‚ in contraposition with economist’s idea since Adam Smith (1776) that market mechanism
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