CHAPTER 3 ACTIVITY COST BEHAVIOR LEARNING OBJECTIVES AFTER STUDYING THIS CHAPTER‚ YOU SHOULD BE ABLE TO: 1. Define and describe fixed‚ variable‚ and mixed costs. 2. Explain the use of the resources and activities and their relationship to cost behavior. 3. Separate mixed costs into their fixed and variable components using the high-low method‚ the scatterplot method‚ and the method of least squares. 4. Evaluate the reliability of the cost formula. 5. Explain how multiple regression
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Background Odysseus is a medium sized firm‚ relatively new to international business in terms of how to operate outside of its local market where it has been successful by being able to build a niche with its coupling and clutch products. Key Facts: Product • 8 products with 600 sizes and types – small batches of orders (not mass production) • Patents across the globe Sales • Odysseus Flexible coupling product - 33% of sales revenue‚ total from $64M to $169M in 2007 • Largest customer
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Table of Contents Introduction 2 Why Crust is in business? 3 Creating Value 4 Demand for Crust Pizzas 6 Factors affecting Quantity Demand 6 Short term trends affecting demand 10 Long term trends affecting demand 10 Price Elasticity 12 Factors affecting Elasticity of demand 13 Market Structure 14 Strong and high Rivalry in business 15 Strategies to seek competitive advantage in the market 16 Conclusion 18 Bibliography 19 Crust Gourmet Pizza Bar‚ Canning vale Introduction Since
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Overview Welcome to the study of cost accounting. This introductory chapter explains the intertwining roles of managers and management accountants in choosing an organization’s strategy‚ and in planning and controlling its operations. Unlike the remainder of the textbook‚ this chapter has no “number crunching.” Its main purpose is to emphasize the management accountant’s role in providing information for managers. Review Points organization. Cost accounting provides information
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marks) The law firm of Smith‚ Jones‚ and Greene provides accounting service for some of its clients. The person who handles this service and her secretary cost the law firm an average of $80‚000 per year in salary and benefits. Furthermore‚ the law firm incurs an additional charge of $50 per client for computer time‚ postage‚ and supplies. Clients are charged $300 a year for these accounting services. a) Determine the cost‚ revenue‚ and profit functions for the law firm in terms of the number
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than the cost of capital. The cost of capital is the rate of return that capital could be expected to earn in an alternative investment of equivalent risk. If a project is of similar risk to a company’s average business activities it is reasonable to use the company’s average cost of capital as a basis for the evaluation. A company’s securities typically include both debt and equity‚ one must therefore calculate both the cost of debt and the cost of equity to determine a company’s cost of capital
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Cost Scenario University of Phoenix ECO 561PR October 22‚ 2012 Professor Adelaida Torres Dilan Cost Scenario The San Juan Cell Phones Scenario Summary talk about this company that manufacture cell phones where Maria Perez‚ a business development specialist‚ secured an order of 100‚000 units with this major chain‚ which is an opportunity to the company to increase their production and their profit. Cell phones are very important to the community these days for business
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Cost Benefit Analysis A cost benefit analysis is done to determine how well‚ or how poorly‚ a planned action will turn out. Although a cost benefit analysis can be used for almost anything‚ it is most commonly done on financial questions. Since the cost benefit analysis relies on the addition of positive factors and the subtraction of negative ones to determine a net result‚ it is also known as running the numbers. A cost benefit analysis finds‚ quantifies‚ and adds all the positive factors. These
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relationships‚ costs and rewards play an influential role in our decision making process‚ where we determine whether we are going to continue engaging in a relationship or choose to terminate it‚ as explained in Doctor Lobel’s lecture on close relationships. This is a component of the social exchange theory that suggests humans are rational beings who evaluate each of their relationship’s worth based on an analysis of benefits and disadvantages. In the bigger picture‚ the theory of a cost-reward system
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COST CLASSIFICATION CONCEPT OF COST: DEFINITION: A SACRIFICE OR GIVING UP OF RESOURCES FOR A PARTICULAR PURPOSE FREQUENTLY MEASURED BY THE MONETARY UNITS (RUPEES‚ DOLLARS) THAT MUST BE PAID FOR GOODS AND SERVICES . ➢ EMPHASIS ON COST INFORMATION: MANAGEMENT ACCOUNTANTS PAY A LOT OF ATTENTION TO COSTS BECAUSE COST HAVE A VITAL ROLE TO PLAY IN PLANNING ‚ EVALUATING AND DECISION MAKING. FOR EXAMPLE IN PLANNING THE ROUTE AND FLIGHT SCHEDULES THE MANAGER OF AN AIR LINE MUST CONSIDER
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