Royersford Knitting Mills‚ Ltd.‚ sells a line of women’s knit underwear. The firm now sells about 20‚000 pairs a year at a average price of $10 each. Fixed cost amount to $60‚000‚ and total variable cost equal $120‚000. The production department has estimated that a 10 percent increase in output would not affect fixed cost but would reduce average variable cost by 40 cents. The marketing department advocates a price reduction of 5 percent to increase sales‚ total revenues‚ and profits. The arc elasticity
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19 RELEVANT COSTS FOR DECISION MAKING I. Questions 1. Quantitative factors are those which may more easily be reduced in terms of pesos such as projected costs of materials‚ labor and overhead. Qualitative factors are those whose measurement in pesos is difficult and imprecise; yet a qualitative factor may be easily given more weight than the measurable cost savings. It can be seen that the accountant’s role in making decisions deals with the quantitative factors. 2. Relevant costs are expected
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week in revenue (fig.3) was hurting profitability even further. The answer lies in the other half of operations‚ known as costs. Variable costs are expenses that are directly associated with the sale of a good. When variable costs are subtracted from sales what is left is known as the contribution margin which gives an idea of how profitable your sales are. CRU’s variable
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company should choose the one that will maximize future cash flow. Cash flows are cash transactions that either cause the company to spend or receive actual monetary units. The decision may change the level of operation‚ meaning it will affect both costs and revenues; therefore‚ the decision should maximize the net difference between the two. This will allow for the highest possible profit within the production capacity of the warehouse. The company cannot change what has happened in the past‚ therefore
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Supply‚ Inc. Question 1: Total fixed costs (TFC) = fixed costs per unit times normal volume =($660 + $770)*3‚000 = $4‚290‚000. Contribution margin per unit = unit price minus unit variable costs = $4‚350 - $2‚070 = $2‚280. $4‚290‚000 Break - even volume = ------------------ = 1‚882 units $2‚280 Break - even sales =1‚882 units x $4‚350 = $8‚186‚700 Question 2: Effects on monthly shares‚ costs and income. [pic] Recommendation:
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for example‚ reduced production‚ growth of fixed costs per unit‚ reducing the number of employees and increase of unemployment‚ decrease in exports and weakening domestic currency exchange rate and so on. It is really necessary to look at all the problems that exist in the process of doing business in crisis conditions. Some of these problems include reduced manufacturing activity‚ inability of collection of receivables‚ increase in energy costs‚ soaring energy prices‚ and the impossibility of product
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ACC/543 May 14‚ 2012 Write a paper of no more than 1‚050 words in which you discuss flexible budgets. Explain the relationship between fixed and variable costs used in a flexible budget. (SAID) Discuss the differences between static and flexible budgets and (Cynthia) how a flexible budget lends itself to a cost-volume-profit analysis. Intro and Conclusion/ Compile and Submit Format your paper consistent with APA guidelines Flexible Budgets Budgets
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mathematical model shows the relationship between quantifiable and non-quantifiable information. ANSWER: FALSE {moderate‚ THE QUANTITATIVE ANALYSIS APPROACH} 1.8 Decision variables may also be called parameters. ANSWER: FALSE {moderate‚ THE QUANTITATIVE ANALYSIS APPROACH} 1.9 Model variables can be controllable or uncontrollable. ANSWER: TRUE {moderate‚ THE QUANTITATIVE ANALYSIS APPROACH} 1.10 A series of steps or procedures that are repeated is known
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Chapter: 1 Facility Location Models 1.1 Introduction Facility Location is a geographic location of manufacturing/service facilities where transformation activities from inputs into the output are performed. Selecting a location of facilities is very crucial decision not only for manufacturing unit but also for service unit. Generally it is a strategic decision and involves lot of activities. It starts from identifying the suitable locations based on certain criteria and then evaluating all locations
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environment. * Managers need to develop understanding of direction and Industry structures to present the company opportunities and Threats.Contributors lead. Competitive advantage: grows out of company value is able to create Value more than cost‚ cost leadership also competitive advantage. Abilities you have resource and you able to do it. Four requirements:value‚ rare‚ hard to imitate‚ organizational structure Strategy on unique activities * Different set of activities to deliver a unique&
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