product to the setting of its price. Product-design issues and pricing considerations are interrelated‚ so they must be examined simultaneously. For example‚ for a higher quality product; you need higher quality materials which will affect a higher cost and needs more time and this will lead to a higher pricing on a product. Also‚ a manager must not price its product out of the market price range. Actions of Competitors: companies must keep an eye on its competitors. If its competitor reduces its
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HOW COSTS BEHAVE TRUE/FALSE 1. One assumption frequently made in cost behavior estimation is that changes in total costs can be explained by changes in the level of a single activity. Answer: True Difficulty: 1 Objective: 1 2. All cost functions are linear. Answer: False Difficulty: 1 Objective: 1 All cost functions are not linear‚ but for cost-behavior estimation we assume some are within a relevant range. . 3. y = a + bX represents the general form of the linear cost function
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surprised Michaels but also made her uneasy about the accuracy of calculations‚ as the ultimate loss of $7‚200 was unexpected given the projected profit of $91‚200 as per the budget. The budget for 2004 was based on estimated sales and production costs. As sales were not subject to seasonal fluctuations‚ the monthly budget was merely one-twelfth of the annual budget. No adjustments were made to the budget for the month of May after the contract was lost in April. Financial Analysis: Budget versus
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be made if a cost-volume-profit analysis is performed to measure how cost behaviors change with activity. For Salem Data Services‚ variable costs would be the costs that change with Revenue Hours‚ the key activity‚ such as power‚ operations hourly personnel‚ and corporate services. Sales promotion amounts do vary but is considered a discretionary fixed cost because it involves advertising and other promotional activities that can be easily changed in the short run. Costs per revenue hour
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taken the shared car concept and proved it could work in Boston. Her September operations show that if 40% utilization could be achieved (currently 30%‚ Exhibit A)‚ revenue ($18956*1.3=$25‚211) will cover variable cost ($9058)‚ local fixed costs ($14000) as well as some of the corporate costs as well. Chase additionally has managed her cash flow well‚ revisited finances to reflect realistic figures‚ understood the positive network effects of the venture‚ was flexible to adjust pricing models and finally
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supermarkets that need to be refrigerated. Alternatives Alternative 1 - The first alternative is to spend $500‚000 on an ad campaign. This alternative will also add in the $50‚000 for slotting fees for the supermarkets. This gives us a total fixed costs of $550‚000. This alternative will use the higher $50‚000 slotting fee as opposed to the $30‚000 slotting fee because we are assuming that the additional $20‚000 will help convince the supermarkets to give our product premier space in their freezer
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slurry. The quality of release-ease‚ amount of raw materials and the characteristics of the process is unaffected by source of energy used in plant. Steam‚ natural gas‚ oil and electricity were combined differently at different plants to minimize local cost. 2. Cleaning: In this step‚ the cleaning or isolation of the release-ease particles from the slurry was performed by moving it on a conveyor belt. 3. Drying: In this step‚ the release particles were dried. 4. Packaging: The packaging of
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Foods allocates some period costs (including sales and marketing costs‚ media and sales promotion costs‚ and freight out cost) based on weight of product sold. SMU2 thus seems less profitable because the main product of SMU2 is Product MP and its special orders‚ which are relatively dense and bulky. This allocation method makes SMU2 seems less profitable. Fine Foods evaluate the performance of SMUs based on operating profit‚ which includes several uncontrollable cost elements in the calculation
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Flashcard Machine - create‚ study and share online flash cards Term A budget can be a means of communicating a company ’s objectives to external parties. (T/F) | | Definition False | | | Term A benefit of budgeting is that it provides objectives for evaluating performance (T/F) | | Definition True | | | Term A budget can be used as a basis for evaluating performance (T/F) | | Definition True | | | Term A well-developed budget can operate and enforce itself. (T/F) |
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Dynamic Business Environment 1-1 Chapter 2 Basic Cost Management Concepts 2-1 Chapter 3 Product Costing and Cost Accumulation in a Batch Production Environment 3-1 Chapter 4 Process Costing and Hybrid Product-Costing Systems 4-1 Chapter 5 Activity-Based Costing and Management 5-1 Chapter 6 Activity Analysis‚ Cost Behavior‚ and Cost Estimation 6-1 Chapter 7 Cost-Volume-Profit Analysis 7-1 Chapter 8 Variable Costing and the Costs of Quality and Sustainability 8-1 Chapter 9 Financial
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