total cost. It is the point of no profits no loss. A business is said to break-even when its total sales are equal to total costs. Decision making in break-even point It helps to take short term decision for company. The break-even point identifies the total amount of sales the business needs before profit can be earned. When analyzed closely‚ the break-even analysis also helps the business to identify excessive fixed costs. Since the break-even point is directly related to the fixed costs‚ reducing
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expectation. However‚ based on the numbers‚ the Prestige Data Services appears to be rather potential after just two years of performance. Its revenue hours sold to outside firms have being growing‚ and the majority of Prestige Data Services’ costs are fixed costs‚ e.g.‚ rent‚ custodial services‚ computer lease‚ maintenance‚ etc. In order to determine whether or not the subsidiary is indeed “too good to give up‚” two scenario were calculated as follows to demonstrate the financial impact to the
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best for an organization consist of cost-profit analysis for locations‚ the center of gravity model‚ the transportation model‚ and factor rating. This chapter discusses the decision to relocate a facility by considering costs and benefits. If you are planning on moving or acquiring a new facility‚ there are many factors to consider: the size‚ the geographic area‚ culture‚ transportation costs and others. After a location or locations have been chosen a cost-profit-volume analysis is done.
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is high -Lots of substitutes (McDonald’s‚ Tsui Wah) -Price range (substitutes are cheaper) 3. The bargaining power of suppliers is high - Switching cost is high - The suppliers are concentrated 4. The bargaining power of buyer is high - Lots of substitutes and suppliers - Switching cost is similar or low 5. Degree of rivalry is high - High fixed cost (rent) - Competitors are of the roughly size - Market is mature - Low level of differentiation Summary The catering industry is not attractive Appendix:
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1). ABC provides a more accurate view of product cost‚ but companies typically use it as a supplemental costing system. The allocation bases used in activity-based costing differ from those used in traditional costing. Activity-based costing determines every activity associated with producing an item and allocates a cost to the activity. The cost assigned to the activity is then assigned to products that require the activity for production. 2). The methods are the following: Account analysis-
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resulting goods or services are * produced according to specifications ( Quality ) * in the quantity and by the schedule demanded * out of minimum cost OBJECTIVES OF PRODUCTION MANAGEMENT * To produce right goods or services of / at right * QUALITY * QUANTITY * TIME * COST * Without compromising on * SAFETY * STATUTORY RULES & REGULATIONS * By effectively utilising the * The loop : MONITORING / FEEDBACK
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Ending finished goods inventory – 30% of the next quarter ’s expected sales units. 3rd quarter actual production – 7 250 units Three pounds of raw materials are required to make each unit of finished goods. Raw materials purchased are expected to cost $4 per pound. a) Prepare a production budget by quarters for the 6-months period ended June 30‚ 2011. b) Prepare a direct materials budget by quarters for the 6-months period ended June 30‚ 2011 Solution: a) The production budget shows
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this at a reasonable cost. The purpose of this paper is to describe Snap Fitness and identify cost-volume-profit analysis as well as break even analysis. Snap Fitness estimates each location will have $4‚000 expense for fixed operating expenses and $2000 to lease equipment. In order for an individual looking to own a franchise such as Snap Fitness‚ in order to make a profit the business may only need 300 members. The paper will provide an estimate of variable costs‚ monthly sales in dollars
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$78.498 for product C and $50 for product D. When it continues the same approach‚ product C’s Mark up level is 6.12% which is less that 25% mark up level policy so CCI will discontinue production of C and increase production of B. Total allocated cost is $75000 and total labor hour are 5000 so allocation rate per hour will be $15. CCI will charge $77 for product B‚ $63for product D. Product B’s Mark up level is -30% which is less that 25% mark up level policy so CCI will discontinue production of
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sales dollars from 2003 to 2006. The margin of safety has decreased as well. Every year they have to increase the number of sales tickets then the previous year to meet their breakeven point. After 2004 when expansion of the store begun‚ Hallstead’s fixed cost have grown each year. The decrease from 2004 to 2006 is far less substantial than from 2003 to 2004. This damage is cause by the stores expansion. It is renting a much larger space down the street from its previous location. This has incurred much
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