I. Introduction Arrowmark Vending has the contract to supply pizza at football games for a university. The operations manager‚ Tom Kealey‚ faces the challenge of determining how many pizzas to make available at the games. We have been provided with demand distributions for pizza based on past experience and know that Tom will only supply plain cheese and pepperoni and cheese combo pizzas. We also know that there is a fixed cost of $1‚000 allocated equally between the two types of pizzas‚ and that
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Absorption Costing vs. Variable (Direct) Costing Absorption cost systems are widely used to prepare financial accounts. These systems are designed to absorb all production costs (variable or fixed) into costs of units produced. Absorption costs techniques allow manufacturing costs to be traced and allocated into product costs. There are different types of absorption costing systems: job order costing‚ process costing‚ and ABC costing. In job order costing‚ costs are assigned to products in batches
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businesses are transforming labor into a more flexible (and variable) cost. Among such companies are Hewlett-Packard‚ General Electric‚ DuPont‚ Sun Microsystems‚ and British Airways. Discuss whether direct labor is a fixed or a variable cost. What are the pros and cons of management treating direct labor as a variable cost? Are there ethical issues to be considered here? Direct labor can be classified as a fixed cost or a variable cost‚ depending on how flexible the employer needs to be/can
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balance sheet and income statement of Crocs. We find that the inventory turnover is a little low. That is a huge problem for Crocs. Because the low rate means there are too much surplus inventory in the company. While shoes are fashionable items and Crocs is now offering large amount of new styles to customers. Thus the surplus inventories do damage to the company. The chart below compares Crocs with related-field companies to see if the inventory turnover is really low. *source from www.sec.gov/
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consumption rates. These approaches may be limited in effectiveness because of the relatively low variable cost of medical care. Variable costs (for medication and supplies) are saved if a facility does not provide a service while fixed costs (for salaried labor‚ buildings‚ and equipment) are not saved over the short term when a health care facility reduces service. OBJECTIVE: To determine the relative variable and fixed costs of inpatient and outpatient care for a large urban public teaching hospital
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Is the company correct in its decision of not manufacturing standard model compressors on Sundays? Why? Show your calculations. Decision making should be based on change of RELEVANT items ONLY. The company’s calculation is WRONG‚ as it takes into concern of irrelevant fixed cost. By double-counting depreciation‚ other Mfg. overheads‚ SG&A in Sunday’s cost; it distorts the P&L sheet. To correctly show cost structure for decision making‚ there are two different approaches‚ yet each should reach
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also discuss a few shortcomings of the absorption approach and how it relates to management. And finally‚ we will see if Mr. Rosen’s decision would allow him to be considered for the CEO position. Absorption vs. Variable Costing (Contribution margin) “The main difference between variable costing and absorption costing is the accounting for fixed manufacturing costs.” (Horngren C. n.d.) This is never more evident than in this case study. Income statements prepared using these different methods
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financial support in hard time‚ which nobody is aware of when and where it occurs. The dinner program about which you are already informed has been organized by social club. You might wonder if all money isn’t consumed then what about the surplus amount? The surplus amount will be deposited in bank in the account of social club. The money will be used to help the needy. You can know about social club in the magazine: “Creation BESS” which will be published shortly before dashain and distributed to all
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Question NO 1:While most companies have difficulty producing sufficient quality candidates for top management succession‚ how has GE been able to create a surplus? What philosophy policies and practices have made it a “CEO factor6y” as Fortune and Economist call it? Really producing sufficient quality top executives is very difficult task for companies‚ but if we see case of General Electric‚ it was producing managers not only for own‚ GE was producing these executives in enough quantity to meet
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Consumer Surplus: The difference between the maximum price that consumers are willing to pay for a good and the market price that they actually pay for a good is referred to as the consumer surplus. The determination of consumer surplus is illustrated in Figure 1‚ which depicts the market demand curve for some good. | | | | The market price is $5‚ and the equilibrium quantity demanded is 5 units of the good. The market demand curve reveals that consumers are willing to pay at least
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