Kyle Birrell MBA 6120 Destin Brass Products Co. 1. ABC Costing | | Costs | Valves | Pumps | Flow Controllers | Cost Driver | Units | | 7500 | 12500 | 4000 | | Material Cost | | 16.00 | 20.00 | 22.00 | Material | Direct Labor | | 4.00 | 8.00 | 6.40 | Labor | Set-up Labor | | 0.02 | 0.05 | 0.48 | Labor | Receiving | 20000 | 0.08 | 0.30 | 3.90 | ABC | Handling | 200000 | 0.80 | 3.04 | 39.00 | ABC | Machine Depreciation | 270000 | 12.60 | 12.53 | 4.73 | Machine | Engineering | 100000 | 2.67 | 2.40 | 12.50 | ABC | Packing/Shipping | 60000 | 0.24 | 1.10 | 10.95 | ABC | Maintenance | 30000 | 1.40 | 1.39 | 0.53 | ABC | | | | | | | | Unit Cost | 37.81 | 48.82 | 100.49 | | 2. Standard Unit Cost Traditional | $ 37.56 | $ 63.12 | $ 56.50 | Standard Unit Cost Trad Rev | $ 49.00 | $ 58.95 | $ 47.96 | Standard Unit Cost ABC | $ 37.81 | $ 48.82 | $ 100.49 | | | | | There are noticeable differences in each of the costing methods. Each of the traditional methods use a single cost driver to estimate and allocate the overhead to each product. The difference between the first and the revised traditional estimates comes from using a different cost driver for each method.
Question 3 Which price increase is needed to offset the profit impact of the increased raw material costs (assuming that volumes are constant)? Which price decrease will result from instituting price-flex (assume a best case and a worst case)? Answer 3 The selling price would increase by offsetting the raw material cost which is given in the “Appendix A” which shows that increase in the price by 6.5% would result in the positive side and a reductioncompany from reduction in the price. Understanding all this is done with respect to the case material. The volume is a constant which is assumed at 80% in the analysis of the price.
The schedule of cost of goods sold shows the cost of goods manufactured will positively affect the number cost of goods sold, reducing $40,000 labor cost eventually save $40,000 of cost of goods sold. In the income statement, we found net income is significantly affected by product sales and cost. When sales and other expenses stay the same as and cost of goods sold are reduced $40,000, net income increases from $30,750 to $55,490. In addition, we can also estimate the future expected net income for a company by calculating current actual income and probability of sales revenue increase or decrease percentage. Higher probability with a positive percentage of sales revenue will result a higher expected
Mechanically how is your strategy different than your best strategies in 4a Strategy 6 : Inventory Management in Price Cutoffs = 10 could be improved with a small tweak on the preloaded strategy. The cutoff could be reduced from 10 to say 5-6. Why does the change in 5a work better? With the tweaked strategy 6, the reduced cut-off will ensure that the inventory be cut down quickly when the overnight volatility and order processing costs are relatively high. The bid-ask spread is also a cost to the dealer.
When demand is inelastic, a rise in price leads to a rise in total revenue and when demand is elastic total revenue rises when price falls. Total revenue= price x quantity demanded. As inferred from the text, the merchants have suggested that a drop in price for Bordeaux wine could increase sales. In order to retain current demand levels they must decrease their pricing strategy to reflect the ‘financial thunderstorms’ of the current economic climate. When the demand for a product does not increase or decrease correspondingly with the fall or rise in its price, the notion of inelastic demand is supported, which is the case for Bordeaux.
LP will earn extra profit of $28,500 on this order and production done on low peak seasonal. 2. What assumptions did you make in calculating the incremental cost in Question 1? What additional information would be helpful in making these calculations? Assumptions did we make in this calculating the incremental cost in question 1 is plant overhead, administrative and selling expenses are fixed
City University London Intermediate Macroeconomics 1 Coursework Joe Pearlman Question 1: Consider a representative agent with a utility function: U (C, l) = C 1/2 + l1/2 that he or she maximises subject to a constraint: C = w (h − l) − T + π where w, h, l, C, T , and π are wages and hours of time available, leisure, consumption, taxes, and dividend income. The production function for this economy is linear so that in equilibrium w = z, and the Production Possibilities Frontier is C = z (h − l) − G . To make the calculations easier assume h=1, z = 1. a) Find the Marginal Rate of Substitution. (4 marks) b) Find the Marginal Rate of Transformation. (4 marks) c) Setting MRS=MRT, solve the resulting equation algebraically for l as a function of G. (6 marks) d) What happens to consumption, wages and output as G increases?
The basic answer is that share repurchases are great when the share price is undervalued, and not-so-great when the share price is overvalued. To put it into a more useful context, if you would otherwise reinvest your dividends or invest new capital into the company at current stock prices, then share repurchases are useful to you because the company basically does it for you. The alternative is that the company could pay you a higher dividend, but you’d be taxed on that dividend and reinvest it into the company anyway. On the other hand, if you would not reinvest dividends or invest new capital into the company at current prices, then share repurchases are not in alignment with your current outlook, and it would be better for you to receive a higher dividend. Something else to be considered is that when a company uses money for share repurchases when it could be paying a higher dividend instead, the company’s management is limiting your control and increasing theirs.
3. What does General Mills hope to accomplish with its April 1994 reduction in trade promotions and prices? Regarding General Mills’ April 1994 reduction in trade promotions and prices, they hope to accomplish some benefits from this, e.g. increasing the profit and reducing the cost. Concerning increasing the profit, if they can reduce in trade promotions and prices, normally the market share and the profit will be increased.
An increasing marginal cost curve will intersect a U-shaped average cost curve at its minimum, after which point the average cost curve begins to slope upward. This is indicative of diseconomies of scale. For further increases in production beyond this minimum, marginal cost is above average costs, so average costs are increasing as quantity increases. As for the short run average cost curve, initially it is worth producing more, as you are making use of the fixed resource(e.g., reezit machine). however, as the law of diminishing return sets in, it is more costly to produce the extra unit of output.In the short term, there is at least one fixed unit of input that cannot be changed, and because of that, the law of diminishing return applies, saying that as you add successive units of labour into a fixed input, the marginal return diminishes over time.