The first way to improve working capital is to make the excess liquid funds work for the company. These funds should be invested back into the company. This can be accomplished by reducing long-term liabilities with high interest rates such as the mortgages on facilities. The second is to manage the inventory held by the company. Currently Competition Bikes purchases inventory for production the month before it goes to the production line.
The average value (Exhibit 1 red line) represents the cost savings realized by Ohio over the total daily tonnage. OP should take into consideration that once the pipeline is installed, cost efficiencies will be gained through lower average cost savings per day, as well as cost savings/ton. Ultimately this will improve their marginal value (Exhibit 1 green line), and the optimal range that OP should negotiate a fixed price and quantity is between 40-45 tons/day at a contract rate of $60.00-$65.00/ton respectively (Exhibit 1 green & purple intersection). This would represent a fair deal for both parties, and OP must negotiate diligently at this level and counter any arguments made by PH. OP’s
So to be able to have a productive and successful business, business owners may want to look into maximizing their profits by way of the profit maximization concept. Profit maximization is when a company comes to a conclusion on the price and output level that will turn the maximum profit by using this particular process (Wikipedia). Granted there are many different approaches to this problem; however in this essay we will be considering the TR to TC method and the MR MC method. Tiffany C Wright expressed that the total revenue to total cost method is dependent on the fact that profit equals revenue minus cost. Total revenue equals price time’s quantity.
Another way to improve the company’s working capital is by reducing costly expenses. According to Competition Bikes’ Comparative Income Statement, the company spent $3,662,837 on operating expenses from year 6 to year 8. Most of the cost was incurred for general and admin expenses. By reducing the cost of executive compensation, the cost of utilities, administrative salaries, or a combination of the three, Competition Bikes’ working capital can be greatly increased. A2b.
q1= (100-(10-3))/3=31 q2= 30 Q=31+30=61 Market Price=100-30-31=39 Firm’s one profit= 31*39-31*7=992 Firm’s two profit=30*39-30*10=870 c. Compare consumer surplus from parts a and b. Do consumers fare better with or without the subsidy? (Remember that consumer surplus is calculated from market quantity and market price.) The consumer surplus is bigger with subsidiary because they get more quantity with lower price while without subsidiary consumer’s surplus become smaller as they get less quantity with higher price. Chapter 11 6.
A 6% increase in Electricity costs. 1. A 2.5% increase in material cost When the material costs increases, the affect will occur on the master budget. The 2.5 % increase on the material cost means we will be paying more; as a result the profit will be less, unless we increase the selling price, reduction of employees (redundancy), to cover the change. Here below are show the calculation of the change: Material cost is 50355.15 2.5% of 50355.15 = 50355.15x 2.5 = 1258.87 100 The new material cost is = 50355.15 + 1258.87 =
What theory of profit best reflects the performance of the plasma screen makers? 2 To reduce Agency Problems, executive compensation should be designed to: Correct Answer: create incentives so that managers act like owners of the firm. 3 Economic profit is defined as the difference between revenue
Define marginal cost Marginal cost is the total cost to produce an additional unit of goods sold. The marginal cost can stay consistent until demand is needed to produce 1 more unit where the marginal cost may increase or decrease. Change of marginal cost can be directly impacted by the cost of items needed to produce that single piece, so the marginal cost may increase or increase. I.e. a bolt needed has increase in price for smaller qty needed to complete total production run.
This issue is in fact more of an opportunity and the opportunity is to reduce the variable cost associated with the consolidated shipments as the estimated growth in shipments from China and Taiwan is 15% per year. This growth rate implies the cost reduction in consolidated shipments which is 11% of total will be contributed to profit margin. Inferred from this issue of consolidated shipments is an issue of increased lead times which in supply chain is very crucial. So the issue is to reduce lead times incurred due to consolidation of small shipments so that supplier to Grainger delivery
Unemployment will drop, to a work rate above that of full involvement. Price levels will also rise for the short-term. There are different reasons why business managers need to pay attention to supply issues. As well as production costs, supply matters affect other business expenditures. Analyzing demand benefits business manager’s make good decisions regarding sales and production levels (University of Phoenix,