Total revenue equals price time’s quantity. It reflects total receipts obtained from selling a certain output or quantity of goods. Total costs is different it’s equal to fixed costs and variable costs. Fixed costs include building and equipment costs, regulatory fees and salaried personnel and remain stable, especially in the short term, but may vary with a longer time horizon. As the time horizon increases, variable costs rely less on existing factors and restrictions and therefore will begin behaving differently which will in turn affect the cost of production (Wright, 2007).
Capital Planning, also known as Capital budgeting, (or investment appraisal) is the planning process used to determine whether a firm's long term investments such as new machinery, replacement machinery, new plants, new products, and research development projects are worth pursuing. It is budget for major capital, or investment, expenditures. IRR, Internal Rate of Return helps organizations figure out what the rate of return is on individual projects; what the project earns. This is important to companies as it helps gauge which projects to accept or reject. To accept a project, the IRR is equal to or greater than or equal to the required rate of return.
By following the matching principle all of the costs associated with a particular product, not just its wholesale price, is expensed when the item is sold. Requirement 2 - A Generally, the lower of cost or market method is used to value inventory in order to “avoid reporting inventory at an amount greater than the benefits it can provide” (Spiceland, Sepe, & Nelson, 2013, p. 476). According to Spiceland, Sepe, and Nelson (2013) the “change in replacement cost usually is a good indicator of the direction of change in selling price” (p. 477). When the change in replacement cost is negative the LCM method allows companies to apply the conservatism principle. The conservatism principle involves “recognizing expenses and liabilities as soon as possible when there is uncertainty about the outcome, but to only recognize revenues and assets when they are assured of being received” (The conservatism principle).
Another con is preparation time and expense of the financial plan is amplified. Last con is sometimes zero-based budgeting sounds too drastic and so consensus is hard to
The fact that the grading system is not clear for managers hampers a precise evaluation of all employees. Second, in addition to the lack of evaluation criteria, there is a problem of absence of assessment of the attributes of specific jobs and consequent alignment with the company’s strategic goals. There are no clear job descriptions, so besides not knowing well how managers should evaluate, they also do not know individual or team goals that should be
This type of budget is different from a static budget, where the amounts are fixed. All types of organization can use a flexible budget, however, the manufacturing, retail, service industries and non-profit organizations will primarily use this kind of budget. A flexible budget can be useful for organizations that can expect a change in activity. For example, a retail store. during the year sales may be slower, and the flexible budget will allot for that.
If you do not have enough money to do certain things you would like to do, then you can use this planning process to prioritise your spending and focus on the money on the things that are most important to you. Once you create your first budget, you can begin to use it and get a good sense for how it can keep your finances on track. Doing this you can easily forecast which months your finances may be tight and which ones you will have extra money. You can then look for ways to even out the highs and lows in your finances so that things can be more manageable. Forecasting your budget gives you an idea how much money you will be able to save for important things like your vacation, a new vehicle, and an emergency savings account.
There are some limitations in using Real GDP. For instance, estimates and revisions can cloud the true picture of an economy’s GDP. Future estimates must be revised, and information for those estimates is collected from only a few sources due to time constraints. Thus, revisions have to be made and can lead to estimates of economic activity that are much more different than those given previously (Rittenberg, et al, 2009). Another limitation is in services provided.
If they are out of season and output is down, less help is needed so layoffs will occur. Next you want to make sure your company is well respected based on the moves you make. Government plays an important role in the economy. By manipulating the arsenal of tools within a fiscal policy, the government can either speed up or slow down the economy depending upon what issues needs to be addressed socially and economically. By completing this simulation I have learned how decisions relating to fiscal policy can affect the economy.
• Poor communication after Mr. Barton discontinued the tally system. ➢ Employees felt management failed to represent their best interests. ➢ Poor communication by management. There was a lack of input requested from sales personnel. Problem Statement The problem, in this case, stemmed from declining department sales and inappropriate business practices that created unpleasant work conditions and significant reductions in employee productivity.