It helps us to understand the relationship between the usage of money and the value of returns it provides from a particular venture or avenue based on the time it would take for providing the return and the future value of the return. Opportunity cost is economic decisions based on a limited resources i.e time or money. Opportunity cost is defined as the next best choice available for a person. Opportunity costs are not restricted to monetary costs only. Trade-off is the form of either buying less or a lesser quality item in order to purchase more or a greater quality item.
Why? Answer: Project A should be excepted because what the outcome of the NPV and the IRR, which are positive and have a higher outcome. Lease Considerations Describe factors Caledonia must consider if they were doing a lease versus buy. When Caledonia leases it must consider the benefits of reducing the out of pocket cost. A disadvantage to that positive is the product that will be leased, will not be owned until the lease is completely paid in full.
The computation of ratios facilitates the comparison of firms which differ in size. Ratios can be used to compare a firm's financial performance with industry averages. In addition, ratios can be used in a form of trend analysis to identify areas where performance has improved or deteriorated over time. Because Ratio Analysis is based upon Accounting information, its effectiveness is limited by the distortions which arise in financial statements due to such things as Historical Cost Accounting and inflation. Therefore, Ratio Analysis should only be used as a first step in financial analysis, to obtain a quick indication of a firm's performance and to identify areas which need to be investigated further Profitability.
Under either system, companies will be required to report assets at either book value or fair value, depending on the situation. As a general rule of thumb, all assets in the same class must receive the same valuation treatment. In regards to the value of receivables, IRFS uses a two tiered method that first analyzes individual receivables, and then looks at receivables as a whole to determine if there is any impairment. IFRS 9-1 What is component depreciation, and when must it be used? * Component depreciation happens when an asset has fundamentally different parts that should be depreciated with different treatment.
The revised costing method separates material related overheads from other overheads, and costs are only allocated to each product for part of the overhead (multiplying the material overhead rate of 48% to the corresponding direct material cost allocated to each product). With activity based costing, each indirect cost has a different allocation base and rate. Each cost is then allocated to the products according to each product’s usage of the indirect cost. 3. From this analysis, and based on the different figures given by the standard unit procedure and activity based costing, we can conclude that Destin Brass co. is undervaluing flow controllers and can in fact afford to raise the price.
GAAP also has specific types of transactions, and it required public companies to follow rules that are set by the Securities and Exchange Commission. IFRS Revenue Recognition IFRS revenue recognition states that revenue can be recorded when it becomes economically significant: IFRS revenue recognition can be defined as "not as strict" as opposed to GAAP. IFRS is considered universal; standard 18 sets forth general principles and examples applicable to all industries. IFRS allows recognition when the rewards and risk of ownership is transferred, giving the buyer control of the goods, revenue is understood and the economic benefits will flow to companies or in other words, you will get paid. IFRS bans the "completed contract method" and under certain circumstances will allow the percentage of completion method.
Unit 2: Business Resources P6- Controlling costs Introduction- the relationship between costs, revenue and profit. The importance of and the for controlling costs Costs- type of Financial techniques available in controlling costs Break even analysis (CPV) Cash flow forecast Budgeting and budgetary control Conclusion TR- TC= Net profit/ loss Cost must be controlled by all businesses no matter the size of the business even if it’s small or large. As there is a clear relationship between cost and revenue and results would have an impact on the profit within the business. When the cost increased the profit would decrease, as the business would have to pay more whereas less profit will be left. On the other hand if the cost is decreasing it would have positive impact on the profit as the profit will increase.
We have to distinguish what rate of KBC's these properties speak to and the related holding costs. Given the noticeable stock and existing Distribution Center it may be suitable to hold movers in a focal area accordingly diminishing general volumes in the retail outlets and related outdoors costs. Based on further examination, it might be suitable to create a practice where movers are not held by KBC yet are sent direct from the supplier to the client upon interest. All clients could be offered the on-line or best cost for these requests to expand general consumer loyalty while decreasing the conveyance time by direct
Case 1: Revenue Recognition According to ASC 605-50-25, Revenue recognition - customer payments and incentives “Costs that are directly related to the acquisition of a contract and that would have not been incurred but for the acquisition of that contract (incremental direct acquisition costs) shall be deferred and charged to expense in proportion to the revenue recognized. When is revenue considered to have been earned/realized/realizable in recognition? Revenue is considered earned when a good or service is either delivered or preformed and inflow is received (cash, receivable, etc.). It is is realized when a product is exchanged for cash or claims to cash (something must change hands). There are four main conditions for revenue
To understand market equilibrium it is important to understand supply and demand and how this will determine the price charged for a product or service. The law of demand states that all other things being equal or held constant, as the price of a product or service increases the demand will decrease. Economists break down the factors affecting demand into five categories; price of product, income, price of complimentary and substitute goods, tastes, taxes, and expectations both of price and quality (Krugman & Wells, 2013). The law of supply states that all other things being equal, as the price of a product or service increases the supply of that product or service will also increase. The four factors that affect supply are price, input price, technology, and expectations of price and quality (Krugman & Wells, 2013).