Judgement Case 9-1 – Inventory costs; lower of cost or market; retail inventory method Requirement 1 Theoretically, Hudson should account for the warehousing costs related to its wholesale inventories as a part of inventory. All of the necessary costs associated with preparing, and in this case storing, items for sale are to be included in inventory. The key here is that the warehousing cost is related to a particular set of items and for that reason it is important to account for the warehousing cost with the inventory in order to satisfy the matching principle. The matching principle “requires that revenues and any related expenses be recognized together in the same period” (The matching principle). 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.
Answers to Week Two Homework Assignment ( Assignment 1) Chapter 7 Exercise 13 You should choose a sample size of 1000 people. Although the law of averages tells you that the average of 1000 people is very likely to be close to 60 inches -- and thus under 65 inches tall -- here you are winning a prize for each person over 65 inches tall, not when the average of all the people is over 65 inches tall. Having a larger sample will give you more chances at getting the prize. The law of averages pertains to the variability of a sample average -- not variability in individual data values themselves. Here, we are concerned with individual data values.
What are the key success factors that lead to or impede successful ABC implementation? 3. How could GEI improve the success of the ABM system? Analysis Question 1 Having operating losses of $100 million, GEI was feeling that the standard cost system is inaccurate because it could not provide reliable information to management about product profitability, product mix, and marketing and pricing decisions. The problem with standard cost system is that it can easily over allocate overhead to cost objectives.
Economic value is a primary focus to determine infrastructure between the supply chains. No ordering and producing products without a demand will promote flexibility in terms of product mix and eliminate product waste and services. The organization will not go without stock, sales, and distribution of products in demand. Therefore, Home Depot’s supply chain value, management, vision or goals and development priorities should focus upon the following objectives in the next 24-month period. Home Depot’s key to success is the way the organization treat people well and encourage associates to speak up and take risk in leadership and development for growth.
Is the internet a good influence on advertisements? Thinking ahead, advertisements have a massive impact on reality. Chiat states that at times, a person believes that advertisements are imaginary and not real, but it is the media that introduces the new inventions and creations that arise across the world. Moreover, there is nothing worthless in the world. The information that is shown in advertisements is truthful as it corresponds to the features of a product, and sometimes demonstrates the specialty of particular products than others.
Just as physical products are open to innovation and change, so are new services. An example of this type of innovation is Frederick Smith who is the American entrepreneur responsible for the multi-million dollar international company, Federal Express. He created a new and better way of moving packages between people. New services, like physical products can also have positive movement due to branding. It is beneficial for entrepreneurs to think more along the lines of all product and service aspects instead of in silos and just thinking about producing “products” alone or “services.” That concept is imperative for entrepreneurs to understand as customer service can be added as an additional component as well to a physical product.
The opportunity cost or ‘real cost’ is not the monetary value paid for a good or service but the next best alternative forgone in its place. Opportunity cost is directly related to and dependent on the production possibility frontier, the opportunity cost may be read from any point on the production possibility frontier. On the graph below: - at Point A the opportunity cost of producing 500 apples is 250 bananas - at Point B the opportunity cost of producing 2000 apples is 1000 bananas - at Point C the opportunity cost of producing 500 bananas is 1000 apples - at Point D the opportunity cost of producing 1000 bananas is 2000 apples The opportunity cost of 1 apple = ½ banana. The opportunity cost of 1 banana = 2 apples. Unemployment reduces the level of production in an economy as it is operating inefficiently, thus less goods and services are produced which in turn causes less wants to be satisfied.
Two important factors to consider as influential of this theorem are property rights and free market. Property rights is an economic terms that details how resources will be utilized and who will own each particular resource. Thomas W. Merrill (2012) calls it Property Strategy, and divides the concept into three categories: object, owner, and the conception of ownership. Thomas first explained that for an object to become a resource it needs to have value for the people. Such a value can be measured in several different manners, for example an object that generates other resources can be very valuable for its owner.
That is, under what conditions will independent national governments, setting policies in their own separate interests, achieve a world-wide configuration of policies that will be optimal for the world as a whole, in the sense that it cannot be unambiguously improved upon by another policy configuration. Preliminary analysis suggests that independent national policies will be optimal only if at least the following two conditions are met: 1. The market failures, distortions, or non-economic objectives that are addressed by government policies are local, in the sense that their costs and their benefits, as well as the behaviors that cause them, are confined to the same national economy. 2. The countries that set policies to deal with these problems are small in world markets, in the sense that the policies of the individual countries do not have perceptible effects on world prices.
08 Fall 08 Fall DECISION MAKING UNDER UNCERTAINTY jUNE 26, 2014 Abstract Decision-making under uncertainty requires decision makers that have the ability and knowledge to choose objectively and decide upon the best alternative. Uncertainty and risk are an inherent part of our business world. Confident and well thought out decision-making can make the difference between a successful and a thwarted organization. Risky situations, complex alternatives and uncertainty warrant a carefully planned out systemic approach, which will list alternatives, strategies, and the probabilities of outcomes. Applying these techniques and understanding that the best decision is one based on what we choose to perceive as the best choice given the information and circumstances.