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Cost comprise impact
Some of the policy choices which tend to have the maximum impact on cost comprise:
Though policy choices always play an independent role in determining the cost of value activities, they also frequently affect or are affected by other cost drivers. Process technology is frequently dictated partly by scale and partly by what product characteristics are preferred, for illustration. Furthermore, other cost drivers unavoidably affect the cost of policies. For illustration, an automated ticketing and seat selection system might well be subject to economies of scale which make such a system very expensive for a small airline to accept.
Policies usually play a particularly necessary role in differentiation strategies. Differentiation frequently rests on policy choices which make a firm unique in performing one or more value activities, deliberately increasing cost in the procedure. A differentiator should understand the costs related with its differentiation and compare them to the price premium which results. This can be completed only by isolating the effects of policies on cost.
Gather Data about Alternatives When potential areas of activity are specified, management must assess the potential growth rate of the activities, the capability of the company
Stock-out costs These are the opportunity costs of running out of stock. They comprise: 1) The costs of lost customer sales, and therefore lost contribution to fixed costs.
Customer oriented or perceived value pricing There is an increasing trend to price the product on the basis of the customer's perception of its value. This method takes into ac
Your company is considering investing in its own transport fleet. The presentposition is that carriage is contracted to an outside organization. The life of thetransport fleet woul
State the Working capital turnover ratio Meaning: this ratio establishes a relation ship among net sales and working capital. Working capital turnover ratio shows the vel
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Explain the tools of management accounting
production budget , how to do ?
On 1st January, 2005 the Board of Directors of Paushak Limited needed to identify the amount of working capital needed to meet the programme they have arranged for the year. From t
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