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Q. Issues to consider when making decisions?
At activity level A it can be seen from diagram that sales revenue line intersects the total cost line specifying that this is the point when company makes no loss or profit that means breakeven. Any activity beyond this point sales revenue would exceed total costs causing the company to make a profit, and anything below this activity, total costs will exceed sales revenue causing company to make losses.
After activity level B fixed costs will increases sharply due to perhaps new investment required in manufacturing process and profits will be reduced compared to just before activity level B. Operational mangers needs to consider whether sales revenue forecast is likely to hold true, if not then profits can be decreased significantly as a result of this investment.
Between activity levels B and C sales revenue line has a much higher gradient line than total costs and company is earning greater profits as it increases its activity. Profits are maximised just before point C when beyond this point sales revenue line is increasing at a slower rate when compared to total costs.
At activity level D there is another sharp increase in fixed costs and also variable costs are rising at steeper gradient to sales revenue. Operational manger must recommend to company to continue to produce activity as long as extra revenue is greater than extra cost or variable cost.
cost accounting is said to three different phases ?? name them.
The following standard costs were developed for one of the products of Ferrars Company: Standard Cost Card Per Unit Materials: 4 feet x $14.25 per foot $ 57.00 Direct labor: 8 hour
Product Versus Period Costs Another way to look at manufacturing costs is to think of them as attaching to a product. In other words, goods result from the manufacturing proces
By understanding the financial statements of a company, one of the first steps considered is the study of the changes in current financial position of the company and the purpose f
Long-Term Liabilities: These are usually for more than one year. They cover almost all the outsider's liabilities not comprised in the current liabilities and provisions. Such
standard hours = 5000 standard wages = Rs.3/hr actual hours worked = 5600 hrs actual wages paid = 17920
what do you understand by cost accounting and what are the main decision areas that are involved
Bakers Bagels LLC produces and sells 20 types of bagels by the dozen. Bagels are priced at $6.00 per dozen (or $0.50 each) and cost $.020 per unit to produce. The company is consid
If a company trades in a building towards a new building and does not recognize a gain or loss (because of code section 1031), will this transaction affect the cash flows statement
Example of ABC System Assume an example, such the cost pool for the ordering activity totaled of Ksh.100, 000 and such there were 10,000 orders the cost driver. Therefore all
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