...estimate a cost function are; a. Industrial engineering method which estimates cost function by analysing relationship between inputs and outputs in physical terms. It is thorough, detailed way to estimate cost but very time consuming and too costly. b. Conference method estimates cost functions based on analysis and opinions about costs and their drivers from various departments within the company. c. Account analysis method estimates cost functions by classifying accounts into variable, fixed or mixed with respect to identified level of activity. Reasonably accurate, cost effective and easy to use. d. Quantitative analysis method uses formal mathematical models to fit cost functions to past data observations. Most common methods used are high low and regression analysis. PART B A. Cost estimation method used by Miller’s Good Value Appliance Store is the account analysis method. B. Variable costs Variable costs Cost of Goods Sold 540,000 Commission on sales 67,500 $ 607,500 Variable cost per unit = 607,500 = $121.50 per unit 5,000 C. Total estimated costs for 6,500 units Fixed costs Store manager salary 75,000 Operating costs per year 225,000 Advertising and promotion 25,000 $ 325,000 Estimated costs = $325,000 + ($121.50 per unit x 6,500 units) = $1,114,750 Question Two PART A A. Units of output Total cost Highest observation...
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...Instructor: Dr. E. Gordon DeMeritt STUDENT: ElisHA r. BUNDY COURSE: MGT 511-115: Managing Operations and Services ASSIGNMENT: CHAPTER 4 PROBLEMS 5 AND 6 DATE: September 15, 2013 Problem 5: 14,000,000 14,000,000 High Demand (.60) $5,000,000 $5,000,000 10,000,000 10,000,000 Large Facility $1,000,000 $1,000,000 Cost 9,000,000 Cost 9,000,000 Low Demand (.40) $6,000,000 $6,000,000 High Demand (.60) Expando Inc. Small Facility 12,000,000 12,000,000 $4,000,000 $4,000,000 Cost 6,000,000 Cost 6,000,000 10,000,000 10,000,000 Low Demand (.40) Do Not Build Do Not Build The company would realize the greatest amount of revenue by building a smaller facility. By building a smaller facility the company would recognize an opportunity cost increase of $1,000,000 in periods of high demand and $3,000,000 in periods of low demand. Problem 6: Sell to Dept.St. (.70) Sell to Dept.St. (.70) ...
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...the term cost management mean? Who in the typical firm or organization is responsible for cost management? = Cost Management is the process of effectively planning and controlling the costs involved in a business. The one who’s responsible for cost management is management accountant. 2. List the four functions of management. Explain what type of cost management information is appropriate for each. = 1. Strategic Management. Cost management information is needed to make sound strategic decisions regarding choice of products, manufacturing methods, marketing techniques and channels, assessing customer profitability and other long-term issues. 2. Planning and Decision Making. Cost management information is needed to support recurring decisions regarding replacing equipment, managing cash flow, budgeting raw materials purchases, scheduling production, and pricing. 3. Management and Operational Control. Cost management information is needed to provide a fair and effective basis for identifying inefficient operations and to reward and motivate the most effective managers. 4. Preparation of Financial Statements. Cost management information is needed to provide accurate accounting for inventory and other assets, in compliance with reporting requirements, for the preparation of financial reports and for use in the three other management functions. 3. Explain the difference between cost of goods sold and cost of goods manufactured. = Cost of goods sold is the cost of the inventory...
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...administration 13)estates under administration 14)settlements 15)trusts 16)badges of trade 17)business income 18)business expenses 19)interest expenses 20)trading stock 21)capital allowances 22)industrial building allowance 23)controlled sales 24)mining allowance & prospecting expenditure 25)approved donation & zakat 26)group relief for companies 27)restriction on use of loss on change in ownership 28)company taxtion 29)double dedustion 30)research & development 31)exemption for increased exports of goods & commodities 32)exemption for increased exports of manufactured products & agricultural produce 33) exemption for increased exports of qualifying services 34)income tax (deduction for cost of acquisition of proprietary rights) 35)income tax (deduction for cost on acquisition of a foreign owned company) 36)single tier dividend system & section 108(6) 37)professional communication tools-reports,letters.... 38)tax incentives-pioneer statuss,investment tax allowance,renvestment allowance 39)computation of chargeable income-company 40)self assessment for individual & companies 41)tax avoidance & wilful evasion 42)tax audit & tax investigation 43)advanced ruling 44)company liquidition 45)transfer of assests 46)double taxqation agreements 47)transfer pricing, advanced pricing& thin capitalisation 48)investment hldg com pany 49)unit trust 50)real investment trust 51)leasing 52)venture capital comnpany 53)multimedia super corridor, operational headquarters...
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...cost vs expense Cost and expenditure are closely related. You spend your resources in return for another thing of value. SUMMARY: 1. Cost is used on something that has returns, while expenses are expenditures used on things that depreciate. 2. Cost is reported in the balance sheet because it means more funds will come to the balance sheet after the expenditure. Expense on the other hand, is reported on the income sheet because it will be taking away funds from the income sheet in making the expenditures. 3. Cost is used when one is buying assets while expense is used on buying liabilities or things that eventually expire. So, basically Expense is the amount of cost which has expired and Cost is the amount of expense which has not yet expired. Understanding Expenses Expenses are incurred, used as a measure for accounting purposes, which measure the financial performance of an organization. Accounting for expense is standardized by Generally Accepted Accounting Principles (GAAP) to provide shareholders, regulators, and management a standard and comparable view of financial information across diverse industries. Technically, an expense is a specific accounting event related to the outflow of cash reducing corporate equity. Expense simply record the event and used to understand ‘what happened’ from an accounting perspective. Understanding Costs Costs are derived, used as a measure for economic purposes, which measure the economic performance across multiple dimensions of business...
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...Organizational Planning Mario S Surla MGT/521 April 9, 2014 Donald Ratliff Organizational Planning Wal-Mart is an American multinational retail corporation and the top retail store with the lowest prices in the world. It is the biggest private employer and the largest public corporation with over two million employees worldwide. There are approximately 245 million customers and members that visit Wal-Mart each week, globally. It has stores in 27 countries and sales in 2013 were $466 billion. Wal-Mart’s mission statement of having the lowest prices is consistent with controlling cost, innovation and continuous improvement (Fortune 500, 2014). One of the strategic plans of Wal-Mart is to bring back “Made in America” products (“Time”, 2014). One of the reasons for having low prices is because Wal-Mart’s global out-sourcing. Goods and products that are made and bought overseas are cheaper. However, higher and increasing shipping costs, high global oil prices and wages overseas, translated to costlier fuel for ships and airplanes. There are also supply interruptions overseas as the middle class is growing and local demands are increasing in developing countries. This prompted Wal-Mart to re-evaluate its sourcing ways on variety of products. As you know, Wal-Mart does not produce goods or products but this giant retailer is playing a part in the manufacturing rebound in the U.S. It promised to buy $50 billion of U.S. goods over the next 10 years...
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...Infosys Business Case | MGT 551-12 | Authors:UID # 864597543 UID # 811655441September 3, 2008 | Leveraging its vast, low-cost human capital base to deliver its services globally, Infosys has experienced remarkable growth since its inception to become a leader in the offshoring IT services industry. However, rising salary costs in India and increasing employee attrition rates at Infosys not only threaten near-term profit margins but also the sustainability of Infosys’ current business model. Since the early 1990’s, Infosys and other large IT service providers in India have relied on two key competitive advantages to create their multi-billion dollar businesses of today. First, the initial impetus behind IT offshore demand was simple: cost savings. And with the average IT professional in India costing 29 percent of comparable U.S.-based staff in 1995, Infosys was able to offer its services to global clients at fraction of the prices charged by Western companies. Exhibit 1 demonstrates the direct relationship between Infosys’ human capital growth and its sustained revenue generation over a 9 year period. This graph not only highlights the success a low cost, large work force strategy, it also identifies the second critical component in Infosys’ success: HR design and execution. Delivering those cost-saving services required a highly skilled employee base, whose development entailed large investments of time and money. Accordingly, Infosys established world-class human...
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...To: Audrey Hausner From: Heather Varez HV Subject: G.G. Toys Internal Cost Study and Costing Methods Date: Tuesday, December 09, 2008 The internal cost study has brought up issues of costs related to alternative drivers for the machine related expenses, increased setups, production runs and work in packaging and shipping. Cost System Recommendation I recommend that G.G. Toys institute an Activity Based Costing (ABC) system in their Chicago plant. In allocating overhead as a percentage of direct labor cost, the margins of 9% and 34% in the Geoffrey doll and the specialty branded doll #106 respectively, do not reflect the true cost of manufacturing. When using the ABC system, we see that a tremendous misallocation in “Receiving and Production Control” and in “Packaging and Shipping” occurred using the previous system. These skewed allocations of costs also distorted the margins as shown below. Comparison of Alternative Costing Approaches | | | | | | Unit Overhead Cost | | Geoffrey Doll | | Specialty #106 | Volume-based | | $11.19 | | $13.99 | Activity-based | | 7.22 | | 25.01 | Difference | | $3.97 | | $11.02 | Unit Margin | | | | | Volume-based | | 1.81 | | $12.26 | Activity-based | | 5.78 | | 1.24 | Difference | | $3.97 | | $11.02 | Return on Sales | | | | | Volume-based | | 8.62% | | 34.06% | Activity-based | | 27.51% | | 3.43% | Difference | | 18.89% | | 30.62% | If G.G. can reduce the number...
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...Fine Foofs University of Phoenix MGT/521 June 24, 2009 Kudler Fine Foods Reviewing Kudler Fine Foods business plans indicated one main area of concern, which is catering. Kudler Fine Foods has established itself in a niche market of fine foods. The original La Jolla, California store has been a total success and afforded the opportunity to move the business forward. Kudler Fine Foods needs to continue growing in strong areas while allowing weaker areas to be cut away. Kudler Fine Foods has three locations and the idea of another location that would condense one existing store with a soon to be built location. The original La Jolla, Ca location services a population of 44,424 with the median home price coming in just over two million dollars. The second location at Del Mar, CA services a population of 4,389 with the median home price of $98,257. The third location is in Encinitas, Ca with a population of 50,000 and an average household income of $75,000.Kudler has three different locations with three different demographics and areas of opportunity (Kudler Fine Foods, 2003). Not only does the store have fine foods with many different departments the business also does catering. The problem that Kudler Fine Foods faces is the entrance of new competition into the market and a weakening economy. The catering side of the business, which Kathy Kudler does by herself, has a 25% better profit margin than does the store. Kathy keeps costs low by doing the catering herself and...
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...Dollar General Analysis Ricky Rich MGT/521 10 Nov 2014 Dr. Bridges Dollar General Analysis Dollar General Corporation is a premier low-cost retailer organization in the United States. It is amongst the biggest retailers with over 11,500 stores that provide quality commodities made by American manufacturers. One of the Dollar General’s main objectives is to create an atmosphere that enables access to everyday items worry-free, rather it is a simple bar of soap or a box of detergent. This objective is achieved by offering a detailed variety of recognized labels at affordable prices in well-located and accessible locations (Dollar General Corporation, 2014). Multiple strategic and operational company goals were identified in the SWOT analysis. For this assignment, the discussion will be focused on providing customers a better life as a strategic goal and operating in an environmentally safe working atmosphereas an operational goal. Providing a better life for customers and excellent opportunities for employees A typical Dollar Generaloccupies close to 7,000 square feet of retail space and mainly provides service for patrons within a five mile radius of the store. The majority of the locations serve local areas with small residential populations below 20,000 (Hotstocked.com, 2014). Management knows that its preferred shoppers enjoy the luxury of a small, community store. The belief is also that Dollar General’s accessible money-saving store model will remain popular in...
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...Stewart 28 February 2013 Midterm/MGT 5061 Over the past eight weeks, we’ve discussed several topics from the textbook Logistics Engineering and Management. For the purpose of this assignment, I will discuss only 3 aspects of the subject matter. As a Quality Assurance Specialist (QAS) supporting the U.S. Army, my job, as well as other civilian personnel, is to help ensure military readiness by supporting the warfighter in every way possible. In today’s society, the need to develop and produce high quality systems is in high demand. It’s even higher in the defense sector. In order to be successful with providing these long lasting, high quality systems to our customer, it is important that we support these systems by ensuring that the provided product designs are supportable and also ensuring that sustainment maintenance is conducted throughout the systems’ entire life cycle. These are viewed as logistics activities. With that said, the areas of logistics that I’d like to focus on are as follows: Reliability, Maintainability, and Availability Measures, The System Engineering Process, and The Measures of Logistics and System Support. According to our textbook, logistics is defined as “the composite of all considerations necessary to assure the effective and economical support of a system throughout its life cycle”. Systems have a big responsibility. They need to be able to perform as intended, be available when needed, and be cost-effective. There are certain performance...
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...the Carson Manor study is to reduce cost on a per-bed basis to be in-line or near the state average. Currently Carson Manor costs are approximately 14 percent higher than state averages on a per-bed basis. -Subsidiary issues Subsidiary issues include; finding goods and services at minimum cost that will be consistent with desired quality, delivery timing, and reliability. Carson Manor has had issues with measuring and controlling costs. Without change, nurses will not be able to provide good quality care for their patients and patients will receive unequal care. The increasing levels of care required by Carson Manor residents have a major influence on costs. 2. Situational Analysis - Relevant Factors * Average cost of per-bed costs within the state * Identification of problem areas in Carson Manor that could use strategies made up by the city to help productivity (ex. contract management services) * Review of administration, staffing, and organizational design and management systems. * Resident care assessments (what materials are needed, what requirements/skills should the nursing staff have) * Develop comprehensive recommendations for improved operating systems * Develop comprehensive recommendations to lower purchasing costs * Find consulting companies within the area with relevant experience * Budget * Patient classification system -Quantitative Analysis *Cost on product * Cost on staffing Carson Manor * Cost on outsourcing * Number of staff...
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...Introduction to Management Science MGT 3304 01 Case Study The Darby Company Table of contents: Introduction and Background………………………….P 2 Methodology * Chart……………………………………………… P 3 * Answers to Questions…………………..................P 3-6 Solution and recommendations………………………...P 7 Application in the Moroccan context…………………..P 7 Conclusion……………………………………………..P 7 Minutes of the meetings……………………………......P 8 Sources……………………………………………........P 9 Introduction and Background: The case involves a company named The Darby that manufactures and distributes meters used to measure electric power consumption. Before gradually building a customer base throughout Texas, the Darby Company started as a small production plant in El Paso. As a first step, a distribution center was created in Fort Worth, Texas and then in Santa Fe, New Mexico. The El Paso plant then marketed its meters in different states, including Arizona, California, Nevada, and Utah. A third distribution center was opened in Las Vegas and a second production plant in San Bernardino, California. Manufacturing costs alter from one production plant to another. El Paso plant produces at a cost of $10.50 per meter. However, the San Bernardino plant’s cost are $0.50 less than the cost of the El Paso plant since it utilizes newer and more efficient equipment. Concerning the efficiency of the distribution system, not much attention was paid because of the company’s quick growth, but the company’s management crew...
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...MGT 3319 – Final Case Analysis (Fall 2013) For our final management effort, we will do a case analysis. Each question is evaluated on: 1. 2. 3. 4. 5. Identification of the key problem. Determining who are stakeholders in the decision making process. Clarifying the alternatives to a decision based on stakeholder values. Decision that solves the problem Effective management of the control process; support why the assessment is sound and explains results. Evaluation of the case will also consider grammar, logical flow of arguments, discussions and conclusions based on your research. I would highly recommend you use University resources to help you with grammar, logic and format. Your added research from scholarly sources is expected – at least 2 scholarly references plus the text is the minimum. I suggest the focus of your external sources are management sources; stay away from technical issues. Remember we are not engineering experts; we are managing. While no minimum page requirement is stated, expectations are you will use 4 to 6 pages in answering the questions; add a cover and reference page (total 6 to 8 pages). This case is an individual effort. The Student Motor Company You are the owner of an auto-manufacturing firm and dealership. The upstart Student Motor Company started about one year ago and based on your degree from Texas Wesleyan University, you are the CEO, competing against Ford and GM. With annual sales of over six million cars and trucks worldwide, it has...
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...Intelligent Cost Reduction Developing & executing a program to reduce cost & create a sustainable operating platform July 2008 Contents Section 1 2 3 4 5 6 Point of view Anatomy of a successful total cost management program Beginning with the business & front office Opportunities in the support units Some lessons learned PwC qualifications to help Page 3 7 11 16 19 21 Point of view Point of view • Cost management is a key issue today and for the foreseeable future – The market is experiencing a severe liquidity crunch and the explosion of a global asset bubble well beyond sub-prime. At the root of this crisis is not only asset values, but the amount of capital in the financial system today versus the size and liquidity of the balance sheets (and off-balance sheet commitments) of financial institutions. This situation is not likely to reverse itself for a number of years. In the environment of de-leveraging and scarcity of capital, we believe fundamental re-thinking regarding business strategies, operating models and cost structures will be necessary. • A pre-securitization baseline may be the appropriate mindset – If one assumes that the securitization markets have significantly contracted in a permanent fashion, then the appropriate way to think about the business may be in a pre-securitization baseline, adjusted for key acquisitions/divestitures, etc. This means that the proper mindset to consider in the business strategy and budgeting area may...
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