custom model have been growing. Following is the company’s sales, production, and cost information for last year: Cello Standard Custom Sales and production volume in units 900 100 Unit Selling Price $600.00 $900.00 Unit costs: Direct materials $150.00 $375.00 Direct labor $180.00 $240.00 Manufacturing overhead* $135.00 $135.00 Total unit costs $465.00 $750.00 Unit Gross Profit $135
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OHIP pays $25,000 per surgery Other hospitals only cost $15,000 per surgery 2. OHIP tries to pay less – rebursement/payment 3. UIHC is the only hospital which can do transplants and valve replacements 4. UIHC has the monopoly position in transplant and valve replacements but not in bypass 5. “Privatizing” hospital services Problems/Issues 1. Needs to know the actual cost for each procedure 2. The choice of cost driver (many alternatives provided) 3. Privatization (it
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resources tracked. Given the complexity and range of hospital services, the time and cost of the initial investigation may not be feasible. For the system to give the level of detail needed to analysis costs verses funding, it can get quite complex and costly. Generally there is a trade off in the design process between accuracy of costing and level of complexity. If a system is too basic, the ability to analyse costs and make decisions will be hindered, not adding any value to the costing process,
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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%
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The Increasing Importance of Channel Strategy to Financial Performance Robert Henske VP, Charles River Associates September 24, 2003 August 2003 Elemica Global Conference Connect Once – Connect To All 1 Definition Channel Strategy: n. The selection of the preferred vehicles (channels and processes) to deliver defined products/services to specific customers to create the highest value for the enterprise. August 2003 Elemica Global Conference Connect Once – Connect To All
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Agency Costs (Fama and Jensen 1983) Contracting problem or principal/agent problem. Agent is person tasked to do something on behalf of the principal. Jensen and Meckling (1976) Definition: “ We define an agency relationship as a contract under which one or more persons (the principal(s)) engage another person (the agent) to perform some service on their behalf, this involves delegating some decision making authority to the agent”. Examples: Patient – Doctor (delegate authority to doctor
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A) “I work for a non-profit organization, so all this talk of the full cost of your product or service really isn’t applicable to me.” I would have to disagree with the statement, as full cost of product or service is applicable; however, the majority of the time people or companies will donate or give a discount if asked. For example, if you work for a non-profit organization and are in need of office supplies, why not buy locally from people who support you such as Staples or Office Depot,
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gets carcass, or you are close enough to one of the plants. The strategy agreed upon, was brought about by the overweight lambs brought to the plant, growing prices from suppliers, and the bust of the lamb market. This bust was brought on by rising costs across the market in general. At the time of the bust, lamb was $3.02/lb for a whole carcass, and the quality of the meat was suffering due to fat content, as well as the growing number of aging ewes that were being harvested. In order to restore its
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Issue of the case Facing the introduction of plastics rings by one competitor, Bruggeman, Reichard Maschinen, GmbH (RMG) needs to decide 1) whether they will start to produce plastic rings and 2) when to start the production, if needed. Incremental cost analysis For the short run, RM has the following three alternatives. We will propose to limit the time span
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negatives to the traditional system including its higher cost, low accuracy and is an extremely complicated system. The time driven ABC costing has many benefits including its lower cost, ease of implementation, higher accuracy and the larger scope of its models. Traditional ABC costing has been used for a very long time but with the introduction of modern computers it allows for Time driven to be a much more effective cost system. The traditional cost system is quite expensive and time consuming because
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