350,000 Gross Margin 30% Cost of Goods Available for Sale $1,020,000 Prime Costs $545,000 Manufacturer Overhead 65% of Conversion cost Direct Materials $325,000 Beginning Inventory numbers: Raw Materials $41,000 Works in Process $56,000 Finished Goods $35,000 Formulas: Prime cost = Direct Materials cost + Direct Labor cost Conversion cost = Direct Labor cost + Manufacturing overhead cost (65% conversion) Prime cost = 325,000 + $220,000 545,000
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process is very strict and is centered on operational efficiency. Such a focus on operational efficiency and cost reductions has intensified rivalry. Also, government incentives for producers of alternative energy may also contribute to levels of competition within the industry. Finally, lack of product differentiation in the utilities industry as a whole, along with the high fixed costs and exit costs, intensify rivalry. Threat of New Entrants: Low In the electricity market, operating and owning
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progression by rewarding the good work of current employees. Others may see this as a positive and may encourage them to do the same if the opportunity arises. Internal recruitment can also be very cost effective as less money spent on the advertising of the role, induction/training. It may also reduce costs by reducing staff turnover. Recruiting Externally Recruiting externally brings in fresh ideas that could be advantageous to the organization. An external candidate may have experienced a different
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CASE 5-69 (60 minutes) 1. Standard Model Deluxe Model Heavy-Duty Model Product costs based on traditional, volume- based costing system $105.00 $215.00 $232.00 × 110% × 110% × 110% × 110% Target price $115.50 $236.50 $255.20 2. Product costs based on activity-based costing system: Regular Model Standard Model Deluxe Model Direct material $10.00 $ 25.00 $ 42.00 Direct labor 10.00 20.00 20.00 Machinery depreciation
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Riordan Manufacturing business chose to outsource their information technology (IT) systems and services for a variety of reasons. This choice carries with it some obvious benefits and some often not so obvious risks. Companies choosing to outsource IT must weigh the benefits and risks carefully, take measures to attenuate the associated risks and prepare their employees for the change by launching a campaign about the benefits of outsourcing. The risks involved with outsourcing mainly involve accessibility
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of incentives; cost, performance, and delivery that encourage contractors to perform within contract requirements. Burleson states that cost-incentive contracts are the most common and the target profit or fee is established at the start of the contract. “Full profit or fee is paid when the actual cost meets the target cost. A fee reduction results when the actual cost exceeds the target cost, and an increase in profit or fee results from actual cost that is below the target cost” (Burleson &
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controlling costs. Without constant vigilance, companies can find themselves in an uncompetitive situation with bloated overhead. The episodic slashing and burning that then becomes necessary can significantly damage a company. These efforts risk producing exceptions on the financial statements, drive “one-time” charges, and hurt company culture. The better way to maintain the appropriate cost structure is to control them in a sustained fashion. Here are 5 ways to control costs. 1) Renegotiate
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Nonetheless, John Martin, Martin’s Textiles CEO, has to make the decision whether or not to move his company’s production, currently based in New York where the company has strong family like relations with its employees, to Mexico in order to reduce labor cost or wait for an imminent bankruptcy. Martin’s Textiles was founded in 1910 and has spanned four generations of the Martin family. However, with the implementation of NAFTA, all tariffs between the Canada, Mexico and the United States would be eliminated
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existing companies are forced to compete by lowering their prices and are forced to share their customers thus driving down economic profits. b. When strict pollution control requirements are enacted, companies are faced with higher cost such as retraining staff, costs associated with implementing new control measures which sometimes can reduce output and lower the rate of productivity resulting in the loss of revenue. c. When a previously nonunion workforce votes to unionize,
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#11-1 A 9% B 11% C 13% D 15% HW -5000000 -5000000 -5000000 -5000000 NPV 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 5,534,819 $5,146,122.76 $4,798,770.29 $4,487,321.51 534
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