1. A transfer price is the price of a product or service that is sold internally within a firm between financial responsibility centres. Transfer prices are important because they include cost information for inputs provided internally that can help managers make better decisions by assessing the profitability of the output that uses this input. This helps both the buying and selling managers decide how much product to buy/sell internally in order to maximize profit or some other performance measure
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in different ways. Furthermore I will describe the circumstances under which we are more likely to experience one of the aforementioned concepts instead of one of the others. Economies of scale exist when average costs decline through increased production. The theory behind economies of scale is that as firms increase their output the marginal cost of the last unit produced is less than the average cost, thereby pulling down total average cost. Many economists depict average cost curves as being
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and the means of production, but both in different forms. Contrasting Capitalism and Socialism, components of Capitalism are that private individuals own the means of production; they market to compete with each other and the individual decides what to produce, how much to produce and what price to sell items at; and the pursuit of profit, private owners decide what the products should cost for receiving a profit. With Socialism, the public or government owns the means of production; the government
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Changes in the loom workshop: Issue: Using unskilled people (small groups of female school-leavers with no expertise and experience can’t solve the problems during production) they can’t not ensure about the quality and reliability. This production line is at trial period, thus, there are definitely some technical errors and if the workers don't possess any expertise, the output will fall behind not catching up with the work schedule. Productivity fell far below the expected targets on every
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CHAPTER 7 THE COST OF PRODUCTION QUESTIONS FOR REVIEW 1. A firm pays its accountant an annual retainer of $10,000. Is this an economic cost? Explicit costs are actual outlays. They include all costs that involve a monetary transaction. An implicit cost is an economic cost that does not necessarily involve a monetary transaction, but still involves the use of resources. When a firm pays an annual retainer of $10,000, there is a monetary transaction. The accountant trades his
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4-12. By using unit contribution margins, we only consider revenues and variable costs that are differential to our decision. While relying on unit gross margins would probably lead to incorrect decision because we take into account revenues and all costs, including both variable costs and fixed costs. However, some costs are not differential to our decision. 4-15. Nonfinancial factors in decisions to drop a product line include the effect on employees who work on that product line, the effect on
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Process Design Matrix and Summary Leticia Beck OPS/571 September 30, 2013 Design Process Matrix and Summary Chaley’s Hair Salon in a full service beauty salon that is dedicated to providing high customer satisfaction to her clients. She executes this by rendering excellent service quality products and making sure all clients have an enjoyable experience while paying reasonable prices. She also maintains a healthy and creative work environment for her employees. Mission:
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ECO 550: Managerial Economics and Globalization Assignment 3 Instructor: Dr. A. A. Boakye Due By: 08/08/2011 Candidate’s Name-Andre Stevenson INSTRUCTIONS: Answer ALL the questions in PART I and PART II Part 1 (40 points) 1. The WXY Corporation has fixed costs of $50. Its total variable costs (TVC) vary with output as shown in the following table. Refer to the table. The average total cost of 4 units of output is A. $27.50 B. $40.00 C. $52.50 D. $210.00 2
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Question 1 (20%) In your own words, briefly describe your understanding of application of the lifecycle concept to validation. Process validation is a vital aspect not just for regulatory purposes, but also for the efficient and reliable long-term application of the process. In order to address the performance of the process adequately, process validation is used to identify the relevant parameters, to design the experimental validation studies accordingly and to define appropriate acceptance
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kitchenware, fishing tackle, etc. Most of its production involved the molding or extrusion of plastic raw materials and over half of its production was for two major manufacturers of toys, located nearby. The vast majority of its customers were located in Southern California, with a few in Arizona, Nevada, and Northern California. In its market area the company was known for its high quality, low cost products. Its low cost was based on extremely efficient production methods, so efficient that on some items
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