Unit 3 Ip Econ 220 Essay

Alex comes up with the consensus that the “Goal” of his business and many others is to increase net profit while simultaneously increasing return on investment and their cash flow at the plant. This basically means to make money. These three measurements can be achieved by looking closer into his second set of measurements. Alex specifically must find a way to increase throughput while at the same time decreasing it inventory and operational expenses. All three of these measurements must be cautiously monitored since they all rely on each other to be obtained in balance. Factors that cause throughput, inventory, and operational expenses to become unbalanced are excess manpower and balance capacity of the demand of resources in the market.

THE UNIVERSITY OF NEW SOUTH WALES SCHOOL OF ECONOMICS ECON1202/2291 QUANTITATIVE MEHODS A FINAL EXAMINATION SESSION 2 2008

We decided to decrease the price of mountain bike production from $134 per bike to $108. The difference of $26 for 11,000 units results in a saving of almost $300,000. In the meanwhile, we also decided to dump our finish goods inventory, incurring a loss of $175,000. We decided to increase our capacity from 20,000 to 27,500 and efficiency from 1,000,000 to 2,000,000. We want to avoid increasing capacity significantly in order to avoid low efficiency. At the same time we want to keep our wastage at a minimum. We reduced our retail margin for the bike and sports store to 20% while reducing the discount stores to 27%. These new retail margins

the variable production cost will be decreased by $0.05 per steel cabinet. Some plant shutdown time is involved, but

If more is produced when it comes to the budget, the fixed cost would be favorable. I believe that the each unit would lower cost when it comes to production in units. But since the total fixed overhead is extended over a huge amount of units, this will cause a lower production in unit. Lastly, it will increase the

Excel OM/QM Learning Curve tool was used to complete this analysis. This tool was selected because of the strategic importance of the learning curve. The learning curve is applied to aid in the formulation of strategic decisions about employment levels, capacity, costs, and pricing. This tool showed that with the learning curve applied how production hours would be affected if the batches increased. This allows the company to understand what their costs associated to labor is and also if they will be able to meet

Alex comes up with the consensus that the “Goal” of his business and many others is to increase net profit while simultaneously increasing return on investment and their cash flow at the plant. This basically means to make money. These three measurements can be achieved by looking closer into his second set of measurements. Alex specifically must find a way to increase throughput while at the same time decreasing it inventory and operational expenses. All three of these measurements must be cautiously monitored since they all rely on each other to be obtained in balance. Factors that cause throughput, inventory, and operational expenses to become unbalanced are excess manpower and balance capacity of the demand of resources in the market.

Economic models which measure changes in costs and revenues as the volume of activity increase can be complex. However, for the purpose of managerial decision making it is possible to simplify these models in a way that makes them easy to use and therefore more readily useful to the average manager. In this case, cost volume profit analysis is simple, with its assumption of output as the only revenue and cost driver, and linear revenue and cost relationships. it provides minimum values in more complex decision-making cases. Cost volume profit analysis examines the relationships between changes in activity and changes in total sales revenue, cost and profit. It may provide very useful information particularly for a business

Step 3: From the calculation above, the management consider that 16 557 unit of demand/production is the break-even point for the whole three processes. Compare the fix cost and the variables cost three processes between Metal Drawing Process, Outsourcing and Plastic

Based on the real world functioning of businesses, every organization that deals with the process of manufacturing of certain products operates in accordance with the main principle of maximizing its profits. During the performance of daily activities, many business managers face a series of questions related to planning, control and decision making. In order to give answers to all these questions, an additional analysis needs to be considered. It is very important for managers to plan carefully how they are going to generate sufficient money to pay down costs and, in this way to result with a profit. As managers are interested in having the adequate information about the influence that certain actions might have on the profitability of the business, "Cost Volume and Profit" analysis plays a significant role by being a potential tool in facilitating the process of making the right decisions regarding planning and control in order to add value to the company. (Trifan and Anton, 2011). To further illustrate the essential impact that CVP analysis has on management authorities in making better decisions, I will refer to and analyze the case of the Hampshire Company which follows as below.

Assume you have been hired as a managing consultant by a company to offer some advice that will help it make a decision as to whether it should shut down completely or continue its operations. It currently uses 100 workers to produce 6,000 units of output per month (working 20 days / month). The daily wage (per worker) is $70, and the price of the firm's output is $32. The cost of other variable inputs is $2,000 per day. It also tells us that the firm's fixed cost is “high enough” so that the firm's total costs exceed its total revenue. The marginal cost of the last unit is $30.

Hiring additional employees lead to an increase in fixed cost, while increase in overtime pay rate lead to an increase on variable cost.

According to previous information for this firm the factors that will have the greatest impact on plant operations are workers, maximum outputs, labor time, and variable costs. Currently, the managing consultant will work with special attention in the

Furthermore, the ACC strategy of offering increased variety requires shorter production runs which inherently increases the cost associated with each product and packaging, as idle time due to process changeover would increase between each product production (4.8% of time com-pared with 2% for DJC). The strategy of increased variety and production runs by the ACC would also affect labor in a number of ways. Direct labor costs would go up due to a larger amount of idle time associated with process changeover and the chance of increased problems associated with the

Cost accounting information play a crucial role for manufacturing organizations in making internal decisions. It is important for management to understand the cost implications of any decisions that they make for their organizations. Managerial accounting under which cost accounting lies, provides the management with a break-down of internal manufacturing and operational costs that help them in making the right decisions for their organizations. Some of the decisions that are made using cost accounting information include pricing decisions, production quantity decisions and inventory management decisions. It is important for manufacturing firms to monitor internal costs and control them in order to realize profits. This presentation will