A cost analyst showed the company president a graph that portrayed the firm’s utility cost as semivariable. The president criticized the graph by saying, “This fixed-cost component doesn’t look right to me. If we shut down the plant for six months, we wouldn’t incur half of these costs.” How should the cost analyst respond?
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A cost analyst showed the company president a graph that portrayed the firm’s utility cost as semivariable. The president criticized the graph by saying, “This fixed-cost component doesn’t look right to me. If we shut down the plant for six months, we wouldn’t incur half of these costs.” How should the cost analyst respond?
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- In a strategy meeting, a manufacturing company’s president said, “If we raise the price of our product, the company’s break-even point will be lower.” Thefinancial vice president responded by saying, “Then we should raise our price. The company will be less likely to incur a loss.” Do you agree with the president? Why? Do you agree with the financial vice president? Why?In a strategy meeting, the president of a manufacturing company said, “If we were to raise the price of our product, the company’s break-even point would be lower.” The vice-president of finance responded by saying, “Then we should raise our price. The company will be less likely to incur a loss.” Do you agree with the president? Why/why not? Do you agree with the vice president? Why/why not?Consider how Break-Even analysis would change (i.e. how is the breakeven point affected) in the following scenarios. Note that each scenario is independent and all non-specified factors remain unchanged: The firm finds it necessary to reduce the sales price per unit because of competitive conditions in the market. The firm’s direct labor costs increase as a result of a new labor contract The Occupational Safety and Health Administration requires the firm to install new ventilating equipment in its plant (assume that this action has no effect on worker productivity). In your paper, make sure to demonstrate how Break-Even analysis might align with Biblical Perspectives and also discuss how this type of analysis might affect or has affected your decision-making whether in business or personal ventures.
- Shatta movement LTD produces a single product. The company's directors want to explore new markets, and they require an accurate analysis of the firm's cost structure for both forecasting and pricing purpose. An attemp to provide this analysis from the aggregation of individual cost has produced a poor correspondence between actual and predicted cost. You are an accountant employee by Shatta Movement Ltd, and you have been asked to provide a statistical approach to the problem. The financial director has given you the following data: Period output (unit) average unit cost (GHS) July August September October November December 9,000 14,000 11,000 8,000 6,000 12,000 12.8 13 11.4 12 13 11.7 You obtain the following further information: 1. The cost from which the averages have been computed consist of the firm's entire cost for the relevant month. 2. Fixed coat can be assumed to be unaffected by seasonal factors except for harmattan heating. In July and August a…In a strategy meeting, the computer manufacturing company's president said, "If we raised the price of our product, the company's break-even point will be lower." The financial vice president responded by saying, "The company will also be less likely to incur a loss." As a management accountant would you agree or disagree with these statements and why?Rockness asked, "Do you see any problems here? Should we drop any of these products? Should we reprice any of these products?" He said, "I am suspicious of these cost data, Rocky. Here we are assigning indirect costs to these products using a 260 percent rate. I really wonder whether that rate is accurate for all products. I want you to dig into the indirect cost data, figure out what drives those costs, and see whether you can give me more accurate cost numbers for these products." Rocky first learned from production that the process required four activities: (1) setting up production runs, (2) managing production runs, and (3) managing products. The fourth activity did not require labor; it was simply the operation of machinery. Next, he went to the accounting records to get a breakdown of indirect costs. Here is what he found: ---------------------------------------------------IMAGE 2----------------------------------------------------------------- Then, he began a series of…
- Peterson Corporation is considering implementing a JIT production system. The new system would reduce current average inventory levels of $2,000,000 by 75%, but it would require a much greater dependency on the company’s core suppliers for on-time deliveries and high-quality inputs. The company’s operations manager, John Leung, is opposed to the idea of a new JIT system. He is concerned that the new system (a) will be too costly to manage; (b) will result in too many stock outs; and (c) will lead to the layoff of his employees, several of whom are currently managing inventory. He believes that these layoffs will affect the morale of his entire production department. The management accountant, Susan Chow, is in favour of the new system, due to the likely result in cost savings. John wants Susan to revise her cost saving estimation because he is concerned that top management will give more weight to financial factors and not give due consideration to nonfinancial factors such as employee…Internal production supervisors of a company’s product line would be MOST likely to ask which of the following questions? Select answer from the options below 1.How much profit can the company expect to earn this year? 2.What can the company afford to pay its employees this year? 3.Which product line is the least profitable and should be eliminated? 4.How much should the company charge for its products to maximize its profit?You are the new cost accountant for ABX Corporation. After careful review of the company's operation you have been tasked to determine the company's break-even point in units and dollars, the numbers sold to meet the company's target profit and contribution income statement for both outcomes. Management has also asked that you discuss the risk, uncertainty, changing variables and margin of safety regarding Cost Volume Profit Analysis. Based on your discussion and calculations what would be your recommendation if the company wanted to increase variable cost by 20% and sales price by 5%? Support your recommendation. Company's Data: ABX Corporation sold it's production for %600/unit. Fixed cost are $725,000 per year. Variable costs are $455 per unit. ABX Corporation desires a target profit of $1,250,000 per year.
- You are the new cost accountant for ABX Corporation. After careful review of the company’s operations you have been tasked to determine the company’s break-even point in units and dollars, the numbers sold to meet the company’s target profit and contribution income statement for both outcomes.Management has also asked that you discuss the risk, uncertainty, changing variables and margin of safety regarding Cost Volume Profit Analysis. Based on your discussion and calculations what would be your recommendation if the company wanted to increase variable cost by 20% and sales price by 5%? Support your recommendation. ABX Corporation sold it's product for $600/unit. Fixed cost are $725,000 per year. Variable costs are $455 per unit. ABX Corporation desires a target profit of $1,250,000 per year.A manager in your organization just received a special order at a price that is “below cost.” The manager points to the document and says, “These are the kinds of orders that will get you in trouble. Every sale must bear its share of the full costs of running the business. If we sell below our full cost, we'll be out of business in no time.” What do you think of this remark?2. Which of the following statements is false? (You may select more than one answer.)a. The planning horizon for discretionary fixed costs is longer than the planninghorizon for committed fixed costs.b. Discretionary fixed costs can be cut in the short term if necessary, while committed fixed costs cannot be cut for short periods of time.c. As companies increasingly rely on knowledge workers, the labor cost associated withemploying these workers is often committed fixed as opposed to discretionary.d. A mixed cost contains both committed fixed and discretionary elements.