The most direct way to prepare a cash budget for a manufacturing firm into include
The most direct way of preparing a cash budget requires incorporation of sales projections and credit terms, collection percentages, estimated purchases and payment terms, and other cash receipts and disbursements. In other words, preparation of the cash budget requires consideration of both inflows and outflows.
The discount rate ordinal' used in present value calculations is the
The discount rate most often used in present value calculators is the minimum desired rate of return as set by management. The NPV arrived at in this calculation is a first step in the decision process. It indicates how the project's return compares vent the minimum deseed rate of return
The data available for the current year are given below.
using the information presented above, the contribution by Division I was?
The contribution margin for Division 1 is $310.000 ($600,000 net revenue - $290.OCN) total variable costs). The contribution controllable by Division l's manager is $260,000 ($310,000 CM --- $50,000 controllable fixed cost), The total contribution by Division 1 equals its net revenue minus all costs traceable to it Accordingly', the total contribution is $190.000 ($260,000 controllable contribution $70,000 allocated but controllable by others) Unallocated costs are excluded from the calculation if separate amour4s are determined to the division's contribution and the controllable contribution. the difference between the division's and the managers performance may be ascertained (assuming controllability of fixed costs can be assigned)
Copeland Inc. produces X-547 in a joint manufacturing process. The company is studying whether to sell X-547 at the split-off point or upgrade the product to become Xylene. The
following information has been gathered:
I . Selling price per pound of X-547
II . Variable manufacturing costs of upgrade process
Ill . Avoidable fixed costs of upgrade process
IV . Selling price per pound of Xylene
V . Joint manufacturing costs to produce X-547
Which items should be reviewed when making the upgrade decision?
Common, or joint, costs cannot be identified with a particular joint product. By definition, joint products have common costs until the split-off point. Costs incurred after the split-off point are separable costs. The decision to continue processing beyond splitoff is made separately for each product. The costs relevant to the decision are the separable costs because they can be avoided by selling at the split-off point. They should be compared with the incremental revenues from processing further. Thus, items I . (revenue from selling at split-off point), II . (variable costs of upgrade), Ill . (avoidable fixed costs of upgrade), and IV . (revenue from selling after further processing) are considered in making the upgrade decision.
Which basic force(s) drive(s) industry competition and the ultimate profit potential of the industry?
I . Threat of new entrants.
II . Bargaining power of suppliers.
III . Favorable access to raw materials and labor.
IV . Product differentiation.
Threat of new entrants and bargaining power of suppliers are among the five basic forces that drive industry competition and the ultimate profit potential in the industry. This potential is measured in terms of long-term return on invested capital. The other three forces are rivalry among existing firms, threat of substitutes , and threat of buyers' bargaining power.
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