Cost Case Studies Samples For Students

- You are required to evaluate, the two options for the production of product Z.

Comment and advise Tony accordingly in the production of product Z.(25 marks)

Answer:
Assuming 40,000 production levels, the cost associated with both the options are as below:
It can be easily seen that the cost of producing 40,000 units is less in case of labor intensive option than the machinery option. For low production levels, it is recommended that labor intensive option is a better option.
However, as the production level goes up, machinery option covers up for the extra machine rental expense and at some level produces units at a lower cost than Continue reading...

Introduction

Massachusetts Eye and Ear Infirmary (MEEI) is a non- profit organization which for the past decades has had problems in its evaluation on the way the cost are being evaluated and appropriated to patients. The system that was being employed in the hospital was insinuated to be ineffective in the sense that it did not put into consideration all the necessary measures that are required before allocating costs. According to the executive director, Mr. Charles wood, there is a need to change the traditional method used in Continue reading...

Cost of Equity Capital

Cost of equity can defined as the opportunity cost of raising finances through equity. Equity comprises of ordinary share capital and retained earnings of a company. The rate of return expected by investors is the same as the cost of equity. Cost of equity is therefore important in valuation of shares. However, unlike debt securities, which have fixed interest, dividend paid on equity securities fluctuate over time. It is in the discretion of the management of any company discretion to determine how much dividend to pay in case they decide to pay dividend. This makes it hard to estimate Continue reading...

Q1. Qualitative Analysis:

The quality of chemicals outsourced was in question hence the company had to do something about it. It could choose another company to outsource especially if in sourcing would be expensive.

This would reduce the expense of recruiting new employees, building a new facility and paying for all the permissions and certificates required. It would also save the company operational additional operational cost (Brown, and Wilson, 2005).

Demerits of Continued Outsourcing

The company would continue to experience quality problems and the high cost of transportation would persist.
Merits of In Sourcing
The company would be in control of production hence producing high quality Continue reading...

Executive summary

Airlines industry is marked by innovations and dynamism. With technological advancement, increased attractiveness of the industry and increasing liberalization in airlines industry, have made the airline industry highly competitive. The low cost carrier industry is going through its best growth phases presently. With level of competition is increasing with every airline company trying to gain share of profit from this industry. Price wars are increasing. To offer the services in a cost effective manner, the challenge faced by the low cost airlines is to reduce their operating costs. The companies adopt different strategies based on their product and service Continue reading...

Appendix

Executive Summary
- Introduction
- Methodology
- Benefit and Cost Categories
- Forecasting Methodology and Decision Criteria
- Assumption
- Analysis
- Project Analysis (commentary and summary of base case results)
- Sensitivity Analysis
- Evaluating the project
- Risk Analysis
- Conclusion/Recommendation
Executive Summary
The cost benefit analysis is the fundamental appraisal tool under the public spending sector. The paper provides an approach by which the cost incurred in e-government project is compared against the expected benefits so that the government can be able to decide the optimum action. The cost of the project is regarded to all Continue reading...

(Financial) Management Accounting Case Study
Every single organization of the world is now trying to flourish their growth comparatively better than that of their competitors (Bradtke, p.45). The thing that really matters for them to have the same comparative growth potential is the management of operational cost. Operational Cost, though a common thing for an organization, but emerged as a real gangrene if the proportion of the same would be on a higher node (Cokins, p.34).
Cost-Volume Benefits always bring positivity in the functions of the company, as it has the ability to manage the operational cost in such Continue reading...

Answer to Q. 1

- “Cost minimisation analysis - outcomes equivalent”: Maximizing health outcomes is the important goal as per the economists. But, keeping the costs of public health interventions, programs, and policies and from an economist’s perspective, low is an important goal. The 1st type deals with problem identification. Economic impact analyses are sometimes called “cost of illness estimates,” or “impact analyses.” Normally annual total costs for a group, or cohort, of people with the disease, regardless of when the disease first occurred. This is called prevalence-based approach.
- cost effectiveness analysis : Cost-effectiveness analysis (CEA) describes consequences in clinical Continue reading...

Executive summary

As the newly appointed head of the travel and hotel support operations strategic unit of this company, I have thoroughly schemed through these units activities and would like to present my suggestions on some of the changes that need to be made in the company’s operational activities. My role as the head of the operations strategic unit is to manage the product portfolio of this unit. The operations unit is responsible for providing all the services offered by this company to its various clients. I have scrutinized my area of control and have come up with a concrete Continue reading...

AES is a leading independent supplier of electricity in the world with more than $33 billion in assets. Rob Venerus, the director of Corporate Analysis and Planning group was faced with a task of calculating the capital cost of the business. Many financial information and results were collected from subsidiaries in June 2003. The manager was obligated to develop a methodology to use the data to determine the costs of capital significantly in valuation and for capital budgeting. The group was created to solve the financial crisis, current and future strategic challenges.
The global economic instability had adverse effects Continue reading...

Introduction

Economics is a field which has its active recognition n almost every walk of life and it is an important thing as well . Alfred Marsha and Adam Smith are known as the founder of Economics who invented it. According to both of these individuals, Economics is the name of how to earn the money and how to consume it in a perfect and well organized position.
There are two different branches of economics, which are microeconomics and macroeconomics. Microeconomics is the branch of economics that deal specifically with the economics of individuals while macroeconomics is the name of economics Continue reading...

Herb Kelleher, the former CEO of Southwest Airlines, provided growth of the company using his flamboyant leadership style and extraordinary approach to team making. Southwest Airlines pioneered in the low-cost segment of the market. From 1996 to 2012 the company almost doubled the number of cities served. The operating income of the company had grown by 1.55 times in 2012 if compared to 2008 while its net income made up 2.37 times greater in 2012 in comparison to 2008. Thus, the company had grown significantly, but the growth outstripped to the maturity stage. The previous growth resources were exhausted Continue reading...

The changes in the global economy, the progressing state of the emerging countries that resulted to the increasing middle income consumers, and the development and spread of the internet technology impacted the ticket distribution system of the airline industry. The airline companies developed new and more cost-efficient ways of selling and distributing air tickets to be price competitive and at the same time to survive the intense competition in the industry and the economic struggles especially in North America and Europe.
The global distribution systems (GDS), was the most common and prevalent system of airline ticket distribution in the Continue reading...

Questions

- What is the economic order quantity for BBE in units? In Pounds?
- What is the total cost ( not considering transportation related costs) of the EOQ?
- What is the total cost for using motor carrier transportation?
- What is the total cost for using motor carrier transportation?
- Which alternative should BBE use?

Answer 1:

Annual Demand/Order Quantity (Q) = 5000 cases

Cost per Unit (CU) -- $200

Cost per Order (CO) ---$100
Carrying Cost (CC) % (as % of CU)—0.28
So EOQ = SQRT((2Q* CO)/(CU*CC%))= SQRT((2*5000*100)/(.28*200))=SQRT(10000000/56)
= 133.6 or approximately 134

So the EOQ is 134 units or 6700 lbs.

Answer 2:
Total Cost Continue reading...

Analyzing Case Study about Adolph Coors in the Brewing Industry

Section I: Introduction
Adolf Coors started his brewing company in 1873 in Golden, Colorado. Primarily, the beer product was not intended to be as it is today because of the prevailing regulation on alcoholic drinks during that period. However, as soon as the prohibition was lifted Adolf Coors’s company started to make the actual beer product and immediately sold 90,000 barrels. The success of the company allowed them to expand distribution territories by appointing independent wholesalers in Colorado and Arizona. Soon after, Adolf Coors’ company is selling beers in 44 states by 1985 with annual Continue reading...

The current paper examines the issues of strategic management accounting including stages of strategic management process, the roles of management accounting, concept of opportunity costs, concept of relevant and irrelevant costs, cost classification and practical application of breakeven analysis. Besides, it contains examples illustrating some of the above listed concepts. The claims are supported with relevant arguments; the examples reflect the issues associated with running business in contemporary market environment. Each task is divided into sections related to different parts of each question. Each part of the question contains appropriate conclusions.

Continue reading...

Business Report based on Excel Sheet workings and calculations

For the application of this paper, it is required that a comparative study in different scenarios be conducted to understand the implications of economic models and pricing theories on two products – brand X and brand Y. The data for this paper has been collected from actual supermarkets and by using analytical techniques it would be seen how the marginal cost, revenue and other economic functions react when the market scenario changes. These two brands – X and Y, are available in two versions, one is the regular version and the second one is a light version or the lite version.
Continue reading...

CSL: Supply Chain Case Study

Summary/ Abstract
CSL is doing very well in the POS equipment market. However, the main problem with CSL is that the POS equipments are changing fast. This is causing the demand to dry up in some of the areas. To battle with the reduction in demand and fresh investments, it is of utmost importance that CSL runs its supply chain efficiently so that the profitability of the company remains high. CSL currently has Asian and Local European suppliers. Asian suppliers send parts on a monthly or bi-weekly basis to the CSL subsidiaries in Europe. Most of the shipments are Continue reading...

The major cost factor that contributed to the choice of chief information officer (CIO) is the low operational cost of IT infrastructure at USA Group than at Sallie Mae. The executive group from the Sallie Mae made a choice based on whose IT organization is better in terms of management and cost of operations. Creg Clancy happened to be the former chief information officer at USA group. This company had several dollars portfolio of student loan hence was larger than Sallie Mae. The company therefore invested $100 million in the information technology five years prior to its merger with Continue reading...

Integrated case analysis

Introduction
Strategic management refers to the ability of managers to execute a collection of strategic policies in order to outsmart their rivals in the regional and global market. It is an intellectual approach by the management where they review their current performance and devise strategies to improve on effectiveness and profitability to seize competitive advantage over their rivals. Ford motor company has had a series of ups and downs in the automotive industry due to advanced technology and increased competition. The situation has prompted the management to review its strategic plan with intent to regain its market share and Continue reading...

Introduction

Cost, Insurance and Freight (CIF) is the price invoiced by a seller including the insurance of cargo, and all other charges incurred up to the destination port. During shipping of goods, there are challenges incurred when preparing the CIF quote. The main challenge is to ensure that all the necessary costs are included. Many of the cost items are readily available to the seller while the transporter prepares the others. Therefore, a description of the goods and their specifications must be accurate during the preparation of the CIF (Billings, 2003). All measures taken must be in standard form.

Jim Continue reading...

General explanation of the procedure followed

Contribution refers to the excess the unit selling price of a product over the direct costs of production related with the production of the said product. This accounting procedure is based on the assumption that fixed costs are incurred on timely basis (fixed costs are fixed for a certain duration of time) Hence, the fixed Continue reading...

Statement of the Problem

Destin Bras Products Co. (Destin) is a company engaged in the manufacture of valves, pumps and flow controllers. Destin is a highly competitive company, having at its helm Steve Abbott, John Scott and Roland Guidry and is a local success story in Destin, Florida.

Recently, Destin has come under fire by way of significantly shrinking gross margins due to price pressure from competition. The production of valves has contributed about 24% of the company’s revenues and has comfortably retained a 35% gross margin. Pumps, which contribute 55% of total revenue, have been under siege recently because of similar Continue reading...

Fitness industry business is one of the booming activities in the present business milieu. A fitness business focuses on offering individual training, fitness instruction and utilization of the fitness facility to those interested in pursuing their individual fitness objectives. Starting a fitness business does not require the initiators to be fitness gurus, but a passion in fitness or readiness to adopt a fitness lifestyle such as Zumba forms a critical part of success in the industry. This response to the case study seeks to consider various business models that Zumba could use to establish a successful business. In addition, Continue reading...

Results of the analysis of the Cooper Processing Company case (Bowersox et al., 2013).
In order to get the data to calculate the ROA, we need to get all the necessary data. The detailed cost for the retail and foodservice channels.
For the employees cost, the retail have 40 employees and the food service 10. Considering 5.000.000,00 USD the values are:
Employee_Retail: 4.000.000,00 USD Employee_Foodservice: 1.000.000,00 USD

The calculation of the sales promotion cost, we consider that 100% of all the cost are considered in the retail channel:

Promotion_Retail: 8.000.000,00 USD Promotion_Foodservice: 0,00 USD
The cost of the order processing for each channel is proportional to the number of orders of each channels, considering 70% Continue reading...

In the effort to revolutionize the retail sector, DigiPoS faced a number computing problems when upgrading the system. According to Debra (2008), DigiPoS was led by the desire to meet customers’ need and maximize on their investments while maintaining its competitive advantage being a leading provider of strong POS software and other technologies. This could be achieved by ensuring that the system was upgraded to make sure that the organization was able to reach their customers in time with the right quality. In the opinion of Shinder (2008), this led to a number of problems; DigiPoS being a large Continue reading...

The production director of Wilmslow Ltd wants to schedule production for quarter 3 (the twelve weeks ending 17 September) and asks you to use the revised information to prepare the following:
- The revised production budget for Alphas and Betas;

Closing stock is 5 days and 10 days of sales for Q4, for alpha and beta respectively, which is 20% more than the new estimated demand, so the Q4 estimated demand is 120% of 2000 and 2400 respectively
=120/100*2000=2400
2400/12=200 units (12 weeks because each week is 5 days)..For Alpha

For beta;

=120/100*2400=2880
2880/6=480 units (divide by 6 Continue reading...

Statement of the Problem

1. Destin Bras Products Co. (Destin) founded by Steve Abbott, John Scott and Roland Guidry and is a local success story in Destin, Florida and is in the business of producing valves, pumps and flow controllers.
2. Destin is facing stiff competition. Currently Destin’s revenues come from valves (24%) earning the company a 35% gross margin, pumps (55%) which has been observed to be weakening to a gross margin of only 22% and flow controllers (21%) even after increasing prices by 12.5% have not been attacked by competitors. With no technical patents or other advantages, Destin has no Continue reading...

Introduction

The case dwells upon a decision, which is to be taken by the Global Positioning System Navigator (GPSN) Manager Wally Wizard at the largest automobile manufacturer in the United States, Behemoth Motors Corp (BMC). The scope of the decision looks at two alternatives: 1) in-house production of 8,000 units of GPSN per months to be installed on the Sports Utility Vehicles (SUV), and 2) outsourcing of this production volume to reasonably new Far East Enterprises (FEE) Company under the terms of two-year contract. There are three critical aspects that should be considered as part of the decision-making process: Continue reading...

Management

Abstract
This paper describes Smiths Information Services Inc. Data centre outsourcing options. As part of corporate overhead reduction program Smith’s Information Service Inc., is faced with a variety of options with regards to outsourcing its data centre management services. The paper reviews the business outsourcing alternatives, short term and long term considerations with data security, service-level agreements, and HR and client issues being of major concern. It will also discuss contractual parameters for the outsourcing process as well as evaluation criteria proposed to be included in the RFP. Finally, the paper will discuss vendor particulars and timeline for Continue reading...

Report on Financing Wetsuits Private Limited Company.

Report on Financing Wetsuits Private Limited Company.
Equity Beta is a signal of the consequential risk that comes from ordinary shares returns. It is also referred to as levered beta. The difference between the equity and asset beta is that there’s a positive correlation with debt amount on the financial structure of the firm. The Wetsuits equity beta is derived from

Stock’s rate of return = (2 / 8) x 100 = 25%
Market rate of return = 12%
Beta is obtained by = (Stock rate of Return – Risk free Rate) / Market Rate of return – (Risk Free rate)
This gives ( Continue reading...

(a) (b)
The difference between the two graphs is that in the first graph (a), total revenue, Total cost and Profit have the straight line graphs. This implies that each graph has a linear function, that is, the total revenue (TR) function is given as; TR = Profit X Quantity, the total cost function TC = FC + VC. This functions takes a linear function of C = mX + C. where C is the y concept. On the other hand, the second graphs (b) illustrates that all the curves, Total Revenue, Total Cost and Profit, have a nonlinear functions (Zanoni, 2009). Another difference Continue reading...

The taxation of the capital gains made during the disposal of the property by James will be considered under the Income Tax Assessment Act of 1997, section 104-105 which deals with capital gains for individuals. This is wholly embedded in the Goods and services Tax act of 1999 (div 9-11). Using this act, considerations will be made on each tax event under the capital gains tax and analysis made on how each will be treated under the act. In the disposal of the property, either a capital gain or a capital loss is made, and such a gain or Continue reading...

Part One:

a)  Calculate the Weighted Average Cost of Capital
WACC: Weight of Debt* Cost of Debt(1-Tax rate) + Weight of Equity* Cost of Equity
WACC:[( 200000/400000)* 0.09(1-.22)] + [(200000/400000)* .15]
WACC: 0.0351+ .0300

WACC: 6.51%

*WACC that is also known as Cost of Capital will be used further to discount the cash flows of the company.
b)Calculation of Capital Allowance and Tax Payable on each project:

Project A:

Tax depreciation
Capital Allowance and tax liability
*Assuming that business loss for Year 1 will not be carry-forward to be offset from Year 2 profit and also there is no minimum alternate tax even if Continue reading...

Instititution:

The Under ArmourCompany began in 1996 by Kevin Plank, who played football with the University of Maryland College. The Under Armour performance apparel consist of footwear, accessories gear, made to keep athletes players cool, dry, and light throughout the course of a game, practice and workout.
There are several factors that affect business such as adjusting people choices or demoting the need for workout gear and other items. As people make more money, they can purchase items that he or she always wanted, such as special material or electronics devices. These are regular product that a normal family needs, Continue reading...

Summary of the Case

Maddux has established two game program suppliers, one local and another one in a different town. He is faced with a decision on which one to pick with their different cost for printing programs and the cost involved in delivery of programs to the university. Another challenge he is facing is whether carrying inventory will be economical for the university. Maddux is pressured to keep the costs of the game programs low and maximize profits.
The stadium is expected to have an attendance of 60,000, which is dependent on the team performance and the opponent the team is Continue reading...

The article “ERP implementation failures in China: Case studies with implications for ERP vendors” by Xue Y, Liang H, Boulton W.R. and Snyder C.A (2004) discusses two main issues in legacy or disparate information systems. The two problems include: complicated communication due to implementation of separate information systems among business units, and the high cost involved in the maintenance of independent information systems.

Issue 1: Communication Problem

Organizations in the past have relied on the independent information systems to systematize the various processes of individual departments. If each business unit of a large enterprise implements independent or incompatible information systems, communication between business Continue reading...

1.0. Background of London woods Limited
This is a private limited liability company that specializes in the production of furniture for sale to wholesale, retail and private use. It has been in business for the past five years and currently it employs 50 personnel that work within the company. It operates in the domestic market. The company was founded by three young men that were carpenters, Billi Kid, Bengazy and Lee Jones. These young men were energetic and they had appointed Operations Director aged 25 years. The operation's director's name was Mathew Do It. He is an innovator who Continue reading...

1. For style A Shades;
1 shade is packed in a box of 12 by 12 by 12 inches
Converting the inches into feet (12 in = 1 ft)
After package, 1 Style A shade occupies a volume of 1ft by 1ft by 1 ft (=1ft3)

When loaded into the intermodal container;

The container accommodates a maximum of 8 Style A boxes (width) by 8 boxes (height) by 40 boxes (length). Total number of boxes = 8 × 8 × 40 = 2560.
Therefore, 2560 style A shades can be loaded into an intermodal container.
2. For style B Shades;
1 package of 6 shades measures 12 by 12 by Continue reading...

i) Calculating cost of equity using CAPM Model:
Capital Asset Pricing Model, often abbreviated as ‘CAPM’, is the most fundamental concept in the investment theory of present time. This is an equilibrium model that predicts the expected return on a stock, given the expected return on the market, the stock’s beta-coefficient and the risk free rate. Considered from the borrower point of view, this model is used to calculate the cost of equity for the company using the following formula:
Cost of Equity= RFR+ Beta(Equity Risk Premium)

Below is the detailed explanation of cost of equity calculated for Tim Hortons Inc:

Risk Free Rate: This refers to rates being offered by Continue reading...