Essays on Fixed Costs

What are the standard logistics operational characteristics of a consumer product company?

Logistics costs reduction, improvement of inventory, and the availability and maintaining optimal service levels are some of the characteristics in standard logistics operations (Gudehus & Kotzab, 2012). Logistics costs management is an essential element in operations of a standard logistics company. Costs determine company efficiencies and earnings. A reduction in logistics cost increases efficiencies and a company’s profit earnings as well as ensuring customer satisfaction. Improving availability of inventory ensures that logistics processes are done in a timely and cost-effective manner. On the other hand, the maintenance of optimal service level ensures that the costs of products are reduced ...

Response Hyundai Cut Cost

All organizations should look for ways of cutting costs when they experience a decrease in profit. However, in implementing cost-cutting measures, it is important to start by establishing budget variances. This helps to identify the costs that have adverse variances. After identification, the management should look at the reasons behind the variances and establish how to rectify the variances. At this stage, the management comes up with methods of reducing the variances. These are the cost cutting measures that the organization should adopt. Another measure of cutting cost is adopting zero-based budgeting approach. In this approach, every expenditure item ...

Cost Classification

It should be noted that the conceptual analysis of costs is based on comparison of different pricing models applied by the companies operating within similar business field. The manufacturing costs should be obligatory considered. The cost of manufacturing products of the navigation systems is very high. It may be explained by the fact that materials necessary for production consist of the unmanned, manned system, aircrafts, and space systems. In process of manufacturing and monitoring of the system high-skilled staff is required. Moreover, manufacturers of the details required by the navigation systems receive overhead profits. The non-manufacturing costs are related ...

BUSINESS STRATEGY – KEBAB-JI CASE STUDY

Introduction Kebab-Ji is the concept of healthy Lebanese cuisine quick casual restaurant. Different from fast-food due to more refined meal options and restaurant layout, this concept became very popularly among many consumers. Timely service and fresh ingredients are the key elements of the marketing strategy, chosen by the management. The purpose of this study is to analyses the operations of the restaurants, its mission and vision and other aspects, which affect the effectiveness of the operations from the Supply Chain (SCM) standpoint.

A variety of dishes and ingredients underpin the authenticity of the Lebanese cuisine. Moreover, the company places ...

American Public University

The Starbucks Cost Analysis The Starbucks coffee shops are on every corner in many cities all around the world, and they all look like similar with a coffee color background, promotion stuff, and coffee kinds. Starbucks trains its workers as a barista and spends the effort to create a coffee environment in its stores and subsequently a coffee culture. Considering that many people are almost like addicted to the Starbucks coffee all around the world, Starbucks could create the largest coffee shops supply chain in the world. While succeeding this, Starbucks could manage to develop a cost-efficient supply chain ...

Problem Statement

The objective of this paper is to present a report on the marketing questions raised by the founder of Celtic Chocolate Company Limited. Mr. Ronald Begg founded Celtic Chocolate Company Limited under which he engineered a new product called Milk Mate. The new product is basically a milk modifier. Milk Mate was introduced into a market largely controlled by large companies, such as Nestle with a market share of 50%, Hersey with a market share of 20%, Cadbury at 10%, and the remaining 20% shared by other smaller players in the region.

Generation of Alternatives

The introduction of the new product into ...

Two distinct set of financial reports are used in managing a company, one made by Financial Accountants and the other by Managerial Accountants. These reports are aimed at the company’s external stakeholders such as investors and creditors and are prepared for each quarter and at the end of the financial year and. The format and content of these reports are laid down in laws such as the SOX (Sarbanes- Oxley) Act and in accounting regulations such as the GAAP (Generally Accepted Accounting Principles) and the IFRS (International Financial Reporting Standards). Financial reports become comparable across companies. Managerial accounting ...

Introduction

In the context of microeconomics, the concepts of economies of scale, economies of scope and complimentary relationships are three important elements for a business and it’s strategy. The nature of how a business plans production and schedules pricing can be significantly impacted by changes to any of these factors as profitability may hinge on the number of units sold, the diversity of the types of products sold or how other products in the market change. Economies of scale is the nature of changes to the cost of production for each unit the organization produces. Economies of scale lead ...

Analysis of Tesla Motors

Analysis of Tesla Motors

Introduction

Organizations must use any strategy that will enable the organization to stay competitive and to also learn about any processes within the organization that could be changed in order to increase proficiency and efficiency. One such process is a critical analysis of the microeconomic and macroeconomic environment as well as any challenges that the organization may be encountering. This essay will perform an analysis of Tesla Motors to include the history of the organization, organizational regulations, factor markets, global pressures and foreign competition, cost structure, economies of scales; a critical analysis, practices of economic theory ...

Product and Cost Allocation

“Luggage R Us” is a new luggage company that helps customers design, make and ship their own personalized travel luggage. The company offers four standard luggage sizes that can be used by individuals for business trips, couples on a romantic vacation, and even for a family of four. The four sizes are segregated into the carry-on, medium, large, and the extra-large (Samsonite, 2016). The standard size used for the carry-on is at 22”x14.5”x9.75”, which is within the maximum size limit for baggage for most airline companies (Samsonite, 2016). Figure 1. Luggage sizes offered However, most carry-on luggage ...

Value Chain

The objective of analyzing Monster’s value chain is to make a product that will become popular to its customers, which includes not only the production segment but also marketing and distribution (Horngren and Data, 2015). This is because products will eventually need to be discontinued due to changing customer preferences and product innovation from competitors. This means that the company’s core operations and its products must continuously evolve and this could be done using the value chain analysis tool. For an energy drink company like Monster, one of its main goals is to continuously adapt to the ...

Budgeting for capital replacements and upgrades per year in a healthcare setting: Approaches used to determine capital affordability - A capital budget refers to an approximation of expenditure to be incurred on items that are long lasting, usually six to ten years or more, and can be major or minor depending on the amount and the context of the budget. Capital budgeting is very important in any hospital as it covers construction, purchase of new equipment or repair of existing equipment, and new equipment in new locations. in a healthcare setting, several factors determine the amount and stretch of ...

Simulation in Nursing Education

The concept of simulation in healthcare education has been since the time of world II. The basic concepts of simulation in associate’s or bachelor’s nursing program comprised of CPR manikins, role playing, static manikins, and conventional techniques based on the utilization of various taught concepts were used as a teaching modality since over 5 decades (Norman J. 2012). The concept of high-fidelity education has been in place for over 2 decades but it is new and unique in the nursing education. The process involves the use of simulation with the help of high-end computer technology including simulation ...

1. Fixed costs are costs that are not directly changed by increasing or decreasing the scale of production in the short term. They take a place even in the case when the company produces nothing, that is, their value does not depend on production volume. The types of fixed costs: depreciation, rents, costs of capital repairs, the percentage of the loan for the purchase of equipment, payment of taxes, insurance premiums, administrative expenses etc. On the other hand, variable costs are such costs, the value of which directly depends on the scale of production. The types of variable costs ...

Cost structure

Monster Beverage Corporation is a manufacturer and distributor of energy drinks. The cost structure of the company consists of both fixed and variable costs. The unit price for a can of Monster Energy drink sells at an average price of $7.90.

Variable costs

Monster’s variable costs include the cost of concentrates and beverage bases, the cost of raw materials, re-packing costs and co-packing costs. The company’s raw materials include cans, flavours, containers, bottles, packing materials and ingredients. The table below indicates each of the variable cost items and the respective costs per can of Monster’s Energy Drink.

Contribution margin

Contribution ...

SIX-MONTHS PROJECTION OF REVENUE AND EXPENSES

REVENUE FEES 248,000 PREMIUMS 95,000 OTHERS 110,000 453,000 EXPENSES COMPENSATION AND BENEFITS 120,000 DIBEATES COST AND DRUGS 190,000 FOOD SUPPLY 70,000 OTHER EXPENSES 70,000 TOTAL VARIABLE COST 450,000 CONTRIBUTION MARGIN 3,000 FIXED EXPENSES 380,000 In business, budget involves a plan that the hospital will employ to determine the difference between the outgoing expenses and the incoming revenues. The budget will help ensure proper use of the available resources as previously planned without exceeding the budget. It also helps in the justification of the appropriate use of the funds, ...

Applying the knowledge of microeconomics in practice allows solving various issues that producers are facing. The importance of microeconomic analysis becomes more evident during the periods of economic slowdown like the current one. As the economic activity decreases, prices fall and firms have to find ways in order to remain profitable. This issue is crucial for agricultural producers, that currently facing the simultaneous decrease in prices and increase in input costs, as indicated by the recent news article (Hawkes, 2016 July 19). The author believes that the USDA program would help to reduce variable costs in the crop industry. ...

Business Risk

This risk or uncertainty concerns that an organization may witness decline in profitability or might suffer from losses in any financial accounting period. Business risks originate from different uncertainties such as changes in consumer tastes, change in preferences and buying behavior, modifications to government policy as well as increase in intensity of competition etc. business risks also stem from those unforeseen or unexpected events that may cause a business to fail in future . Business risks are not just related to an organization as a whole. Different departments of an entity face numerous business risks that are unique to their ...

LeanCor’s Supply Chain Case Study

Q1. A consumer product company has a number of standard logistics operational characteristics. The main characteristics considered in the LeanCor case study include high inventory availability, constant flexibility during customer order processing and speedy deliveries from distribution points to the customer. These three characteristics all relate to improved customer service which is the main target for consumer product companies. More inventory availability means that there is no occasion that a consumer will require a product and find it out of stock. Inventory availability in the warehouses and distribution points is a key practice to ensure that customers get the ...

The airline industry is considered to be highly competitive and therefore airline company managers will need to determine the relevance of their current ERP systems with regards to the applicability of the financial information it generates. This is because the same quantitative and qualitative information is used for both financial and management accounting. However, the main goal of a company is to generate better profitability for its owners while remaining sustainable. This is done by controlling costs while improving revenues through the use of budgets and the standardization of costs and results to variances, which are primarily under management ...

Fixed Costs Details

Fixed costs refer to the costs that do not change with the unit of production. It is the cost that is required to pay even the business is stopped. These costs are the obligations of the owner of the business even at zero production level. The fixed costs of Cancer coach is provided in the table below. The costs of the components are based on market research that is estimated costs of assets and expenses are collected from the market analysis. The high cost is allocated for equipment as it is the main thing required in the cancer center. ...

Nike cross fit shoes

Pricing strategy is an important factor in business; it plays a main role in creating demand on the market. Price is usually set by business to cover all cost spent for creating the product and to maximize the profit. There are several factors that form a price for any product and they can be divided into fixed and variable costs. For instance, costs for materials used in production Nike shoes, wages if the employees are paid for the amount of unites produced and utilities are variable costs as these expenditures vary with output. Fixed costs include machinery that is ...

BEP and CVP Analysis.

1. Scenario #1 – New Wing Rental. In order to determine the break-even number of knee replacements, the Finance Director should do several calculations. First he needs to determine the total variable cost. They are equal to $12 500 ($9 500 Supplies + $3 000 sales costs per knee). Knowing the selling price of one knee replacement ($17 000), the Finance Director can now calculate the contribution margin. In order to do that, he needs to subtract total variable costs from the selling price. The contribution margin is $ 4 500 ($17 000 – 12 500). This is the amount that can be ...

Business Accounting Assignment 1: Business Report on Accounting Practices and Financial Standing of Crafty Limited

Introduction Final Accounts are prepared at the accounting cycle in order to determine the financial state of a business during a designated period. Preparation of final accounts include Manufacturing and Trading account statements, Profit and Loss Account sheets and the Balance Sheet. In order to calculate the amount of profit or loss a business entity has generated within a specified period, the Trading, Profit and Loss Account is prepared; since the Balance Sheet provides a snapshot of the assets and liabilities of a business, its interpretation reveals how financially viable the business is currently; while the most important function ...

The Boeing Corporation is the leader in the industry of aerospace. Moreover, it is known for the manufacture of military and commercial airplanes as well as satellites, missile defense, and launch systems. Therefore, it is the biggest manufacturer of both commercial and military planes. The corporation has five major divisions: Global services, military, business services and capital Corporation, network and space systems. However, its primary objective is to lead the industry continuously while creating new innovative aircraft to fulfill the growing needs of the customers. On the other hand, the Lockheed Martin Corporation is known for its ability in ...

MANAGEMENT ACCOUNTING REPORT

Introduction This report covers budgeting, break-even analysis, and the analysis of make-or-buy decision. The budgeting details the purpose of a budget and the importance of involving staff in developing a budget. The report contains a direct material purchase budget (in units and in dollars), a direct labor budget (in hours and in dollars), and a manufacturing overhead budget. The break-even analysis compares the hammer division break-even point locally and in Myanmar. The break-even analysis indicates that the business will have a lower break-even point if they shift the hammer division to Myanmar because of lower fixed costs and reduced ...

Introduction

Time warner Cable Company is a telecommunication company located at the Time Warner center in the United States in the city of New York. Time Warner company deals with the televisions networks, films and entertainment. It is the third largest telecommunications company in the world. The company was established in the year 1990. It was started by forming a merger between two companies in the United States of America. This companies comprised of Time Inc. and the Warner communications. The company mainly operates in film production and television. The company has a limited publishing operations in the United States ...

Recommendations to the Restaurant Manager

In the current state, the restaurant is profitable. The break-even point is 89,474 covers with a margin of safety of 10,526 covers, and the net profit is £60,000. This implies that the restaurant sales have to fall, by at least 10,526 covers for it to start making losses. The manager has several considerations to make on measures to improve the profitability of the restaurant. The available options and offers are discussed below.

Reducing the price to £10.00

If the price is reduced to £10.00, there will be a rise in sales to 12,000 covers. The contribution margin will fall ...

Activity Based Costing and Process Costing

Contribution margin per unit: Formula = selling price per haircut – total variable cost per haircut Selling price per haircut = $12 Variable cost per haircut = $0.40 Contribution margin per haircut = $12 - $0.40 = $11.60 per haircut

Discussion:

The contribution per unit is $11.60 per haircut, which means that the every haircut is $11.60 towards the profits of the business. Moreover, the portion of fixed cost is very high as compared to the variable costs.

Annual breakeven point in terms of haircuts:

Breakeven point formula = Total fixed cost for the year / Contribution per haircut Labor cost per year = 5 barbers x 40 hours x50 weeks x $9.90 = $99,000 ...

Importance of understanding cost changes

Introduction Introduction The report outlines the importance of having a good understanding of the cost changes. The two commonly used methods used to derive the cost function are the econometric method and accounting method. The report gives details on how the CVP analysis technique has been used to get prices of diverse range of products and services. The CVP analysis is based on certain assumptions which are extensively covered in the report. This report is intended to help in improving the efficiency of carrying out operations in both small and large business organisations.

Different methods were used in collecting ...

This analysis considers the cost behavior of the various cost items in order to determine the cost and profit at various levels of activity. Fixed costs are costs that do not vary with changes in output. Variable costs are costs that change with changes in output. Semi-variable costs are costs that are partly variable and partly fixed. Stepped fixed costs are costs that remain at a particular level of activity but step-up to a new level when activity level exceeds a particular point (Drury, 2012). In this case, the cost items are classified into either fixed costs, variable costs, ...

Management Accounting

Step 1: Question 1: The total variable cost for the company comprises of manufacturing costs and sales and administrative cost. Accounting both, the total variable costs for the firm was calculated at $10 per unit

Question 2:

The total production costs for any organization is bifurcated as fixed costs and variable costs. Important to note, while the variable costs and output carry a direct and proportional relationship, fixed cost is not related to output level and remains constant throughout. In other words, while the variable costs increase in proportion to the increase in output level, fixed cost does not change and ...

Business Health Check

[Insert Date]

Introduction

Happyville Pharmacy is a family owned business located in Brisbane. Husband and Wife pharmacist Joe and Betty Blow are the owners of the store and it is run independently without any banner group. Although the main products sold are related to pharmaceuticals but the store also sales other products such as baby products, confectionary, cosmetics, small gifts, household and domestics products and perfumes. It also sales non-medical skincare products and oral hygiene products. As per the 2014 guild report which reported data for the years, 2012 and 2031 in Australia, community pharmacy industry has an overall size ...

Problem statement

Foxy is considering whether to continue using trade shows or venture into online sales to distribute their collection. Trade Shows provide Foxy with a chance of meeting retailers who would be willing to add Foxy collections to their merchandise. Foxy attends Trade Shows targeting retailers dealing in Women’s fashion accessories and giftware boutiques. The Trade Show strategy is however, time consuming and Ger and Chemel spend about 50% of their working time travelling. Now that they are married, Ger and Chemel feel that they will not be able to devote adequate time to attending trade shows.

Recommendations

The alternative ...

Greetings,

I hereby submit this formal analysis bundled with detailed calculations regarding the low profitability of Product Gale and its overall effect on the company. Basing on my analysis, I have discovered that Axelrod Company is better off with Product Gale in its operations than without it. Find below the analysis and conclusion on the same:-

Total Income of all Products of Axelrod Company is as follows:

Calm Windy Gale Sales $ 750,000 600,000 146,250 Variable Production Costs: Direct Materials $ (250,000) (187,500) (56,250) Direct Labor (350,000) (262,500) (78,750) Fixed Overhead (90,000) (67,500) (13500) Net Income $ 60,000 $ 82,500 $ (2,250) ...

Part One

Risk There is no standard way to define risks. However, one of the definitions of risk is the probability that the return on an investment will be lower than the expected return (Business Dictionary, n.d.). Examples of risk include business risk, transactional risks and exchange rate risk.

Beta

Beta is a measure of systematic risk of a stock. The value measures the volatility of the stock compared to the volatility of the market (Forbes, n.d.). The value of Beta can be either positive or negative while the beta value of the market is always one. As such, in interpreting the ...

Under monopolistic market structure, one seller dictates the conditions and prices. It means that the demand curve of the company is equal to the demand of the whole industry (Monopoly, n. d.). There are different types of monopolies. For instance, pure monopoly occupies the biggest market share. Any company that has more than 25% of share in the market may be categorized as a monopolistic entity (Monopoly, n. d.). This type of firm is prohibited by law in many countries. There is also a natural type of monopoly, which essentially means that the industry is characterized by high fixed ...