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Q7.
a) Explain the difference between full-absorption costing and direct costing and how does absorption costing help an entrepreneur make better decision?
b) “A start-up entrepreneurship does not need to develop a business plan when launching a new enterprise. All he/she need is a business idea and money to start operating.” Evaluate this statement supporting your answer with facts
d) What options does an entrepreneur have if he or she becomes unhappy with the growth of the company?
Step by step
Solved in 2 steps
- B) The C.E.O. explains that the company is facing severe competition in the market place and has heard about the use of Cost Volume Profit Analysis to assist in the decision making process. He is however unsure about the analysis and how it can be of use in the business, and is seeking your help to determine: 1) What is C.V.P. Analysis and how it can be used to improve the profitability of the business. The C.E.O. then asks your advice on two sets of actions currently being considered by the company to increase its Net Income. The company currently has sales of $ 350,000, representing 5,000 units. Its variable costs are $ 250,000 and the fixed costs are $ 60,000. The alternatives being considered are: a) Increase Selling Price by 10% b) Reduce variable cost to 70% of Sales. You are asked to: 1) Compute the Net Income that will be earned under each alternative. 2) Advise the CEO as to which alternative would best suit the company's requirements.how could MIN() and MAX()In excell benefit a small business? Create an example where knowing such value may help a manager make a smart business decision.In The Trouble with Outsourcing, a Schumpeter column in The Economist, there is a statement of advice to companies, who outsource products or services: they need to think harder about what is their core business, and what is peripheral. What types of problems do you think they are talking about? In your answer, present at least five (5) problems that companies should consider when outsourcing products or services.
- Discuss profit equation and how costs affect profitability. Explain the pros and cons of these business decisions. From a biblical perspective, discuss outsourcing to sweatshops and mass layoffs.All of the following should be considered in a make-or-buy decision excepta. quality issues with the supplierb. future growth in the plant and other production opportunitiesc. whether the supplier will make a profit that would no longer belong to the business d. cost savingsIn making short-term business decisions, what should you do? a. Use a traditional costing approach. b. Focus on total costs. c. Separate variable from fixed costs. d. Focus only on quantitative factors.
- What does a consistently negative responsibility marginimply will happen to the operating income of the business ifthe center is closed? Why? Identify several other factors thatshould be considered in deciding whether or not to close thecenter.See questions 1 - 3 in image Question 4: If you were in Dell Havasi's position, would you accept or reject the new product? Question 5: Would the new line increase or decrease the company's overall ROI?Identify the major problems in this situation and explain how they impact the organization. You will need to consider both behavioral and analytical factors. Specifically, how might managerial accounting concepts, tools, or techniques be applied to help resolve this dilemma? What are possible consequences of applying the same to this dilemma? Briefly explain Orange Electronics has been experiencing declining profit margins and has been looking for ways to increase operating income. It cannot raise selling prices for fear of losing business to its competitors. It must either cut costs or improve productivity. The company uses a standard cost system to evaluate the performance of the soldering department. It investigates all unfavorable variances at the end of the month. The soldering department rarely completes the operations in less time than the standard allows (which would result in a favorable variance). In most months, the variance is zero or slightly unfavorable. Reasoning that…
- Answer the following questions in multiple-choice answers: 1. The book value of the equipment currently owned by a firm is an example of a(n): a. future cost. b. differential cost. c. comparative cost. d. opportunity cost. e. sunk cost. 2. An accounting information system should be designed to provide information that is useful. To be useful the information must be: a. qualitative rather than quantitative. b. unique and unavailable through other sources. c. historical in nature and not purport to predict the future. d. marginal between two alternatives. e. relevant, accurate, and timely. 3. Factors in a decision problem that cannot be expressed in numerical terms are: a. qualitative in nature. b. quantitative in nature. c. predictive in nature. d. sensitive in nature. e. uncertain in nature. 4. An opportunity cost may be described as: a. a foregone benefit. b. a historical cost. c. a specialized…Select a manufacturing organization for justifying“Companies with labor incentive manufacturing processes are most likely to benefit from sendingmanufacturing operations overseas because the bulk of potential cost savings relate to labor costs”.Q1. Identify relevant and irrelevant costs and benefits in a decision?Q2. Prepare an analysis showing whether a product line or other business segment should be addedor dropped?Q3. Determine the value of obtaining constrained resources?1. Which of the following is an example of qualitative factors that can effect investment decisions? Select one: a. All of the choices b. Over time, how will the quality of goods produced impact the company financially? c. How will any changes affect worker productivity? Will they have any impact on employee morale? d. How will the proposed acquisition or upgrade affect the company’s flexibility?