Cost analysis Cost concepts 1. Opportunity cost: Opportunity cost refers to the maximum return that could be obtained from an alternative use of resources, but is unavoidable or foregone by employing the resources in their present use. Opportunity Cost is also termed as Implicit Cost. Economic Profit = Earnings or Revenue of Firm - Economic Costs. For example: Mr. Subodh has two job opportunities in hand. First job opportunity can help him to earn Rs. 20, 000 per month and the second opportunity
the level of the cost driver, then: | | | | | |Answer | | | | | |Selected Answer: | | | | | |[pic] | | | | | |fixed costs per unit will change
Total ownership costs Introduction Total ownership cost is a financial estimate whose function is to assist customers as well as organization managers to determine both direct and indirect costs of a system or product (Contract management. 2006). Total ownership costs, as a management accounting concept it is applicable in the full cost accounting. In addition, it is applicable in ecological economics where in includes social costs among other costs. When it comes to manufacturing, total ownership
According to economic theorist, the problem regarding the cost of capital emerge is because capital that used to obtain assets create uncertain profits. In perfect capital market, we assume that firms act rationally; therefore theorist has come out with a proposition that helps to make the marginal profit on physical assets equal to the market rate of interest. Two propositions have been introduced and both of them are assuming that firm, as a rational decision maker under certainty circumstance
College text books are beyond expensive. Never did i imagine that books could cost so much in life. In elementary school, I use to be so upset over the fact that the books at the book fair cost $10 and now I'm paying over $100 for just
A drastic action would be to shut down its business customer line altogether as it is turning into a liability. Though this is not recommended as such, instead the bank should find ways to cut the costs of operating the business line. 2. Signs that Columbia City Bank’s original cost system was broken and in need of refinement is that it showed that its profit continued to decline even though 80% of the branch managers met the targeted increase in the number of customers. Another sign
College Costs Introduction It's no secret that financing a college education is getting tougher. College costs have skyrocketed over the past decade or so, and there's no relief in sight. Average tuition at four-year colleges will increase 7 percent this school year, double the rate of inflation. Student aid is not increasing fast enough to plug the growing gap between tuition and family finances. In addition, there is a growing number
Measurement of Cost Behavior Cost accounting may be regarded as one of the key aspects of most organizations. Lack of proper analysis and accounting for costs would bring detrimental effects on the profitability and the general financial position of an organization. However, one of the essential activities that costs accountants have to engage in is the measurement of cost behavior. Cost behavior involves finding out how costs are affected or altered when there is a change in the level of organizational
Q1: explicit costs and implicit costs concepts Explicit Cost Explicit cost is defined as the direct payment which is supposed to be made to others while running business. This includes the wages, rents or materials which are due in the contract. The explicit cost is the expense done in business which can easily be identified and accounted for in the business at any stage. The explicit cost represents the out flows of cash in clear and obvious terms. When any out flow of credit occurs in a business
Q1: explicit costs and implicit costs concepts Explicit Cost Explicit cost is defined as the direct payment which is supposed to be made to others while running business. This includes the wages, rents or materials which are due in the contract. The explicit cost is the expense done in business which can easily be identified and accounted for in the business at any stage. The explicit cost represents the out flows of cash in clear and obvious terms. When any out flow of credit occurs in a business