Analysis The annual maintenance coast of machine shop is P 69‚994. If the cost of making a forging is P 56 per unit and its selling price is P 135 per forged unit‚ find the number of unit to be forged to break-even. Solution: Let: x = number of units to be forged to break-even Income = 135x Expenses = 69‚994 + 56x To break-even: Income = Expenses 135x = 69‚994 + 56x 79x =69‚994 x = 886 units Steel drum manufacturer incurs a yearly fixed operating cost of $ 200
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Equivalent annual cost From Wikipedia‚ the free encyclopedia In finance the equivalent annual cost (EAC) is the cost per year of owning and operating an asset over its entire lifespan. EAC is often used as a decision making tool in capital budgeting when comparing investment projects of unequal lifespans. For example if project A has an expected lifetime of 7 years‚ and project B has an expected lifetime of 11 years it would be improper to simply compare the net present values (NPVs) of the
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One of the SKUs has the following characteristics. Demand (D) = 20‚000 units/year Ordering cost (S) = $40/order Holding cost (H) = $2/unit/year Lead time (L) = 2weeks Cycle-service level = 95% Demand is normally distributed with a standard deviation of weekly demand of 100 units. Current on-hand inventory is 1.040 units with no scheduled receipts and no backorders. 1. Calculate the item’s EOQ. What is the average time‚ in weeks between orders? EOQ = (2DS)/H EOQ = (2*20000*40)/2 EOQ = 800000
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____ 1. A cost is not relevant if it: A. B. C. D. E. Does not differ for each option available to the decision maker. Changes from period to period. Is a future cost. Is a mixed cost. Is a fixed cost. 2. Variable costs will generally be relevant for decision making because they: A. B. C. D. E. Differ between options. Are volume-based. Have not been committed and differ between options. Differ between options and have been committed. Measure opportunity cost. 3. Fixed costs will often be
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Job Order Cost System There are two main cost accounting systems used: Job order cost systems and Process cost systems. Both have very distinct differences that help each specialize in a certain type of manufacturing company. The job order cost system in particular is used to "provide product costs for each quantity of a product that is manufactured." When a product is called to be manufactured‚ then it is called a job. Once the job is ordered‚ the manufacturing company must go through a flow
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the difference between cost accounting and a cost accounting system. Explain the difference to Joe. (b) What is an important feature of a cost accounting system? 2. (a) Distinguish between the two types of cost accounting systems. (b) May a company use both types of cost accounting systems? 3. What type of industry is likely to use a job order cost system? Give some examples. 4. What type of industry is likely to use a process cost system? Give some examples. 5. Your roommate asks your
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Select the correct statement regarding relevant costs and revenues. A. Relevant costs are also known as avoidable costs. B. Relevant costs are future-oriented. C. Relevant revenues must differ between the alternatives. D. All of the above. 3. Andy is trying to decide which one of two job offers he will accept. Several items are presented below: Select the items that are relevant to Andy’s decision. A. (1)‚ (2)‚ (3)‚ (4)‚ (5) B. (2)‚ (3)‚ (4) C. (1)‚ (3)‚ (5) D. (2)‚ (4) 4. Alicia brought her lunch today
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time was in building supplies‚ so Low bought a business that specialized in sales of one size of nail. The annual volume of nails was 2‚000 kegs‚ and they were sold to retail customers in an even flow. Low was uncertain of how many nails to order at any time. Initially‚ only two costs concerned him: order-processing costs‚ which were $60 per order without regard to size‚ and warehousing costs‚ which were $1 per year per keg space. On average‚ the rented warehouse space is only half full. This meant
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Order Size‚ Transportation Costs‚ and Economic Order Quantity Jerome Benedict 604 488 9691 Prepare answers to the following questions prior to class. In class you will be given time to discuss your findings in small groups. Be prepared to present your findings either individually‚ or as a group‚ to the class. This discussion exercise is worth 2.5% of the overall mark for this module. 1. Is it reasonable to think order sizes are infinitely variable? How does this relate to LTL (less-than-truckload)
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Sangam (India) Limited • Annual Report 2011-12 Sangam (India) Limited Forward-looking Statements The report contains forward-looking statements that involve risks and uncertainties. When used in this discussion‚ the words like ‘plans’‚ ‘expects’‚ ‘anticipates’‚ ‘believes’‚ ‘intends’‚ ‘estimates’‚ or other similar expressions as they relate to Company or its business are intended to identity such forwardlooking statements. Forward-looking statements are based on certain assumptions and expectations
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