...The profit margin of an organization can be increased by either cutting costs or adding value and increasing the price of a product or service. The profit margin means the amount by which revenue from sales exceeds cost in a business. The profit margin of an organization can be increased b either cutting cost or adding value and increasing the price of a product or service as if the price does cheaper the more customers who will be able to afford the product equalling more units sold and more profit will be earned from the extra units sold. Secondly if the organization decides to make the product more expensive, then the people who are looking to buy the product will have to pay extra earning the organization more than what they would have had from the original price. Finally if the organization add value to their product it will make it unique from the market meaning the can add extra price to the product because others doesn't exist like this. This will also get the customers to be interested in the product because of it is unique so they will be willing to pay the extra cost towards it. However the profit margin of an organisation cannot be increased by cutting cost, adding value and increasing the products price because the current customers may not be able to pay from the extra cash, making less people to buy it costing the organization to lose money. Secondly adding value means that the organization will have to pay extra to make the product from the original product...
Words: 402 - Pages: 2
...the Internet. The activities that make an enterprise successful today may no longer be sufficient next year. A crucial role of managerial accounting is to continually assess how an organization stacks up against the competition. I do agree with the notion of value costing for the 21st Century organizations. Traditional accounting systems distribute indirect costs on the basis of direct labor hours, machine hours, or material costs. This leads to a distorted picture. The costs of products and services must be accurate, or management can be misled. In the last 15 years value costing has been at the forefront for businesses in the 21st century. New cost concepts allocates costs to the things people are doing in companies and assures that these costs are paid by the products that generated them. Virtual enterprise and efficient supply chain management systems will shape the future of these enterprises. Organizations are trying to become agile enterprises with the help of strategic alliances of firms and integration using information technologies. Traditional performance and cost measures are no longer suitable for developing and managing enterprises in the new environment. In order to remain relevant and to add value, cost and performance measures must be designed and systematically evaluated to reduce the often-unnoticed mismatch between strategic goals and operational tactics. Traditional costing systems provide precise, objective, verifiable and good information for external...
Words: 804 - Pages: 4
...Lecture 5: Cost-Volume-Profit Analysis In this module, we are going to discuss a simple concept yet a powerful financial planning and decision-making tool for managers. This concept is called CVP analysis or cost volume profit relationship. Profits are the difference between revenues and costs. Both revenue and cost depend on the volume of operations. So, in the short run whether you make a profit or a loss depends upon the volume of sales you make. What is the unknown for a manager when he or she tries to project profits for future? The managers know the costs and the selling price. So the only unknown is the volume of sales. The importance of CVP analysis flows from the fact that it emphasizes the inter-relationship between costs, volume of sales, and selling price, and therefore it represents a unified picture of all financial information in a simple framework. What effect on profit can American Airlines expect when it adds a new flight on the Dallas Chicago route? How many patient days of care must Dallas Children’s hospital provide in order to cover all of its operating costs? How will the profits for Texas Instruments change if it sells 10% more of its DLP chips? Each of the above questions concerns the effect on cost and revenues when an organization’s activity changes. CVP analysis summarizes the effects of changes in organization’s volume of activities on its costs, revenue and therefore profit. Although the word profit appears in CVP analysis, this...
Words: 2923 - Pages: 12
...BGI COURSE SYLLABUS |Course Number and Title |MGT 553 Finance, Accounting, and the Triple Bottom Line I | | | | |Instructors |Kate Lancaster, PhD, CPA | | |kate.lancaster@bgi.edu | | |(W) 805.756.2922, (H-MB) 805.772.7452 | | |(H-BI) 206.780.1015, (C) 805.440.4618 | | |Toni Smith, PhD, CPA | | |toni.smith@bgi.edu | | |603.659.5108 | | |Brian Setzler, MBA, CPA | | ...
Words: 1506 - Pages: 7
...re-release their famous albumTissue Your Earin the United Kingdom. The fixed costs of production will be £150,000 and variable costs of production are £4.30 per CD. One-sixth of the sales price of the album is paid by Fink Ploid for Value-Added Tax (a form of sales tax that is included in the sales price). The income tax rate for corporations like Fink Ploid is 20% of pre-tax profits. Required: 1. Determine the following: a. Assuming a sales price of £5.40 per unit, what is the breakeven point, in CDs? b. Assuming a sales price of £8.40 per unit, what is the breakeven point, in CDs? 2. Assume that Fink Ploid wants to earn an after-tax profit of £70,000. Determine the following: a. Assuming a sales price of £5.40 per unit, how many CDs will Fink Ploid have to sell to earn the desired profit? b. Assuming a sales price of £8.40 per unit, how many CDs will Fink Ploid have to sell to earn the desired profit? 3. Fink Ploid expects to sell 1,500,000 CDs if it sets the sale price at £5.00. For every £0.01 increase in sales price, 3,000 fewer CDs will be sold. Determine the following: a. The profit-maximizing price (all prices are to the nearest £0.01) b. The amount of profit earned at that price. 4. Assume that Fink Ploid can purchase £30,000 in specialized production equipment that will reduce its production cost £0.05 per CD. Determine the following: a. The profit-maximizing price b. The amount of profit earned at that price c. Should the specialized equipment be purchased?...
Words: 498 - Pages: 2
...of people, organizations and governments Important to have clearly defined functions/processes Ex. human resources, production, marketing and finance Customers: people/organizations that buy the product Consumers: those who use the product Consumer goods: sold to the general public and can be split into: Consumer durables: products that last a long time Non-durables: products that needs to be consumed very shortly after purchase Capital goods: purchased by other businesses Added value: difference b/w the value of inputs and the value of outputs Allows a business to sell its products for more than production cost (leads to profit) Comes in the form of: Speed/quality, prestige, brand image, feel-good factor, perceived value, inability to achieve cheaper products elsewhere Opportunity cost: best alternative decision that is foregone when making a decision Leads to rational decision making Choose options that will generate the highest valued benefits to the business Role of profit: Acts as incentive to produce Acts as the reward for risk takers Encourages innovation and invention Acts as an indicator of growth Signals when to switch b/w low-profitability and high-profitability business activities Survival in the long run Money for owners (surplus, on the other hand, is put back into the business) • • • • • • • • • • Factors of production: resources used to produce a good or provide a service Land: natural resources incl. renewable...
Words: 30408 - Pages: 122
...CYCLERMATE PROJECT REPORT Integrated Business Contents * Introduction * Analysis of Business Environment * Analysis of Business Management * Solution * Conclusion Introduction Dai Armstrong and Lewis Llewellyn are the two men who planned to open their own company after being superfluous due to the shutting down of the steel plants in their town of South Wales were Dai Armstrong and Lewis Llewellyn. They both were the part of the local club of cycle touring and because of that, they both became good friends and as a result decided to start Cyclermate which was a bicycle manufacturing company that was laid down in the year 1988. In the initial year Cyclermate possessed a great influence over the share of the market. The whole lot appeared to function with no problems and difficulties up to the year 2010, the time when the company confronted lots of consequences with respect to operation human resource and finance. Specifically, demand by the purchasers fell continua sally even though the prices were cut down by the company; the distinguishing attributes of the goods were not up to the quality as they were earlier. The rising complaints from the customers regarding degrading quality and faults in the product and the concern by the bank manager regarding the overdraft could cause trouble if the problems are not solved as soon as possible. The report is with regard to the financial problems and various other problems confronted...
Words: 4056 - Pages: 17
...and increase production efficiency, compress production time and reduce the production cost. It ultimately changed the entire plant as well as the situation of the company as a whole. It gave me a different insight into an upper level of management achieving a purpose. For the factories, chaotic production system, higher production costs and longer lead times are common problems. The theory of Constraints which was introduced in the book is a good tool to help us solve these problems. Besides this, what I learned in the book is far more than the application of the theory itself. First, find the goal. When Rogo sought a solution of factory predicament from Jonah, the first question this physicist asked him was what is the goal of the factory? This seems like a simple question. But soon Rogo found that this question is not simple, he realized that the "goal" is the starting point and the final destination of the managers, what he did before was just specious stereotypes in guiding decision-making. In fact, people do need a goal for doing anything, we can only know the direction of doing things with the goal, and then we will think how to do things. And we also need to refer to the goal so as not to deviate from the direction. What is the goal of the enterprise? In a nutshell it is the word "money." If we use a precise definition: the present and the future goal must continue to obtain profits....
Words: 1230 - Pages: 5
...Daniyell Payne Hayley Romine July 19, 2015 Table of Contents Abstract 3 Key Issues and Problems 4 Decision Alternatives… Resolutions and Solutions… Recommendations… References… Abstract The purpose of this case study is to examine, classify; analyze critical concerns as well as difficulties that are impacting Precision Worldwide, Inc.’s organization. Notably, Precision Worldwide, Inc. has several competitors who are well-disposed in the market due to their reduced pricing and product substitutions. The method in which this case study observation is arranged will explore findings and opportunities related to price and production cost; the ramifications of demand in other markets. The assessment of this case study, in conjunction with arriving to an appropriate cost for materials and freight, will help determine the recommended best course of action for Precision Worldwide, Inc. and Hans Thorborg in deciding the preferred product for the organization. Key Issues and Problems Precision Worldwide, Inc. (PWI) is faced with a business decision that will potentially affect the organization’s continuity and profitability. The organization recently held meetings to discuss the introduction of a substitute product into the marketplace by a competitor. In making a business decision to ensure the ongoing future of the organization, the key issues and problems need to be outlined to provide certainty that all issues and problems are addressed...
Words: 1119 - Pages: 5
...To: Board of Directors of Caribbean Brewers Inc. From: Comptroller, Caribbean Brewers Inc. Subject: Production Costs, Performance Management System, & Income Tax Audit Risks Date: Background In 2005, the Gera International conglomerate purchased 75 percent of the common shares of an Antiguan brewery, the producer of “Tigua” beer. The Antiguan brewery was renamed Caribbean Brewers Inc. Three years later, the production facilities at the brewery were expanded, and the production capacity doubled. In 2009 and 2010, sales volumes of Gera beers increased dramatically. Although production systems and processes have not changed since the acquisition, Caribbean Brewers’ costs of production have also increased significantly. As a result there has been growing dissatisfaction amongst production employees, especially those whose compensation is linked to the supposed production inefficiencies and rising costs. In addition, Caribbean Brewers Inc. has received a letter from the Inland Revenue Department of Antigua informing us that our tax filings for the years ended December 31, 2008, 2009 and 2010 will be audited at the end of the month. Purpose The purpose of this report is to: • Assess production costs to determine if they have been properly allocated, • Analyze the current performance measurement system, • Determine if Caribbean Brewers Inc. has been compliant with Antiguan tax laws, and • Recommend solutions to overcome declining...
Words: 2544 - Pages: 11
...of Golden Glow Logo Description The future entrepreneurs decided to attach '' Golden Glow'' to its business Logo. The color portrays the appearance of veggie empanada after being fried. Lastly, the rolling pin represents as a tool that will shape the young entrepreneurs to become successful in the future. Brief description of the Project The main product of the business is vegetable empanada. Its main ingredients carrots, chayote, cabbage and bean sprout. This vegetables can be used as alternative to meat in the preparation of empanada. The future entrepreneurs will start a business and is willing to take risk in order to generate profit. Also, this project can help the society by providing healthy snacks rather than junk foods. General Objectives of the business * To introduce a business that will give maximum profit. * To promote vegetables as an alternative for meat in preparing empanada. * To offer an affordable and satisfying healthy snack....
Words: 4859 - Pages: 20
...input to buyer and importance of industry to supplier; Intensity of Rivalry of rivalry among existing competitors: number of competitors, augmented capacity in large increments, value of fixed costs and exit barriers; Threat of entrants or potential competitors: economical scale; Determinant of buyer power: product differentiation, switching costs to use other products, switching costs to use other products and buyers’ use of multiple sources, threat of substitute products or services relatively low. Keywords: Environment analysis, Competitive Forces, Competitiveness Porter’s Five Forces, Sweet Corn, Agribusiness 1. Introduction Sweet corn is a major economic agronomy in Thailand. There are large amounts of consumption and utilization of sweet corn each day. The sweet corn is a perennial plant providing greater values to fresh markets and industrial factories. Recently, sweet corn is one of the most popular crops; the 2011 Thai Food Processors’ Association report revealed that there were 29 factories of sweet corn manufacturers, and 64,000 hectares of plantation areas, and more than 35,000 farmers involved. Producing 544,000 tons of sweet corn, Thailand ranks third worldwide, with a 190 million USD increase from the year 2010, and an export value of 170.26millionUSD. From January to August 2012 exports value 94.67 million USD. The top 5 import...
Words: 7394 - Pages: 30
...Table of Contents Introduction 3 Organization 3 Management Team 4 Objectives and Industry Analysis 7 Sales and Net Income Analysis 8 ROA, ROE and Stock Price Analysis 11 Market Share Analysis 15 Unit Production Costs Analysis 16 Weighting Factors 17 Corporate/Business/Marketing Strategies 18 Operation Strategy 19 Financial Strategy 21 Sales Forecast 22 Exhibits (Sales Forecast Analysis) 23 Production Plan 28 Exhibits (Production Schedule) 30 Financial Statement Analysis 34 Cash Flow Analysis 38 Appendix Annual Consolidated Pro Forma Income Statement… i Annual Consolidated Pro Forma Cash Flow… iii Annual Consolidated Pro Forma Balance Sheet… iv Consolidated Historical Data… v Financial Data for Years 1 and 2…vii Operating Information Report D…viiii Operating Information Report E…xvii INTRODUCTION Nyrica is based out of Merica 3. Our company was established with several goals in mind. We aim to provide a higher end product with certain benefits for our consumers to help enrich their lives. In addition, Nyrica seeks to improve the value of our company for our current shareholders as well as future potential shareholders. Our approach is to have a well-funded research and development platform coupled with a training program that promotes growth of our valued employees and their skill sets. Nyrica plans to expand their production capabilities in the first quarter of their fifth year of existence. Organization ...
Words: 7030 - Pages: 29
...A. Abstract This paper analyzed the economic feasibility of a mobile bioenergy pyrolysis system using a Monte Carlo simulation model. Pyrolysis transforms any cellulosic materials into i) a bio-oil similar to crude oil ii) a synthesis gas similar to natural gas, and iii) a bio-charcoal substance. The pyrolyzer machine is currently being manufactured and tested with various types of feedstocks including corn stover and energy sorghum. The economic analysis focused on creating an automated process that integrates a transportation logistics cost optimization model with geographic information system (GIS) data. The geographic data provides possible paths for the mobile bioenergy pyrolysis unit as it moves to and from each harvest area, depending on stochastic availability of feedstock (determined by historical crop yields) and distance to oil refineries. The results indicated that there is a low probability of a positive Net Present Value (NPV) with current economic conditions. In general, the NPV was highest with a stationary scenario and it decreased with...
Words: 4491 - Pages: 18
...market in 32 countries and is currently expanding in the United States. The success of the company is providing low cost products that include function, modern design, environmental considerations and healthy manufacturing conditions. IKEA designs its products, manufacturing, and distribution systems with the target price in mind. IKEA’s processes and corporate mantras feel unique and cheerful. Both customers and employees count on the company to operate responsibly. IKEA makes customers feel like they are living well even though they aren’t paying for premium product. There is a great deal to learn from its operations and management. The company’s goals have been incorporated into the product design process that IKEA uses. Key Terms: • Triple bottom line – A business strategy that includes social, economic and environmental criteria. IKEA is an example of a company that judges itself by the triple bottom line. While it strives to do good business, it includes a business and operating model designed to minimize the impacts on the environment. The company markets its philosophy to stakeholders and customers. • Productivity – A measure of how well resources are used. IKEA continuously works to improve productivity through design, partnering with suppliers and saving on shipping. One great example is knock-down furniture design that minimizes the cost and environmental impact of shipping larger pieces. • Order winners and qualifiers – Order winners differentiate...
Words: 3391 - Pages: 14
