2: Exercise 2.4 • Relevant costing - a cost that varies with decisions, opportunity costs e.g. increase in expenses. Does not include sunk costs or future costs that don’t vary with the decision. • e.g. Minimum price for SJ Services Ltd: |Relevant costs |Irrelevant costs | |Opportunity costs |Future outlay costs |Sunk costs
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established practices in those industries. RELEVANT DEFINITIONS: RELEVANT DEFINITIONS Inventories are assets : held for sale in the ordinary course of business. in the process of production for such sale. in the form of materials or supplies to be consumed in the production process or in the rendering of services. Net Realisable Value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated cost necessary to make the sale. VALUATION:
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Generally speaking, cost-based transfer pricing is top management chooses a transfer price based on the costs of producing the intermediate product. For instance, variable production costs, variable and fixed production costs, full costs (including life-cycling costs) as well as some markup. It is useful when market prices are unavailable or too costly to obtain. When a large organisation transfers product across international borders, transfer prices are relevant in the calculation of income taxes
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Product Cost For financial accounting purposes, product costs include all costs involved in acquiring or making a product. In the case of manufactured goods, these costs consist of direct materials, direct labor, and manufacturing overhead. Product costs “attach” to units of product as the goods are purchased or manufactured, and they remain attached as the goods go into inventory awaiting sale. Product costs are initially assigned to an inventory account on the balance sheet. When the goods are
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save costs on transportation, storage and labor d. Consider eliminating other services such as passport and Post Office Box (POB) and any other non mail processing and delivery services Use the above information to develop a framework for a recommendation for the USPS to continue or discontinue two of the services above. Your discussion should consider a make or buy decision or product line discontinuation decision or outsourcing decision or any combination with identification of the relevant costs
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understocking costs, which then determines the number of units to stock. 2. What item costs and revenues are relevant to the decision of how many units of that item to stock? The cost of the item for L.L. Bean and the price at which they can sell the item are the two factors that are relevant in determining how many units of an item should be stocked. L.L. Bean can, then, calculate the profit margin by subtracting item’s costs from the selling price. The profit margin relates to the cost of understocking
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This has been caused by both cost of goods sold and overheads falling as a proportion of turnover. This may have been caused by • better prices negotiated with suppliers as sales have grown enabling them to cut the cost of goods sold (purchasing economies of scale) • overheads being spread over a greater level of sales, hence reducing the unit cost • improved systems being developed to help improve productivity and therefore lower costs • any other relevant point. However, the net margin
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29/12/2012 5a Evelien de Wilt 2014/2015 Academic and study skills semester 1, period 2 Historical cost accounting v market value accounting. Jamie Short 10703330 In a report written by GAAP (2012, pp.101-121), Assets and liabilities have been recorded through historical cost accounting: a system where assets and liabilities are recorded and presented in the monetary amount paid or the consideration given at the time of their acquisition. But
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1. Describe the industry and explain the general pattern of change of the particular market model Health insurance in the United States providers represent competitive market because they are numerous, variety of choices, and no single entity has much power over prices. The health insurance can be considered as rapid growth industry. Recently, this industry is transforming in a rapid way and evolving into an oligopoly. Insurance markets in many states are eventually controlled and dominated by a
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difference between alternatives is to identify the differential costs and revenues. (Horngren et al, 2008) The differential costs and revenues analysis is called incremental analysis. By examining all the relevant costs and revenues Guillermo can decide which alternative to choose and, therefore, to obtain the greatest contribution possible. The company will use the contribution to pay the unavoidable costs. The unavoidable costs will remain the same regardless of any decision, so the key is picking
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