...139 Part 2 Costs and Decision Making Chapter 5 Cost Behavior and Relevant Costs Chapter 6 Cost-Volume-Profit Analysis and Variable Costing Chapter 7 Short-Term Tactical Decision Making Chapter 8 Long-Term (Capital Investment) Decisions 140 Chapter 5 Cost Behavior and Relevant Costs Chapter 5 U 141 Cost Behavior and Relevant Costs nderstanding the behavior of costs is of vital importance to managers. Understanding how costs behave, whether costs are relevant to specific decisions, and how costs are affected by income taxes allows managers to determine the impact of changing costs and other factors on a variety of decisions. This chapter introduces concepts and tools that will be used in Chapters 6 through 8. Chapter 5 begins with a definition of cost behavior and illustrates the concepts of fixed costs, variable costs, and mixed costs. Next, the chapter revisits the concept of relevant costs (introduced in Chapter 1) as it applies to variable and fixed costs. The chapter also describes the impact of income taxes on costs. Learning Objectives After studying the material in this chapter, you should be able to: 1 Describe the nature and behavior of fixed, variable, and mixed costs Analyze mixed costs using regression analysis and the high/low method 2 Distinguish between relevant and irrelevant costs and apply the concept to decision making 3 Illustrate the impact of income taxes...
Words: 13858 - Pages: 56
...MANAGERIAL ECONOMICS: SECTION A: PART ONE: MULTIPLE CHOICES: 1. A-MACRO ECONOMICS 2. C-DEMAND FUNCTION 3. B-ARC ELASTICITY 4. B-CONSUMER GOODS 5. C-THE INDIFFERENCE CURVE 6. A-FUTURE COSTS 7. C-EQUILIBRIUM 8. B-GROSS NATIONAL PRODUCT 9. B-PRODUCT APPROACH 10. C-GDP PART-TWO: 1. Concept of Demand Schedule: The inverse relationship between the price and the quantity demanded for the commodity per time period is called as the demand schedule for the commodity. 3. Various forms of Market Structure: The various forms of market structure are: Perfect Competition, Imperfect Competition and Monopoly 4. METHODS OF MEASURING NATIONAL INCOME: We can measure national income either at the production stage by measuring the value of output or the income accrual stage by measuring the amount of factor income earned or at the expenditure stage by measuring the size of total expenditure incurred in the economy. The following are the three methods of measuring national income. 1. Product Approach 2. Income Approach 3. Expenditure Approach SECTION C: APPLIED THEORY: 1. MONETARY POLICY: The monetary policy can be said to be controlled expansion of bank credit and money supply, with special attention to seasonal requirement for credit. The RBI regards money supply and the volume of bank credits as the two major intermediate variables, but it seeks to control the former through the latter. It is said that money supply doesn’t change on its own; it changes because of certain underlying...
Words: 2736 - Pages: 11
...CONTANT INDEX S/L 1 2 CONTANT NAME What is Price Importance of Price PAGE 1 2 4 4 9 9 9 14 16 16 17 22 23 27 30 32 32 34 36 48 49 50 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Objectives of Pricing Pricing Techniques Categories of Pricing Methods New Product Pricing Policies Product Mix Pricing Strategies Product Line Pricing Five geographical strategies Pricing in Practices Two-Part Tariff with Two Consumers Bundling in Practice Pricing science Pricing of Multiple Products Products with Interrelated/Interdependent Demand Pricing Practices in Market Economy 25 Theories To Get You Started Arbitrage pricing theory Cost-of-production theory of value Multiple-product Pricing Multi-product pricing Conclusion 1 Pricing Practices Pricing practices sometimes seem peculiar. When first-class hotel rooms in London, Tokyo, or Paris go for $300 to $500 per night, Holiday Inns offers Weekend WebSaversSM rates at Chicago’s O’Hare International Airport from as low as $62.48 per night—more than 50 percent off regular prices. Not to be outdone, Howard Johnson’s says vacations are more fun with family package rates up to 70 percent off regular prices. Meanwhile, Marriott offers advance purchase rates on the Internet for as low as $59 per night at the Courtyard Marriott Village at Lake Buena Vista, Florida. At the Hilton Durham, in North Carolina, weekday rates are $109.95 and $89.95 on the weekend. What is going on here? Rather than a mad scramble to build market...
Words: 17587 - Pages: 71
...------------------------------------------------- AYB230 Corporations Law Practice Qs for Midsemester Exam – Answer guide Week 7 Incorporation and its effects 1. Answer: c, because Macaura applied the principle in Salomon v Salomon. 2. Answer: e, all of (a), (b) and (c). 3. Answer: d, the Walker case did not say anything about directors being unable to sit on more than one board in a company group. 4. Answer: b. 5. Answer: e. Breach of a Listing Rule is not a breach of the Corporations Act. 6. Answer: c, the Federal government could only legislate on companies if they were already formed, due to the way the Federal government’s constitutional power was interpreted by the High Court. Types and classes of companies, shares 7. Answer: c. A is wrong (pty co’s cannot meet the shareholder/size requirements for ASX listing). B is wrong, because it requires qualification. D is wrong, because they would need to convert to a public company first. 8. Answer: b, Listing Rule 10 requires listed companies to obtain shareholder approval of transactions with a person of influence, eg directors. 9. Answer: e. It is not just (a), because you’re asked what the difference is between the two – so you need to identify the correct characteristics of each one. (b) and (c) are therefore also incorrect, although (c) is the standout characteristic I was trying to get you to identify. The correct answer is (e). Previous iterations of this answer guide said that...
Words: 715 - Pages: 3
... Gunter spent $800 retrieving information from the hard drive only to find out it was mixed with another customer’s. The other customer disposed of Gunter’s old hard drive, so he cannot retrieve it. Gunter is suing ACME for $800 for retrieving information from the wrong hard drive supplied by ACME, $5,000 for time spent reconstructing the lost information, and $10,000 for punitive damages. The point of this report is to analyze the legal ramifications and statistics based on the situation at hand and to deduce the appropriate course of action to take based off the analysis. We analyzed a survey using statistics that the maximum amount ACME would have to pay in court to Gunter is $2,242.00. Based off this and our analysis of common tort law, we recommend you settle for the aforementioned amount outside of court. Table of Contents Executive Summary……………………………………………………………………….1 Table of Contents………………………………………………………………………….2 Legal...
Words: 3603 - Pages: 15
...industrial disputes demand for payment of bonus was also included. In 1950, the Full Bench of the Labour Appellate evolved a formula for determination of bonus. Introduction An Act to provide for the payment of bonus to persons employed in certain establishments on the basis of profits or on the basis of production or productivity and for matters connected therewith. It extends to the whole of India Every other establishment in which twenty or more persons are employed on any day during an accounting year. Bonus - Applicability (a) Every factory (as def. in Factories Act), & (b) Every other establishment in which 20 or more persons (less than 20 but 10 or more if appropriate Govt. notifies) are employed on any day subject to certain exemptions. (b) Bonus to be paid within eight months from the expiry of the accounting year. Establishments to include departments, undertakings and branches Where an establishment consists of different departments or undertakings or has branches, whether situated in the same place or in different places, all such departments or undertakings or branches shall be treated as parts of the same establishment for the purpose of computation of bonus Bonus – Eligibility Every employee shall be entitled to be paid by his employer in an accounting year, bonus, in accordance with the provisions of this Act, provided he has worked in the establishment for not less than thirty working days in that year. Disqualification for bonus An employee...
Words: 1573 - Pages: 7
...Furthermore, function of statistics is presentation of fact, simplification of complexities, facilitating comparisons, facilitating the formulation of policies, widening of human knowledge, useful in testing the laws of other sciences, facilitates the forecasting, establishment of correlation between two facts. ( Madan kumar, 2014) Statistics provided methodology for understand, assessed and controlled the operation of the organization and thus promotes organization welfare. The facts based on statistical operation are considered to be most reliable and dependable. ( Madan kumar,...
Words: 4029 - Pages: 17
...are non – measurable characteristics that cannot assume a numerical value but can be classified into two or more categories. Data obtained from this type of variable come from qualitative data. * DICHOTOMOUS – consists of one or two values; example of which is gender (male or female) * TRICHOTOMOUS – three values; example is in an opinion poll (for, against or undecided) * MULTINOMOUS – four and more; example of which are the responses coming from the a survey like “Smoking Habits”(always, very often, often, seldom, very seldom) * QUANTITATIVE – are those quantities that can be counted with your bare hands, can be measured with the use of some measuring devices, or can be calculated with the use of mathematical formula. Data involving quantitative variables are called quantitative data. * DISCRETE – consists of variates (actual values) usually obtained by counting. They are represented by counting numbers or whole numbers. (no. of students in a Research Class) * CONTINUOUS – are obtained by measurements, usually with units such as height in meters, weight in kilograms and time in minutes. DATA AND INFORMATION * DATA – usually refers to facts concerning things such as status in life of people, defectiveness of objects or effect...
Words: 2159 - Pages: 9
...CHAPTER I INTRODUCTION Background of the Study In any educational system there are three primary aspects of the learning-teaching process which are geared towards its end goal- that of growth and progress in knowledge, skills, abilities and attitudes of the students. First, educational goals are established either implicitly or explicitly. Secondly, learning experiences are designed to carry out the attainment of the goals. Finally, an evaluation is conducted to determine the extent to which the objectives have been established. This evaluation aspect has become the focus of study in the educational field. Evaluation involves the summing-up processes in which value judgments play a large part, as in grading and promoting students. Most educators considered that a school’s main business is promoting growth towards desirable and societal objectives; fewer agree on who should judge the desirability of these objectives. However, since all schools focus on student progress as the ultimate criterion, it is important to evaluate the status and gains of students expertly. If our evaluation procedures are poor, then the quality of the information on which we make judgments can not be adequate. Measurement and evaluation are indispensable to the growth of scientific education. They encompass judgments made by teachers and administrators. An important phase of this educational process involves the construction, administration, and scoring of tests. Before it is possible...
Words: 20012 - Pages: 81
... Chapter: 2 Double Entry Bookkeeping- Part A ▪ Every transaction must be entered twice-on the debit side of one accounting and on the credit side of another account. ▪ The debit entry is made in the account which is receiving the value and the credit entry is made in the account which is giving the value. ▪ Each type of asset, liability, expense and income has its own ledger account. ▪ Any value taken from the business by the owner of the business is known as drawings. ▪ At the end of the period, the accounts of assets and liabilities which contain more than one entry should be balanced. ▪ The entries for purchases and sales and purchases returns and sales returns are recorded in separate accounts. ▪ Carriage is the cost of transporting goods. Chapter: 3 Trial balance ▪ A trial balance is a list of the balance on the accounts in the ledger at a certain date. ▪ A trial balance is prepared to check the arithmetical accuracy of the double entry bookkeeping. ▪ If a trial balance fails to balance, it indicates that an error has...
Words: 3733 - Pages: 15
...Institutional factor grants Moving from current to the new funding framework February 2004 1 INCOME SOURCES OF PUBLIC HIGHER EDUCATION INSTITUTIONS The diagram below offers a broad summary of the ways in which funds flow to public universities and technikons in South Africa. Diagram 1: Sources of funds of public higher education institutions Government grants 50% Student tuition & other fees 25% Annual funds for public higher education 100% Other private income 25% The proportions reflected in the diagram are averages for the system as a whole. These proportions can differ widely between institutions. For example, government grants as a proportion of total income can be as low as 35% if an institution is able to raise large amounts of private funds through research contracts, donations and investments and can be as high as 65% in the case of institutions which are not able to generate substantial amounts of private income. The Ministry of Education has direct control over only government grants to public universities and technikons. The Ministry furthermore takes no account of income raised from student fees and other private sources when distributing government grants to individual institutions. These institutions are however required, as public entities, to submit to the Ministry annual financial statements which reflect all expenditures and all income from all public as well as private sources. This paper explains how the Ministry of Education...
Words: 7577 - Pages: 31
...5.5 LITERATURE REVIEW 5.5.1 DEMOGRAPHY DEFINITION Thompson (2007) : “The study of human populations – their size, composition and distribution across place – and the process through which populations change – Births, Deaths and Migration.” Weeks (1994) : “The science of population – concerned with virtually everything that influences, or can be influenced by population size, distribution, processes, structure, or characteristics.” 5.5.1.1 WHY STUDY DEMOGRAPHY To understand why the populations of some countries are growing and why some are not What happens to societies as their pattern of birth, death or migration change Understanding all these consequences of population change (either growth or decline) 5.5.1.2 SOURCES OF DEMOGRAPHIC DATA The kind of information we often seek for are: i. Population size and distribution ii. Population processes (fertility, mortality, and migration). iii. Population structure and characteristics Three major sources of information for these three population processes are: a) Census Information about persons – age, sex, marital status, source of livelihood, place of birth, number of children ever born, etc. Information can be found in official government reports. b) Registration of Vital Statistics Information about events – vital events and their rates are called vital rates – birth and deaths. - Vital registration – marriage, divorce, adoptions, fetal deaths as well as migration ...
Words: 3192 - Pages: 13
...Pass-Through Effect of RMB Exchange Rate on China’s Inflation Contents Chapter 2 Literature review 3 2.1 Introduction 3 2.2 Exchange rate pass-through effect 3 2.2.1 Narrowly defined exchange rate pass-through effect 3 2.2.2 Broadly defined exchange rate pass-through effect 4 2.2.3 Complete and incomplete exchange rate pass-through 5 2.3 Relevant theories of exchange rate pass-through 7 2.3.1 Theory of complete exchange rate pass-through 7 2.3.2 Theory of incomplete pass-through 9 2.4 Empirical research on exchange rate pass-through 13 2.5 Summary and reflection 16 Reference 19 Chapter 2 Literature review 2.1 Introduction This chapter reviews the theoretical and empirical researches on exchange rate pass-through effect. Specifically, this chapter firstly introduces the definition of exchange rate pass-through effect, incomplete and complete exchange rate pass-through. Then, this chapter analyses the theory of exchange rate pass-through effect, with focus on the reasons for the common incomplete exchange rate pass-through effect. After theoretical analysis, this chapter reviews and analyses the empirical research on exchange rate pass-through effect. A major part in this section is the review of the perspective and method for analysing exchange rate pass-through effect. Empirical researches generally referred to McCarthy (2000)’s research method, used VAR model, and selected specific area and time window data to empirically analyse exchange rate pass-through...
Words: 6617 - Pages: 27
...Ramandeep Singh www.BankExamsToday.com Number system Natural Numbers: 1, 2, 3, 4….. Whole Numbers: 0, 1, 2, 3, 4….. Integers: ….-2, -1, 0, 1, 2 ….. Quantitative Aptitude Cheat Sheet HCF and LCM For two numbers, HCF x LCM = product of the two. HCF of Fractions = LCM of Fractions = Rational Numbers: Any number which can be expressed as a ratio of two integers for example a p/q format where ‘p’ and ‘q’ are integers. Proper fraction will have (pq) Factors: A positive integer ‘f’ is said to be a factor of a given positive integer 'n' if f divides n without leaving a remainder. e.g. 1, 2, 3, 4, 6 and 12 are the factors of 12. Prime Numbers: A prime number is a positive number which has no factors besides itself and unity. Composite Numbers: A composite number is a number which has other factors besides itself and unity. Factorial: For a natural number 'n', its factorial is defined as: n! = 1 x 2 x 3 x 4 x .... x n (Note: 0! = 1) Absolute value: Absolute value of x (written as |x|) is the distance of 'x' from 0 on the number line. |x| is always positive. |x| = x for x > 0 OR -x for x < 0 Relatively Prime or Co-Prime Numbers: Two positive integers are said to be relatively prime to each other if their highest common factor is 1....
Words: 2990 - Pages: 12
...RUNNING HEAD: GUILLERMO FURNITURE STORE University of Phoenix Guillermo Furniture Store Guillermo Furniture Store Guillermo Furniture Store has undergone a major critical change within its industry. In order for this organization to stay focused there should be a change that can provide the organization with the best possible ambition to recap the profit and stability that the organization is use to. This paper will recap the cost relationship and behavior, management control systems that will help achieve Guillermo’s goals, also this paper will provide the break-even analysis for Guillermo’s current situation, and compute the Return on Investment. Cost Relationship and Behavior Cost relationships and behaviors can affect Guillermo’s decision making prerogatives for the manager. Cost behavior is defined as, “how the activities of an organization affect its costs” (Burgstahler, Horngren, Schatzberg, Stratton, and Sundem, 2008). Cost behavior consists of variable costs and fixed costs. Variable costs are, “costs that change in direct proportion to changes in the costs driver” (Burgstahler et al., 2008). Examples of variable costs for Guillermo are materials, equipment, and labor (Guillermo, 2009). Fixed costs are, “costs that is not immediately affected by changes in the cost-driver level” (Burgstahler et al., 2008). Examples of fixed costs for Guillermo are labor, utilities, taxes, and etc (Guillermo, 2009). Cost behavior can affect the choice of the process...
Words: 1445 - Pages: 6
