Personal Finance Chapter 4 Essay

The average costs of production of Sony’s new product is the total costs (the addition of fixed and variable costs) divided by the output which is the quantity of goods or services that are produced during the production run.

Unit Break-even Volume = Total Fixed Costs/Contribution per unit = $525,000 - $6.40 = 82,031.25units

The production manager for the Coory soft drink company is considering the production of 2 kinds of soft drinks: regular and diet. Two of her limited resources are production time (8 hours = 480 minutes per day) and syrup (1 of her ingredients) limited to 675 gallons per day. To produce a regular case requires 2 minutes and

In this year, the owner will travel to San Francisco, California to attend the American Management Association Customer Service Seminar. It will cost the shop $1,400 for the seminar, $100 for the flight, $300 for the hotel, and $100 for food. The total cost of this trip will be $1,900. In year three, the owner will travel to Anaheim, California attend the Natural Foods Expo. This expo costs $30 to attend, $300 for food, $222.20 for the flight, and the owners’ family will provide a car and housing. This brings the total cost of this expo to

The owners of the lemonade stand place a value of $50.00 for each season toward being their own and thus have the freedom and flexibility that they would otherwise not experience while working another person or company. This form of revenue can be found in the stand’s implicit revenue on the stand’s balance sheet and is added to the value of learning how to run the business; $25.00 for Season One; as well as gaining more information and/or education on increasing profits and learning how to better manage the stand.

Example: Actual cost of labor for 100 series = cost ratio × total actual cost of labor

Assume you have been hired as a managing consultant be a company to offer some advice that will help it make a decision as to whether it should shut down completely or continue its operations. It currently uses 100 workers to produce 6,000 units of output per month (working 20 days/month). The daily wage (per worker) is $70, and the price of the firm’s output is $32. The cost of other variable inputs is $2,000 per day. You are told that the firm’s fixed cost is “high enough” so that the firm’s total costs exceed its total revenue. The marginal cost of the last unit is $30.

Thus the cost of capital can be easily calculated using the weighted average cost of capital formula (13.69%).

The company is currently operating at full capacity of 150,000 brochures per month. It employs one sales representative and one printing press operator, and also relies on temporary labor from time to time. The monthly operating costs summary for the company when it operates at full capacity is as given below:

It is important to first understand what the specific product and period costs are in order to accurately compute the associated costs. It is known that bird feeders are being produced. In this case the product costs are: cedar, plastic, and indirect materials, factory worker labor, depreciation, utilities, and maintenance and repairs. For period costs they are as follows: shipping, sales commissions, office rent, advertising, liability insurance, office depreciation, office salaries. Once this is known then the variable cost per unit and contribution margin can be found.

* Average variable costs (AVC) equals variable cost divided by quantity produced, AVC = VC/Q

Correct The production manager for the Coory soft drink company is considering the production of 2 kinds of soft drinks: regular (R) and diet (D). Two of her limited resources are production time (8 hours = 480 minutes per day) and syrup (1 of her ingredients) limited to 675 gallons per day. To produce a regular case requires 2 minutes and 5 gallons of syrup, while a diet case needs 4 minutes and 3 gallons of syrup. Profits for regular soft drink are $3.00 per

By substituting the appropriate values in the formula we arrive at a cost of $ 23,646,530. This cost is then divided by the total demand over 12 months of 30.7 Bcf or 30,700,000 Mcf to arrive at an average cost per Mcf of $ 0.7702 which

representative cost mix that is proportional to total revenues. Hence, we use the average COGS

The cost concept AVC shows a company the average per unit cost including both variable cast and fixed cost. This information is use to determine the price a company should sell the product for to make a profit. AVC is determined by the total variable cost and the quantity if the price is higher than the AVC then the company is making a profit if price is lower the company may close down because the cost of producing 1 unit is much higher the the price for that 1 unit