The Optimum Cash Balance

QUESTION 2: What total contribution is required to cover the new fixed costs and earn $500 profit per issue?

Variable and fixed costs per unit (or per 100 brochures) at the current monthly production level of 150,000 brochures can be determined from the data in case Exhibit 1, as follows:

3- As we can see the company would loss 0.52 cent per 1 kg if it decides to sell at 6.85 price and allocates the fixed expenses at 1.20 per 1 kg.

2.) What is the ‘relevant range’ for the cost structure? In other words, at what volume might you expect the fixed and variable costs to change appreciably?

1. For financial accounting purposes, what is the total amount of product costs incurred to make 10,000 units?

2. What is the total cost? How much of the total cost are labor costs? Capital costs?

330-10-30330-10-30-1 The primary basis of accounting for inventories is cost, which has been defined generally as the price paid or consideration given to acquire an asset. As applied to inventories, cost means in principle the sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location. It is understood to mean acquisition and production cost, and its determination involves many considerations. 330-10-30330-10-30-2 Although principles for the determination of inventory costs may be easily stated, their application, particularly to such inventory items as work in process and finished goods, is difficult because of the variety of considerations in the allocation of costs and charges.

3. Using the variable costing method, which of the following costs are assigned to inventory?

In this final paper for Managerial Finance I will attempt to show how the supply chain inventory management method can be affected depending on the situation of the retailer. Studying the control method for problems in inventory, which would include both, excesses in inventory as well as shortages, and hoping to minimize loss.

a) Cost of Production: To understand the cost of production we must first understand what two costs are valuable to company along what can make a company gain or lose profit. First we look at Variable cost which “depends on what materials and labor are needed for the company” and in this case it is anchors which can vary with the volume of anchors that is produced (Russell & Taylor, 2011). The fixed costs are “those that do not vary with output and typically in rents, deprecation, insurance,

Working capital is the key to a successful business. It is like their blood flow and the manager’s job is to help keep it flowing. Under the Generally Accepted Accounting Principles working capital is simply the difference between a company’s Current Assets, which are cash, inventory, accounts receivable and prepaid items, and Current Liabilities, accounts payable and accrued expenses.

2. The present value of the holding cost of inventory for the duration ofinitial replenishment cycle is

The Board is currently proposing a new simplified guidance on the measurement of inventory. The Board suggests that inventory should be measured at the lower of cost and net realizable value, eliminating the old guidance of measuring inventories. The Board defined net realizable value in ASC paragraph 330-10-20 as “Estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.” The new guidance should help companies to disclose the measurement of inventory more concisely and reduce the cost to account for them. In addition to that proposal, the Board are also aligning with the measurement of inventory with International Financial Reporting Standard. According to IFRS No. 2, inventories are required to be measured at the lower of cost and net realizable value. IAS No. 2 defined net realizable value as “the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.” This definition is aligning with the definition under

unit, two types of costs are distinguished. Firstly the direct costs, consisting of the direct

The inventory throughout the second quater each an every item is variable and it totals at about £4,009,800 and turns over every 3 months/90 days. Cash sales should amount to about £7,500,000 if the inventory of £4,009,800 valued at cost turns over once in 90 days and if the average mark-up is about £2004, 9000. This figure can be roughly checked by referring to the expenses on the income statement. A rough measure of the cash expenses can usually be obtained by using the operating expenses less any non-cash expenses such as depreciation. Overall this shows that it is very important for Doomy corporations to have cash budget planned for its business, because it can help them assess if they are over spending their money and if the money is going and where it is coming in.