How will relating product contribution margins to the amount of the constrained resource theyconsume help a company maximize its profits?

Q: Calculate the maximum number of units that can be produced for Product P provided the company…

A: Formula: Contribution= Sales-Variable Cost We can calculate Maximum production that can be achieved…

Q: Discuss how contribution margin can be maximized when one factor limits productive capacity.

A: In this question, we are taking the example of a small medical. Factors that would most likely to…

Q: Discretionary costs: are variable in relation to the level of activity, such as the production or…

A: Cost means the amount incurred for running the business. Discretionary cost means the cost which is…

Q: Why would a company want to know their operating leverage when they can already calculate the number…

A: Degree of operating leverage means the division of contribution with operating income. Number of…

Q: Marginal cost and marginal benefit analysis are important to compute efficient level of production.…

A: marginal analysis is generally the process of decision making which involve an examination of…

Q: Define cost-volume-profit analysis?

A: Cost-Volume-Profit Analysis (CVP Analysis): CVP Analysis is a tool of cost accounting that measures…

Q: Is variable or absorption costing a better method of computing income from operations?  Why?

A: Variable costing only covers the variable costs directly involved in production but excludes all…

Q: How can the contribution margin be used to determine the profitability of Ford Motor Company's…

A: While determining the profitability of the organisation first to find out the total contribution…

Q: The amount of increase or decrease in cost that is expected from a particular course of action as…

A: Discretionary cost: A discretionary expense is a cost that a business or household can survive…

Q: Why do managers consider direct costs to be more accurate than indirect costs?

A: Cost: Cost refers to the expense incurred by the business to earn revenue from sales. In other…

Q: When output volume increases, do variable costs per unit increase, decrease, or stay the same within…

A: Variable costs: These are the costs that proportionately change with the changes in the activity…

Q: Can a company use a target pricing model without a follow-on cost-savings sharing agreement? Why or…

A: Target price is the price at which the stock future price is estimated grounded on earnings…

Q: What is a natural resource? What is the process by which businesses spread the allocation of a…

A: Natural resources:

Q: What is the economic rationale for the cost approach? Under what conditions would the cost approach…

A: Answer: Economic rationale for cost approach: The cost approach means that the person who is…

Q: What is meant by the term contribution margin per unit of scarce resource?

A: Decision involving limited resources:   Firms typically have resources limited in supply. For…

Q: If a firm operates at capacity, the minimum transfer price should be the: external market price any…

A: Solution: If a firm operates at capacity, the minimum transfer price should be the "external market…

Q: What variable affecting gross profit should the manager focus his attention? Why?

A: Gross Profit is the profit arrived at by deducting cost of goods sold from the turnover or the…

Q: How does Lean Production reduce or eliminate the difference in reported net operating income between…

A: Absorption Costing: Absorption costing is a method for calculating the full cost or total cost of a…

Q: A company's best sale s mix is determined using contribution margin per unit of scarce resource.…

A: The sales mix is a formula that calculates how much of each product a company sells in relation to…

Q: Is activity-based costing always beneficial to an organization? in what situations would itb…

A: Activity based costing is a system of costing in which  allocated on the basis of activity done .it…

Q: What is value-chain analysis? What role does it play in strategic cost analysis?

A:

Q: How does the contribution margin affect the cost-volume-profit analysis?

A: Cost Volume Profit analysis means the breakeven analysis which generally used to determine the break…

Q: What is the appropriate measure of a product's value when a firm is operating under production…

A: Production Bottleneck:   Production Bottleneck is a situation of constraint in the manufacturing…

Q: What is cost-efficiency according to profit projection?

A: Cost-effective usually means to reduce the expenses and excel in what you are doing or maintaining…

Q: Why would a firm want to measure profits by segment and how would common costs be allocated to each…

A: Introduction: Common costs are company expenses that are shared by numerous departments. Common…

Q: When constrained by a limiting resource, managers often seek to produce those products which have:…

A: When constrained by some budget or limited sources managers often try to make products which lie in…

Q: How is cost-volume-profit analysis useful?

A:

Q: Discuss how non-production and production cost could affect the profitability

A: Introduction:- Cost are classified into two types based on cost types as follows under:- Non…

Q: Standard cost system provides companies with a number of advantage and argue the statment

A: Standard Cost:   A standard cost accounting refers to a cost accounting method used by a company as…

Q: How is cost-volume-profit analysis different from profit planning?

A: Cost Volume Profit Analysis - This is an Analysis which provides the details How it will Effect the…

Q: In Classification Of Cost (Marginal costs) What Is A Business Situational Example of the ff:…

A: Cost is the amount which is spend to sold the goods or to provide the service. It is comprises of…

Q: How does assuming that operating activity occurs within a relevant range affect cost-volume-profit…

A: C-V-P analysis is used to explain the relationship among the volume of production, costs and…

Q: How useful is cost–benefit analysis?

A: A cost-benefit analysis, commonly known as CBA, is the process of comparing the various projects and…

Q: Consider a situation in which a firm needs to make a decision regarding the resources to allocate…

A: Cost accounting is the branch of accounting that inspects the cost structure of a business. This…

Q: Discuss the advantages and disadvantages of partial measures of productivity.

A: The partial measure of productivity is a method under which the productivity of each factor is…

Q: How does targeted profit enter into the break-even units equation?

A: Every organisation desires to attain certain target profit.  Therefore the organisation makes an…

Q: What factors affecting ROI does the DuPont method of profitability analysis highlight?

A: DuPont method of Profitability Analysis: According to DuPont method of Profitability Analysis,…

Q: What is a cost-volume-profit analysis?

A: Cost: The amount paid to purchase the asset, install it, and put it into operations, is referred to…

Q: What is the danger in allocating common fixed costs among product lines or other segmentsof an…

A: Fixed cost: It can be defined as the cost that does not vary with an increase or decrease in the…

Q: Operating leverage refers to the extent to which an organization's cost structure is made up of:…

A: Operating leverage is a ratio of how of change in sales effect the change in operating income. It…

Q: t the contribution margin and net operating income?

A: Contribution Margin: Contribution margin refers to the contribution earned by the company from the…

Q: What does the target full product cost include?

A: Definition:   Target full product cost: The target cost is the maximum cost of a product that can…

Q: The component that analyzes profitability is • , and its value is The component that analyses…

A: DuPont Analysis has been developed by the DuPont Corporation for decomposing different aspects of…

Q: Explain why using cost as a transfer price is inappropri-ate when the center producing the product…

A: Profit Center: A profit center may be a part of a business that is expected to form an identifiable…

Q: What are the disadvantages of cutting expenses and costs , when it comes to working capital and…

A: Working Capital Working Capital is treated as one of the important element of the business entity…

Q: What is the differential cost to produce product Zeta?

A: Given information is: Cost of producing Alpha = $23 per unit Additional cost of producing Zeta = $25…