Decision Making For Management - Linearity of Variable Costs within the Relevant Range - Assignment Example

Solution to Question 2 Part (a) The break-even point in units for each product can be calculated taking into consideration that certain fixed costs relate to each of these products only while a certain portion relates administration, salaries and rent.... The formula for calculating the contribution margin is as follows: Contribution margin= Fixed cost per unit – variable cost per unit.... The contribution per unit for each product is calculated as follows: Contribution = selling price – variable cost Cv = SPv – VCv = $1....

Relevant cost information is useful in identifying the relevant cost in the decision to outsource or produce the goods within the firm.... It is critical that the relevant cost analysis be supplemented by carefully considering both the long term and strategic concerns of the firm.... Relevant Information for decision making Name Tutor Institution Subject name Subject Code Introduction decision making is considered as an outcome of processes that can lead to the selection of a course of action among several alternatives....

Ford's fixed costs may include rents for the plants and machinery while variable costs may include direct labor.... They view direct labor, direct material, and the variable manufacturing overhead as product costs while fixed manufacturing overhead as period costs (Hicks, 2002, p.... The current global challenges have made the company embark on manufacturing varieties of the automobiles to ensure that the costs are balanced.... For this reason, management has lately discouraged any production of goods that do not produce adequate sales to cover up its variable manufacturing costs (Weygandt, Kimmel and Kieso, 2011, p....

In the paper “Fixed and variable costs” the author analyzes some costs which include both the fixed and variable elements in it and are referred to as semi-variable costs.... Examples of semi-variable costs include electricity expense, telephone expenses.... Examples of fixed costs include interest expense, salaries and expenses of the employees or executives, and insurance protection.... In one broad category of Overhead expenses, these costs are collectively shown for example depreciation of machinery as well as the heating and lighting cost....

or 1,000 items, the unit costs are: Fixed Cost per Unit = 9,000 / 1,000 = $ 9.... 5 per unit For 6,000 UnitsThe total annual costs are: Fixed Cost = $ 9,000 Variable Cost = $ 0.... 5 x 6,000 = $ 3,900The unit costs are: Fixed Cost per Unit = 9,000 / 6,000 = $ 1.... 5 per unit For 8,000 UnitsThe total annual costs are: Fixed Cost = $ 9,000 Variable Cost = $ 0.... 5 x 8,000 = $ 5,200The unit costs are: Fixed Cost per Unit = 9,000 / 8,000 = $ 1....

As such, this brief analysis will consider the relevant and non-relevant costs associated with management's decision with regards to aforementioned issue.... f course the relevant costs associated with such a change will necessarily be those associated with the differential between the cost of continuing to provide the old form of packaging as opposed to the new.... The firm further noted that although redesigning the Section/# decision making Recently, Arby's corporate management announced that it would be instituting a franchise wide change with regards to the type of packaging that the brand utilized....

The best outcomes are associated with the maximization of profits and the minimization of costs during a manufacturing process as or the Chale Manufacturing Company.... These outcomes are attainable by… It considers the proper allocation of the available minimum resources of a company to achieve the maximum most of results....

decision makers use various techniques to analyze the available data in order to come up with the most appropriate solution to the organization problems.... Some of the… However, the methods of data analysis may be similar depending on the relationship between the decision elements (Sharma, 2010)....