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If the management expects the revenue to be $700000, then it must not accept the proposal of the landlord as this will increase the annual rent payment to $45500 which is more than the fixed annual rent of $40000.
The company can accept the order as this will result in a profit of $400000. This is because the fixed costs remain fixed irrespective of the size of production (National Council on Economic Education, n.d.; Mankiw, 2008, P274).
If the order size is 12000 units, the company must not accept the offer as this will result in a loss of $492000. The company has to spend an additional amount of $900000 as fixed costs because of an increase in the total capacity. This is because the fixed costs increase with the increase in the total capacity of the business
The maximum order size that the company can accept is 100000 units. This is because beyond this capacity the fixed cost of the company doubles. For producing even one unit beyond the total capacity the company has to incur the total amount of fixed expense as this cannot be adjusted with the number of units produced.
The costs have been allocated as direct and indirect costs. Direct costs include the cost of materials and labor cost that can be directly related to the product whereas indirect costs are the costs that cannot be directly identified with the product. The costs relating to general services are apportioned based on sales volume and the costs of the computer department are allocated based on the use. From this the operational income of the Tree division has been calculated as $480000. The net investment of the division is $1600000. This gives a return of 30% on the investment.
The performance evaluation can be done using Variance analysis, EVA and return earned on investment. To earn profits the business has to be managed efficiently. ROI is an important tool for evaluating the
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Accounting Standards 1 Politics have a lot of influences when setting the acceptable accounting standards. People who have their economic personal interests have used politics to set accounting standards, which are beneficial to them. For example, the political difference between the Republic of China and the United States of America has seen different accounting standards in the two countries.
This contingency management depends on the manager’s personal leadership style. It also relies upon the talent and behaviours of the regular employees. The contingency theory is a line of thinking that there is no one ideal way of leadership. It also contends that certain leadership styles may be effective in some situations, but not so in others.
The paper seeks to create an understanding of the leading, controlling, and organising functions that are part of a manager’s day-to-day engagements. The interview also attempts to gain insights to the constraints under which managers operate and how the competitive environment affects them and influences their decision-making.
However, mere achieving profitability should not be the goal of the organization. The goal of any firm should be to maximize profits. As such, the firm needs to analyze many considerations to achieve such maximization of profits.
As such a
bank has also demanded a master budget from our company in order to ensure their uninterrupted services, therefore, it would be better that we make an internal budget first, before drafting a final master budget. The reason for emphasizing the formation of an internal budget is
It gives information related to customers, their preferences and satisfaction, internal operation and innovations in a company.
The balanced score card can be used to measure performance in several ways because it is a comprehensive tool containing
Managerial accounting or management is the process of identifying, recording, analyzing and presenting financial data that is utilized internally by the Directorate for decision-making, planning, and control. In contrast to financial accounting, management accounting is majorly concerned with coming up with useful data and reports to internal users.
9 Pages(2250 words)Research Paper
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