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Web-books.com is an internet company that sells books on the World Wide Web. The president of the company authorized an activity-based costing study to understand the cost of various activities that are driving overhead at Web-books.com. Selected activites include:
- website maintenance - costs do not vary as a function of sales volume- retrieving the order from the web site and locating the product costs vary as a function of order size (the number of books per order) because more time is required to fill larger orders.- Specialty handling - unique packaging is required for oversized (large) products.- Standard packaging - costs do not appear to vary by the number of books in the order, but are constant across all orders.
Construct a diagram of a two-stage cost allocation system for Web-books.com. Identify each activity pool in your model as unit-level, batch-level, product-level or facility-level.
Dealing with people is probably the most difficult thing we will ever encounter in life.
Calculate the unknowns for the following independent situations. All given activity levels are within the relevant range.
Discuss the issues that must be taken into consideration when setting selling prices, which is the usual reason given for the need to know the full cost.
Give some examples of the types of nonfinancial factors that managers would consider more important in today's capital investment decisions than they were in the past.
Why is it important to investigate both price (rate) and volume (efficiency) variances when rewarding employees for satisfactory work when performance evaluations are based on meeting budgets?
Avitar Corporation manufactures the line of computer memory expansion boards employed in microcomputers. The average selling price of its finished product is $175 per unit. The variable cost for these same units is $115. Avitar incurs fixed costs ..
What should the Manhattan Company do to improve its profitability? Consider pricing and product-level changes among your suggest. Who should be involved in implementing your recommendations?
Appalachian Coal Mining believes that it can increase labor productivity and, therefore, net revenue by reducing air pollution in its mines. It estimates that the marginal cost function for reducing air problem in its mines.
One way to own your own fitness business is to buy a franchise. Snap Fitness is a Minnesota-based business that offers franchise opportunities. For a very low monthly fee ($26, without an annual contract) customers can access a Snap Fitness center..
Each gallon of Old Guard, a popular aftershave lotion, requires 3 ounces of ocean scent. Budgeted production of Old Guard for the first three quarters of 2013 is:
Describe how the following affect the break-even point: increase or reduce in unit sales price, increase or reduce in variable cost per unit, increase or reduce in fixed costs.
Discuss the most important steps in the operating budget process. Why are these more important than the other steps?
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