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Describe Committed fixed costs
Committed fixed costs are those fixed costs that arise from the possession of
1. Plant, building and equipment (for example, depreciation, rent, taxes, insurance premium etc.) or
2. A basic organization (for example salaries of staff). These costs remain unaffected by any short term changes in the volume of production. Any reduction in committed fixed costs under normal activities of the concern would have adverse on the concern’s long term objectives. Such costs cannot be controlled.
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What are Selling and distribution expenses? Selling and distribution expenses incurred for the marketing of a commodity, for securing orders for the articles, dispatching goods
Assumption of break even analysis The break even analysis is based upon the following assumptions : 1) All elements of cost, i.e., production , administration and selling di
QUESTION 1 PART A You are provided with the given information relating to ABC Limited. The accountant is currently developing the budget for the next three months endin
Implementation of the Decisions Once alternative courses of action have been chosen, they must be implemented as part of the budgeting procedure. The budget is a financial plan
Incremental budgeting Incremental budgeting uses a budget prepared using a last period budget or actual performance as a base with incremental amount asses for the new budget p
Disadvantages of Simulation 1) Although all models are simplification of reality, they may still be complex and require a substantial amount of managerial and technical time.
Ordering Costs These are incurred in getting purchased items into the company’s inventory or stores, and usually consist of clerical costs of: • Making the purchase demand.
Gather Data about Alternatives When potential areas of activity are specified, management must assess the potential growth rate of the activities, the capability of the company
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