Capital Investment Decisions
Outcome is uncertain.
Investment involves a long-term commitment.
Capital budgeting: Analyzing alternative long- term investments and deciding which assets to acquire or sell.
Decision may be difficult or impossible to reverse.
Large amounts of money are usually ...
Standard Cost Systems
Based on carefully predetermined amounts.
Used for planning labor, material and overhead requirements.
The expected level of performance.
Benchmarks for measuring performance.
The Challenge of Changing Markets
Product markets can change quickly due to competitor price cuts, changing customer preferences, and introduction of new products by competitors.
Managers must make short-run decisions, with a fixed set of resources, to react to the changing market place.
Questions Addressed by Cost-Volume-Profit Analysis
CVP analysis is used to answer questions such as:
How much must I sell to earn my desired income?
How will income be affected if I reduce selling prices to increase sales volume?
What will happen to profitability if I expand capacity?
The Value Chain—Focus on Core Operations
The value chain is the set of activities and resources necessary to create and deliver products and services valued by customers.
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Capital Investment Decisions Outcome is uncertain. Investment involves a long-term commitment. Capital budgeting: Analyzing alternative long- term investments and deciding which assets to acquire or sell. Decision may be difficult or impossible to reverse. Large amounts of money are usually ...
Standard Cost Systems Based on carefully predetermined amounts. Used for planning labor, material and overhead requirements. The expected level of performance. Benchmarks for measuring performance.
The Challenge of Changing Markets Product markets can change quickly due to competitor price cuts, changing customer preferences, and introduction of new products by competitors. Managers must make short-run decisions, with a fixed set of resources, to react to the changing market place.
Questions Addressed by Cost-Volume-Profit Analysis CVP analysis is used to answer questions such as: How much must I sell to earn my desired income? How will income be affected if I reduce selling prices to increase sales volume? What will happen to profitability if I expand capacity?
The Value Chain—Focus on Core Operations The value chain is the set of activities and resources necessary to create and deliver products and services valued by customers.