Cost Essays

Pricing Strategy

Home depot is a store dealing with home appliances and other household consumables. I will look at the pricing strategy of refrigerators. Most prices of different brands of refrigerators are set to match the prices of their competitors. This is because mostly the competitors are operating in the same environment. it is essential to offer better quality brands with the same price as competitors. However when setting the price, the objective is to ensure profitability of the firm is taken…

Read >>

Perfect Competition

For a market to be perfectly competitive, one of the main criteria is that all firms (and consumers) are price takers. The following conditions are also necessary: 1. There must be many buyers and sellers in the market for an identical product. 2. Firms’ products are identical. 3. Buyers and sellers must be fully informed about prices, products, and technology. 4. There are no barriers to entry (or exit). 5. Selling firms are profit-maximizing entrepreneurial firms. The scenario about the…

Read >>

Iphone 5c Price Decision

The fist factor that important in the pricing decision of iPhone 5C is by considering costs. For instance, since Apple Inc. wants to maximize its profits through establishing new products, the price should be set at the point where marginal revenue equals to marginal cost. We know that iPhone 5C is in the perfectly competitive market, the company can reach its maximum profit at equilibrium at X* and P*. To determine the price, Apple Inc. needs to do the marginal…

Read >>

Depreciation and Vital Spark

p. 182The New Economy Transport Company (NETCO) was formed in 1955 to carry cargo and passengers between ports in the Pacific Northwest and Alaska. By 2008 its fleet had grown to four vessels, including a small dry-cargo vessel, the Vital Spark. The Vital Spark is 25 years old and badly in need of an overhaul. Peter Handy, the finance director, has just been presented with a proposal that would require the following expenditures: Mr. Handy believes that all these outlays…

Read >>

Auerbach Enterprises Manufacturers

In today’s very competitive business environment, it is imperative that organizations choose the most appropriate and effective overhead rate, particularly, because it guides management in its tasks of product pricing, job costing, and budgeting. Businesses can use the single company-wide method or can opt for the departmental method. Auerbach Enterprises manufactures air conditioners for many makes of both automobiles and trucks. The two main products are MaxiFlow and Alaska. Currently, the company uses a company-wide predetermined overhead (OH) rate but…

Read >>

New Product Launch Marketing Plan

Executive Summary Learning Team A has shown in the first two phases of the marketing plan that individuals exercise for a variety of reasons including obesity, addressed target markets (recreational, fitness, and professional athletes), decision motivators and buying behaviors (individual needs and health concerns), the Product Life Cycle, the four P’s, and the product mix. Within this final phase, Learning Team A will be discussing situational analysis, market growth potential and competitive analysis, segmentation, target market, and positioning, pricing and…

Read >>

Niche Bakeries

Niche bakeries are becoming more popular though the last few years. These types of bakeries specialize in a certain type of baked goods and showcase them for their customers as well as having other types of more common baked goods available. This is the type of business that I would create. My niche bakery would specialize in individual cupcakes and pies as well as baking larger cakes and pies to order. Local customers will consist of area residents, business owners…

Read >>

Dakota Office Products Case

1 Dakota current allocates warehousing, distribution and order entry cost equally to each customer. DOP’s pricing system is generally independent of the specific level of service provided for customers. They just chose a single cost drive. However, it’s not believable and proper to use this simple method to analyze costs when costs are more complex. So we need to use activity-based cost system to chose different cost drives and allocate costs based on the activity. 2 We identify four different…

Read >>

Economical and Environmental Cost Benefit Analysis on Hybrid Cars

A hybrid car is a car propelled by the application of two or more power sources. First attempts to introduce hybrid cars goes back to mid 1660, way before the discovery and introduction of the fuel powered conventional cars but were never commercially manufactured until 21st century when Japanese car manufacturer, Toyota produced the Toyota prius exclusively for its domestic market. In fact, it is estimated that the first attempt to produce a hybrid car was in 1665. The delay…

Read >>

Mendel Paper Company

According to the text, a break-even point can be computed for any assumed mix of sales and a break-even chart or P/V graph can be constructed for any sales mix (2012). For (a) – the Break even= Contribution Margin from the original estimates is $1,013,000 and for (b) – the Margin of Safety, take the grand total sales number of all items and the total contribution margin and subtract it: $1,013,000 – 2,480,000 = $1,467,000 and to get the percentage,…

Read >>

Case Study for Wilkerson Company

1. According to the case, if using ABC, Wilkerson should pool overheads into five activities: machine-related expenses, setup labor cost, receiving and production control cost, engineering cost, and packaging and shipping cost. The cost pool/cost driver information for an Activity Based Costing (ABC) system for Wilkerson has already provided by table 2. Based on the information on table 1 and four exhibit in case, we can figure out that the total cost per unit of valves, pumps and flow controllers…

Read >>

Marginal Benefits and Marginal Costs

The first principle can be summarized with the following phrase “There’s never a free lunch” every time that you need something you have to give something in return. One example is an employee that needs a particular day off. He could just miss work and not get paid or ask for a change of schedule and not miss work. This allows flexibility or compromise between parties. Previous to making any decisions on the trade off you should always consider the…

Read >>

Economies and Balance Midterm Exam

1. Economies of Scope refers to situations where per unit costs are 2. For a short-run cost function which of the following statements is (are) not true? 3. According to the theory of cost, specialization in the use of variable resources in the short-run results initially in: 4. Economies of scale exist whenever long-run average costs: 5. The existence of diseconomies of scale (size) for the firm is hypothesized to result from: 6. If TC = 321 + 55Q –…

Read >>

Capital One Case Study

• What is a case interview? The Case Interview • What specific skills does it assess? • How to prepare for a case interview? • An interactive example. What is a “Case Interview” anyway? The Case Interview Simulation of a business problem. Similar to what our associates encounter every day. Series of open-ended questions. They’re designed to stimulate your conceptual, quantitative, analytical and – most importantly – creative abilities. The Case Interview There are several types of cases. Each is…

Read >>

One Way you Can Lower the Cost of Produce

One way you can lower the cost of produce and be sure of their origin is to grow your own. Even in urban centers people are doing so. Go on the internet and see how you can as well. Discuss and describe one way you can make this happen whether in a dining facility or at home. Produce cost will be lower if you grow them at your home because it will reduce many of the cost that is associated…

Read >>