How national and local guidelines affect day to day work Essay

National and local guidelines, policies and procedures for safeguarding that affect a practitioner’s day to day work relating to; Childcare practice The Education Act 2002 poses a duty on education authorities to promote and safeguard the welfare of children and young people. This affects my day to day work as I must be aware of the child protection procedures at all times, such as how to spot the signs of abuse, how and who to report my concerns, how to maintain a safe school environment, be aware of the health and safety of children and to be able to undertake any training required of me. Child Protection In my settings policies and procedures for safeguarding it states that all employees, volunteers and students should be properly vetted, which includes checks into the eligibility and the suitability, and that crb checks should be carried out. If I didn’t produce a crb check to make sure I didn’t have any criminal convictions or to check my suitability to work with children and young people then I would not be allowed to work in my setting. Risk assessment Risk assessments are an important factor in safeguarding children and in my day to day work, before I carry out any activity with children and young people I am required through my setting policies and procedures to carry out a risk assessment first to make sure all involved is safe, for example, if I were to plan an activity, such as an art and craft activity I would need to risk assess the potential danger of scissors, small objects, i.e beads and amend my plan accordingly to suit each individual. Ensuring the voice of the child or young person is heard Advocacy safeguards children and young people and protects them from abuse and poor practice. The government developed national standards for advocacy practice to ensure that children are able to speak out and have their views heard. The national Standards for the provision of children’s advocacy 2002Â  is this standard. This affects my day to day work as I need to know how to access advocacy services should a child require it and a child can request that I act as an advocate for them and in that case I will need to know where to look for support from the advocacy services. Supporting children and young people and others who may be expressing concerns Following my settings policies and procedures, if a child or young person were to express any concerns I would in my day to day work show a child that I am taking them seriously, that I am here to listen and have empathy, I would reassure the child that I will help in any way I can, I would record the conversation following the correct procedure, I would not make promises, or say that what has been discussed is confidential, I will not come to my own conclusions or ask questions and I would seek support and advice from the designated child protection officer.

Hindu Rate of Reform Essay

The License Raj In 1947, India had already developed all the institutions of a modern market Economy. Right after Independence, Extensive government control began . Firms in the formal economy became completely dependent on government approvals for the most basic business decisions. Regulations in one area interacted with those in another to give teeth to the regulatory system. Thus, the reforms needed were not just a matter of freeing prices and trade, but were a task of undoing a complex system of controls that moved the economy faraway from allocational efficiency, created numerous rents and vested interests, and was grounded in numerous pieces of legislation and institutions. Prior to the reforms started in July 1991, India had one of the world’s most controlled investment regimes, a severely license restricted trade regime with very high import tariffs, regulated agriculture, tightly regulated labor and capital deployment. Reform in the 1980s Unlike 1966, Indian engagement with the IMF succeeded in 1981 and a number of reforms were implemented during the 1980s. Relaxation of controls over capacity utilization, imports of capital goods and spare parts, Efficiency gains, liberalization of the trucking industry. By the end of the decade, the central government fiscal deficit increased rapidly, to 8. 5 percent of GDP at its peak in 1986-87, a level never reached since and the debt to GDP ratio reached levels from which it has not yet recovered. Indian Reforms, 1991-2001 A new Government came to power on June 21, 1991 and its most important short-term priority was to avoid defaulting on India’s external obligations. The outcome of these ten years of reform is that India has opened to the world economy. Except for restrictions on foreign investment in retail, India now has a competitive foreign investment regime. The financial sector has likewise seen the introduction of numerous reforms. Banks’ discretion over the allocation of funds has increased, and incentives for the efficient use of funds improved. the exchange rate of the rupee and the liberalization of capital flows have also reformed gradually. As a result of all the measures taken over the decade, India now has a much less regulated economy in terms of Agriculture; telecommunication, fdi outflows International trade has become an increasingly important part of the economy, and in many respects the globalization of India’s economy is accelerating. The agenda of 2002 included overcoming severe structural impediments preventing faster growth, in addition to the fiscal deficit like difficulties encountered in the reform of India’s power sector; the fiscal relations between the central and state governments. As opposed to most reforms in the world, India was able to introduce major policy changes without large fluctuations in income or consumption. It maintained almost continuous improvements in living standards throughout the decade. Inflation has declined to its lowest level in decades, and the real exchange rate has been reasonably stable. Social indicators like illiteracy and infant mortality have continued to improve. Conclusion On the whole, India should be regarded as a successful, yet gradual reformer. Gradualism has yielded two enormous benefits to India. First, the avoidance of premature liberalization of the capital account prevented India being exposed to contagion in the Asian crisis. Second, the Hindu rate of reform has allowed time for the Indian democratic polity to buy into the reform program. Will reforms continue in the future? Political dynamics of the country impact the implememtation of reforms massively, hence they are bound to remain vulnerable to the varied pressures of India’s complex political scene. But it is reasonable to hope that reforms will continue, although with stops and starts and varied support from parties in power and opposistion, at a reasonable rate.

Career Plan as part of my CV preparation Assignment

Career Plan as part of my CV preparation - Assignment Example In two years time I can see myself as a graduate student of Bachelor of Science in Chemical Engineering in the University of San Carlos. In my two years left in college, I can achieve this goal by attending to all my classes in every semester, by listening attentively to my professor’s lecture and by studying in advance so that I will have the upper hand advantage in class. I would also take up the 2 summer class I have left to speed up my education in college. I will continue to be active in extra curricular activities such as being in the swimming varsity team because of the extra credit and exposure I am gaining from it. I will also do my best and show my potential in work during my On-the-Job-Training so that I will have a good working record and gain referrals from seniors in the industry and that companies will prioritize my application when I apply. All of these will bring and guide me to my goal which is to finish my college degree with quality education and good reput ation. In 5 years time I see myself competing and building my way to the corporate world. In this time span I see myself working in an oil company such as Saudi Arabian Oil Co., National Iranian Co., or any other leading company. This is an attainable goal because I am equipped with the knowledge and training needed to do this job when I was in college. I will be patient and positive in applying for these top oil companies, I will do my best in job interviews by attending seminars and gaining tips from human resource experts. During this span of time I will aim for a promotion such as the position for engineering manager. I can achieve this goal by being pro-active in work, apply what I have learned in school and by striving excellence in work so that the management will see that I am worthy of the promotion. I will avoid any workplace violations that would interfere with the

The Investigation of an Ethical Issue Essay Example | Topics and Well Written Essays - 1000 words

The Investigation of an Ethical Issue - Essay Example Even while acknowledging the validity of a number of the ethical concerns raised, the fact is that not only are they resolvable but the merit scheme is a meritorious strategy. As school populations increase, teacher populations decrease. While the obvious solution to the problems associated with public school teacher shortages is the recruitment and employment of more teachers, Cornett and Gaines (2002) quite rightly maintain that this is a non-solution insofar as public teachers’ wage and benefit packages dissuade potential recruits from joining the public school system. Added to that, both federal and state resources are simply insufficient to meet the demand for across the board pay increases. Needless to say, long working hours and intense levels of on the job-stress versus low pay and unattractive benefits, de-motivates teachers and discourages a significant percentage from investing and dedicating themselves to their work (Cornett and Gaines, 2002). There is, however, a sizeable percentage of public school teachers who do dedicate themselves to their job, put in the extra hours their students by need and, indeed, invest themselves in their te aching. The merit scheme, according to Cornett and Gaines (2002) arose in response to the two points mentioned: low salaries and differentiations in teachers’ performances. Merit pay is designed to compensate the deserving for low salaries while, at the same time, encourage and reward the latter group of educators. Merit pay, when perceived of in the terms outlined in the preceding, does not simply emerge as a solution to the identified problems but as a meritorious concept insofar as it is fundamentally based on rewarding the deserving. As Johnson (2000) maintains, however, merit pay has been critiqued by many as fundamentally flawed and, ultimately, unethical. To this end, Johnson (2000) quotes Olsen (1987, p. 2) as saying that merit

Unit 3 Taxation and Representation Assignment Example | Topics and Well Written Essays - 250 words

Unit 3 Taxation and Representation - Assignment Example ight by a considerable extent, which was evident by having a close look on their respective approaches towards fulfilling such rights effectively (Ward, â€Å"History in the Making: An Absorbing Look at How American History Has Changed in the Telling over the Last 200 Years†). According to Patrick Henry and Samuel Adams, the right of taxation was referred to an option, which has been provided to the willing Englishmen by the British government. However, this provision changed with time. The political rights belonged exclusively to the colonists included the right to vote, order or proceed whereas, the power and authority over the British parliament remained confined to the concerning authorities. The above stated rights regarding the power to vote, order and proceed were only agreed upon by the legislation and the Parliament in terms of sharing with the colonists (Hanover, â€Å"Samuel Adams, and The Rights of the Colonists†). The existence of unrealistic expectations about the relationship prevailed between the mother country and its colonies can be duly considered as a major cause for the revolt brought upon by the colonists over Great Britain. For instance, the unrealistic and the ineffective mandates set up by the Parliament gradually resulted in raising several debates about taxation in the 1700s (GMW, â€Å"Soame Jenyns the Objections to the taxation considerd

Islamic Finance Law Dissertation Example | Topics and Well Written Essays - 1500 words

Islamic Finance Law - Dissertation Example The paper would therefore be analysing the role of Islamic finance in the fast transforming environment of global economy with the view that it has brought in more radical but ethical paradigms within financial system of contemporary times. Historical background The Ottoman Empire in the pre WWI era has perhaps been the most prominent exponent of using tenets of Islamic finance in their trade and business transactions. The close trade relationship with their European counterparts, Islamic finance was closely aligned with that of European financial system. The system worked on the basis of sharing of profit and loss (Chachi, 2005). But post WWI and WWII brought into focus the divergent ideologies of two financial system into sharp focus. While the western economy and financial system was based on interest bearing instruments, Islamic finance was rigidly guided by the religious tenets of Islam which forbids transactions based on interests or gains made through unethical means (Ahmad, 1 972)). In the contemporary times, Islamic finance has seen unprecedented growth primarily because of its fundamental principles based on Shariah guidelines (Anwar, 2008; Sundararajan & Errico, 2002). Principles of Islamic law and financial transactions under it Islamic finance is based on Islamic law that conforms to the Shariah guidelines of ethical practices in personal and business arena. Thus, Shariah can broadly be referred as Islamic law that defines the duties of man and the way they should be carried out (Vogel & Hayes, 1998; Hasanuzzaman, 1997). Shariah is part of Quran, the religious scripture of Muslims and is written in Arabic language. The interpretation of Shariah scholars therefore, may differ but the fundamental principle of ethics remains same. But Hadith, qiyas, idjma and fatwas are also key sources which inspire the ethical and moral considerations within the business transactions in Islamic finance (El-Gamal, 2006; Shahrukh, 1997; Pryor, 1985). Shariah principles are based on equity and prohibit financial transactions and activities that incorporate gharar (uncertainty), maiser (gambling) and riba (interest income) (Thomas, 2005; Nienhaus, 1986; Hasanuzzaman, 1994). The shariah compliance is vital element of Islamic finance products. Interestingly in the current times of highly sensitive global market, Islamic finance offers huge incentives in terms of ethically delivered financial instruments in myriad areas of finance (Venardos, 2005; Cooper, 1997; Ariff, 1988). It has made forays into banking, market risks and credit, insurance, liquidity management etc. and is fast emerging as credible alternative investment forum. Main Sharia compliant transaction structure and how they are used in practice All Islamic financial institutions are distinct in their constitution of board that comprises of financial experts and shariah scholars who evaluate the validity of financial instruments as per shariah principles. It uses various financial structure s that conform to shariah but at the same time, adequately meet the needs of people in the contemporary times (Hasanuzzaman, 1971; Saeed, 1995). Some of those financial methodologies can be defined as under: Zakah: It is vital instrument that promotes social justice by ensuring that people who own more than nisab (basic need) must make donation of 2.5% of their yearly assets. The social funds are used to meet the needs of the poor. Murabaha:

How the internet has changed world culture Essay - 1

How the internet has changed world culture - Essay Example nd what made it more endearing to masses of people one can identify the most important element as its swiftness, that is, its capability in providing the details in an instant. This is quite made possible by Google and Wikipedia by opening the realm of knowledge within seconds, creating a culture where acquiring knowledge becomes more and more easy. The social changes that internet brought to the world is really notable that it gives due importance to relationships. One may say that the Internet is about relationships whether political, economic or social. The major impact of internet on our society and culture is not negligible. A revolutionary change occurred in society with emails when it replaced letters. Internet has wondrously reduced the time interval of hand written letters where one had to wait for weeks for a reply. Today instant emails across thousands of miles are quite possible. The advent of internet has helped a great deal in reducing the cultural differences that it enables one to have a clear picture of other cultures far beyond our own towns, cities and countries, and thus making the world smaller. To speak figuratively, world is in our hands—just a click away. Another significant change has occurred in the educational and medical field. World has witnessed for a sudden change in educational sector that many modern universities have online based educational systems. The students and educators can clarify their doubts instantly through various educational websites and thousands of online libraries and can really improve the educational standards. One of the greatest changes brought by internet is in the medical field where the doctors could share and seek wise counsels or face to face interactions through online teleconferences from medical experts and successfully conduct even complicated surgeries. Internet has dominant influence in politics political system of a country. Internet has now emerged as an effective medium to gather

Cultural Analysis Research Paper Example | Topics and Well Written Essays - 1500 words

Cultural Analysis - Research Paper Example Healthcare provision is still behind in upper-middle-class countries. People in Panama have no confidence in the health care provision. They believe God is the only alternative for curing diseases. It made the researcher believe the level of education in Panama is still behind. Civilization has not taken root in most parts of Panama. To understand the women's position in the Panamanian’s society, the interviewee gave an in-depth discussion. The specific questions were how the marriage customs were practiced, attitude about separation, how women express modesty and roles of women in the society. The answers for the questions were different from what the researcher expected. It turned out that the women had no major position in Panamanian’s society. The researcher agreed with the interviewer that it would take time for Panama, to embrace the role of women in the society. For a health care provider to be culturally sensitive, he has to understand the roles of gender, sexual orientation, faith, tastes, and socioeconomic status. Physicians have to be sensitive to the unique needs of the Panama people. Sensitivity to their needs will improve the service delivery. Furthermore, asking appropriate questions, which are open-ended, will demonstrate a particular health care provider is culturally sensitive. Communication is an essential tool that will improve the patient-doctor relationship. The communication means should be able to bridge the differences between the culture of medicine and Panamanian’s beliefs and practices.

Dissertation Proposal to be done on same topic as other proposals and Essay

Dissertation Proposal to be done on same topic as other proposals and previous orders - Essay Example In this way, this study leans towards the end goal of making high school special education students stay in school. Receiving a high school diploma is extremely important to an American’s chances at achieving professional success. This is because Americans’ financial stability and professional achievement have always been mostly dependent on the education they have received (Shore, 2003). Higher education is something that highly enhances the number of opportunities one receives in the professional world and a high school diploma is almost always a prerequisite in being able to climb up the ladder to career success. This fact is augmented by the increasingly competitive market and the ongoing recession that has made getting job a lot harder. As a result, high school dropouts are faced with the negative ramifications of noncompletion throughout the rest of their lives, which includes unemployment and even a prison sentence as they might confront their financial difficulties with criminal activities (Rumberger, 2003). This contributes to â€Å"a pattern of increased economic marginal ization for those Americans with the least education† (Shore, 2003). Dropping out Ð ¾f high Ã'•chool restricts oneÃ'• options Ð °nd labor market opportunities in an economic climate that is becoming more and more advanced and comples; hence, high school noncompletion prompts serious negative conÃ'•equenceÃ'• for both thÐ µ individual Ð °nd Ã'•ociety in termÃ'• Ð ¾f financial ability and future productivity (Ð…trothÐ µr, 2006). These negative ramifications of high school noncompletion are further augmented when it comes to students with disabilities as their disabilities already act as a hindrance that closes many doors of opportunities. Furthermore, statistics show that the dropout rates of special education high school students are at least double and at the most triple that of regular students (Blackorby and Wagner, 2006; deBettencourt, Zigmond and Thornton,

Cietac Ethical Rules for Arbitrators Essay Example for Free

Cietac Ethical Rules for Arbitrators Essay 1. Each arbitrator shall independently and impartially hear cases on the basis of the facts, in accordance with the law, with reference to international practice and in compliance with the principles of fairness and reasonableness. 2. An arbitrator does not represent either party and shall remain independent of the parties and treat them equally. 3. No arbitrator on the Panel of Arbitrators may be appointed to a case once he/she has discussed the case with either party or given any advisory opinion about the case. 4. Unless otherwise agreed between the parties and the Tribunal during conciliation within arbitration, an arbitrator shall not meet either party independently to discuss the case or accept any materials relevant to the case. In any case, an arbitrator shall not accept any gift from either party. 5. An arbitrator shall disclose to International Economic and Trade Arbitration Commission (hereinafter ‘CIETAC’) his/her relationship with the parties if he considers that there is any conflict of interest or other relationship which may affect his/her impartiality, e.g. lineal consanguinity, obligations, proprietary and financial relationships, service and business relationships, and request voluntary withdrawal. 6. The arbitrators shall hear cases strictly in accordance with the procedure provided by the CIETAC Arbitration Rules, and shall give the parties full opportunity to state their case. 7. The arbitrators shall guarantee sufficient time for hearings and deliberations after the appointment, and the hearing should remain his/her top priority under all circumstances. Arbitrators shall inform the Secretariat immediately if any extraordinary circumstances arise. 8. The arbitrators shall carefully and conscientiously go through the entire documents and materials of the case and find out the main issues. 9. The arbitrators shall discuss the case and work out a plan before hearing the case, and the presiding arbitrator shall put forward a proposal as the basis for the discussion. The sole arbitrator shall work out a plan before the hearing where the arbitral tribunal is composed of one arbitrator. 10. The arbitrators shall stay impartial during the hearing, be wary of the way they ask questions and express opinions, avoid a premature decision on the key issues, and stay away from any argument or confrontation with the parties. 11. Immediately after the hearing, the presiding arbitrator shall preside over the deliberations and give his opinions for the next step in the procedure or the drafting of the final arbitration award. 12. The arbitrators, in particular the presiding arbitrator, shall control the whole process of the hearing, and keep it within the time limits provided by the CIETAC Arbitration Rules. 13. The arbitrators shall maintain strict confidentiality in the case, and shall not disclose to any outsiders any substantive or procedural matters of the case, including the facts, hearing procedure, content of the deliberations, etc. Neither shall he/she disclose his/her opinions or the details of the deliberation to either party. 14. An arbitrator is entitled and encouraged to participate in activities organized by CIETAC, concerning study or experience exchange between arbitrators. 15. An arbitrator who acts on behalf of CIETAC to take part in any meeting or activities related to arbitration or publish articles or give lectures shall obtain permission from CIETAC in advance.

Causes and Effects of Inflation in India

Causes and Effects of Inflation in India Introduction Inflation is defined as the constant rise in the price of a particular goods and services over a period of time. When the level of prices increases, each unit of currency can purchase lesser goods and services making the purchasing power will decrease. There are two types of inflation in this world including the positive inflation and negative inflation. A negative inflation will increase the chances of investors to hold their money as the future is still in uncertainty. They do not want to take risks of their money to invest in uncertainty and hence will lead to surplus of goods in market. A positive inflation will help the bank to adjust their real interest rate in a short run and encourage investment in the non-monetary capital project. Summary In recent years, high food inflation in India is one of the factors which bring to non-food inflation and aggregate inflation. There are 4 factors that affect food inflation occur, which are international prices and trade policy, rising demand supply mismatch, stagnant productivity and minimum support prices. During 2008 and 2010, international economist forecasted that will be inflation on that year caused that the international price of good increase. It affects the cost of input which import from foreign country has been increased as well. Besides, rising per capita income and diversification of diet in India causes that the demand of high-value product like eggs, meat fruits and other rise while the response of supply of these products is being weak. To overcome the problem of stagnant productivity, Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) is promoted and it affect that the rural wages in India rise. Under this program, the indexation of wage rate to Consum er Price Index has been pushed up the minimum wage. (Sonna, October 2014) Food inflation will cause that wage rate increase because labor can request for a higher wage since food is constituted as an important good in their consumption basket. Increase of wage will increase the cost of production and make the prices of non-food increase as well. On the same time, the real income of producer in food sector is increased during the rise in food price. It cause that the demand of non-food items will rise due to the increases of food prices which relative to aggregate price through substitution effects and through income effect of the food producer. (Sonna, October 2014) When the price of food inflates, it will drive the fluctuation in currency which has created a huge impact on all the sectors. For instance, the domestic oil price is linked with the international oil price. This lead to the oil price has a direct relationship with the Indian currency as US dollar which has already become one of the acceptable global currencies in the international market. However, the impact brought by the increase in oil price is not heavy and will cause a big burden to the market because this increase in price will go through the other sectors in the market. This contributes to share the burden of the increase in oil price among the other sectors. This causes inflation of other goods to happen due to the chain reaction happen when the prices of the domestic oil increase. (Dr.A.Hidhaya Mahammad Rafee.B, 2014) As the oil price and inflation build a cause and effect relationship, the fluctuations of oil prices have significant impact on the inflation. The impacts of oil prices fluctuations are different in oil exporting and in oil importing countries. For the oil exporting countries, the increment of oil prices constituted good news while the increment of oil prices constituted bad news for oil importing countries. For instance, China and India were known as the most consumption on the oil among the oil importing countries in the world. Anshul Sharma stated that inflation will move in the same direction with the movement of oil prices. The inflation rate increases as the crude oil increases and vice versa. Since the early of the 21st century, the prices of oil has rising heavily. This contributed to the higher inflation as the cost of production increased. The increment of cost of production led to the increment of fuel costs and then caused the decrement of supply. Jose De Gregorio et al. stated that the fluctuation of oil prices had adverse impact on the economy. (M. Anandan, S. Ramaswamy and S. Sridhar, 2013) Besides, depreciation in the currency will subsequently lead to the people to buy lesser goods with the same amount of money they hold. This case can be defines as a decrease in the purchasing power of currency. This journal has mentioned that India is considered as one of the largest market in the world that does not have any monetary policy framework to help to control the market. This is why the India always faces inflation after a financial crisis. There is no initiative taken by India to handle the inflation brought by the financial crisis which will lower down the currency of the country. People will now start to demand fewer rupees and consider investing in other country’s currency. (Zainab Mulla, 2014) There is a strong pressure on the Rupee currency which is caused by the strong demand of US dollar. This will lead to a major impact of inflation. The Rupee depreciation will make India to produce competitive goods in global market which will bring benefit for India’s exports. The exporters gain advantages as the abroad exported goods return more Rupees which are translated from dollar to Rupees. As a result, there is a relationship between Rupees depreciation and the inflation. (Deepa Divakaran.N and Dr.G.S.Gireeshkumar, 2014) According to Kamiar Mohaddes Mehdi Raissi (2014), the inflation could lower the growth by reducing the productivity and investment. Barro stated that there is a strong evidence for the negative impact of inflation on growth. Besides, the journal stated the inflation-growth relationship is highly non-linear. Besides, Khan and Senhadji stated that the inflation rate above the ‘threshold’ is negative and significant on growth whereas the inflation rate below the ‘threshold’ is positive and insignificant. Gillman and Kejak stated that the inflation and growth has surveyed by various models and resulting in generating a negative relationship between inflation and growth. De Gregorio and Gomme proved that the relationship between inflation and growth is non-linear which means the growth rate will be lower as the inflation rate increases. Based on AK and AH models, inflation play a role as tax on either physical capital or human capital. This will lead to the decrement of the growth rate. Akerlof et al. also stated the low inflation rate may have a positive relationship with output growth. This is because of low inflation causes the increment of productivity and resulting in higher growth. (Kamiar Mohaddes Mehdi Raissi, 2014) Discussion Crude oil is an input in the value added chain of most agricultural products such as machinery fuel, transport and fertilizers. The rising of crude oil price causes that the cost of production rises and the price of final product increase as well. Moreover, nowadays food products are common used in producing of biofuel energy based on environmental preoccupation. Therefore, the substitution of crude oil by food product to produce fossil fuel causes that the food product demand increases in the market. As a prove, we found the data from US Energy Information Administration and FAO which shows that the price of oil and food is positive relationship at year 2000 to 2010. When food inflation occurs, the wage rate will increases due to the productivity need to increase but supply of labour is limited in the market. By this, not only wage of labour will increase, but the income of producer in food sector also increase because of the windfall profits will raise higher than cost of production. It means that the citizen become richer and their demand of goods and services will increase as well through income effect. The increase of demand causes that it excess than supply in the market and then causes inflation occur. In order to prove that food inflation will affect nonfood inflation and aggregate inflation, there was a Forecast Error Variance Decomposition (FEVD) analysis is done and shows that variation of food inflation contributes 54% of variation of nonfood inflation and 46% variation in aggregate inflation after 1 month of the shock. After 10 month, the variation of nonfood inflation decreases to 46% while the variation of aggregate inflation increa ses to 72%. (Sonna, October 2014) Over the years, the currency rate of Rupee to US Dollar is increasing each year. In year 2000, 1 USD can exchange for 45 Rs. However, in year 2013, the exchange rate has increased that 1 USD can exchange for 58.53 Rs. This causes the Rupee to depreciate its value due to the strong demand of US Dollar by the citizens. In order to prove the statement of Deepa Divakaran N and Dr G.S.Gireeshkumar, the major impact of inflation in India is caused by the peer pressure faced by Rupee currency as there are many people who demands US Dollar rather than holding Rupee. When the currency is facing depreciation, people will tend to hold other’s countries’ currency as Rupee has no more holding value. The demand for Rupee will drop and thus drives up the inflation. Cost-push inflation will occur when people now feel reluctant to spend their Rupee on normal goods and causes supply to be surplus and push the price to increase. Therefore, a drop in the currency of Rupee will affect inflation to happen. Throughout the research, we have figured out that the purchasing power for India is increasing linearly year by year since from year 1999 until now. Starting from year 1999, the GDP (Purchasing Power Parity) is 1,805 Billion Dollar and for year 2014, it has increase to 7,277.3 Billion Dollar. This means that the purchasing power for India is getting bigger and bigger every year. As GDP grows, there will be more transaction happen daily and this will lead to an increase in the demand of Rupee. Thus, it will help to raise the exchange rate of Rupee to other country’s currencies. This will result in the increase of purchasing power of Indians’. When the nation’s GDP (Purchasing Power Parity) increases, the exchange rate of Rupee to other country’s currency will decrease and this caused the import fee to decrease as well. This causes more and more transaction will occur because the export fee is lower compared to the older time and this can help to drive up th e country’s GDP. In order to prove the statement of Zainab Mulla, when the GDP (Purchasing Power Parity) in year 1999 is still at a lower stage, the citizens can barely afford to buy breads with 60Rs. However for year 2014, the GDP (Purchasing Power Parity) increase drastically, making the purchasing power of Rupee to increase. As a result, now they can afford to buy few types of bread with 60Rs. This shows that Rupee in year 2014 has more value than year 1999 because we can buy more stuff with 60Rs over 15 years. When the purchasing power of citizens increases, they will tend to spend more money rather than keeping it because they can get more goods with the current value. This action also can help to increase the country’s GDP. On the other hand, the decrease in the price of the crude oil also becomes one of the catalysts in the economic growth in India. Crude oil as the largest internationally traded items will have an abrupt changes in economic if there are any changes in the price for the oil exporting and importing countries. This can be seen when the economic growth of India had shown a decrease sign from year 2010 to year 2013, which is decrease from 10.3% to 5.0%. This is because of the recent crude oil price has increased from 3,463Rs in year 2010 to 6,415Rs in year 2013. The increment in the price of crude oil will affect inflation to happen if the government chooses to absorb the burden by increasing the price of other petroleum products. In order to prove the statement of Gillman and Kejak, when the price of crude oil increase, the growth of the country will decrease as the petroleum-based products will have them increase in the price which causes the consumers will try to consumer less of these products. When these products have a low demand, the supply will be overloaded and then leading to the output production level of the factory drop. Hence, the whole economic growth will be stalled. Conclusion In the nutshell, there are many causes and effect that are brought by inflation. It is undeniable that inflation is not favor in the country as it brings a lot of negative effect and will drag the growth of country. However, we could not avoid inflation from happening in a country. What we can do is just try to minimize the impact bring by the inflation. One of the solutions to curb the inflation problem is by selling bonds to the non-residential investors of the country. As we know that the poverty of Indians is very serious, the residents have less money to afford the bond sold by the government. Hence, the government should make the bond available to the investors from other country which can afford it so that there is more money inflow to the country so that the government has more money to circulate the daily money flow of money. Other than that, the government should implement some policy that makes them to be less dependent to the import industry. They should encourage more export activities because they can earn more money when the exchange rate of Rupee drops. Incentives should be given in order to encourage this action. In addition to the above, the government can also control the price of oil and give subsidies for the crude oil. By controlling the price of oil, all the petroleum-based products will also have their price controlled because they do not have to share the burden of increased price of oil. This will subsequently keep the inflation rate to remain under the threshold and will not cause any major problem to the economic growth of India. Last but not least, if the entire precaution steps have been taken to handle inflation problem, we can surely minimize the impact that bring by inflation.

The Recluse Essay -- Literary Analysis

Wordsworth suffers solitude, even as he celebrates it. Alone, the poet can explore his own consciousness; it exists at both poles of the notion of ‘emotion recollected in tranquillity’, and is the dominant developmental mode of Wordsworth’s childhood as depicted in The Prelude (1805). Independence is what is exalted in his introduction to that poem: he greets the ‘gentle breeze’ as a ‘captive†¦ set free’ from the ‘vast city’ which has been as a ‘prison’ to his spirit. The oppression of city living is alleviated in this opening reacquisition of isolation; the relief is evident: ‘I breathe again’, ‘that burthen of my own unnatural self [is shaken off], /The heavy weight of many a weary day/ Not mine, and such as were not made for me’. In this, the commencing statement of his autobiography, the independence of solitude is represented as the essential quality of his poetic felicity. T he ‘egoistical sublime’ observed by Keats is manifest in this poetry in a separation from other men, rather than in that of a Byron, whose narrators’ egotisms are evinced by their social interactions. Wordsworth’s company is nature; his sister, his wife, his children exist as assimilations rather than relationships. The sister of Lines Written a Few Miles Above Tintern Abbey, is conjured into independence in the final paragraph, so as to exist as a previous self: ‘For thou are with me’, he suddenly reveals, ‘and in thy voice I catch/ The language of my former heart’. She is externalised when poetically useful; and it is by this externalisation that Wordsworth is able to avert and diminish his poem’s undercurrent doubts. ‘This prayer I make/ Knowing that Nature never did betray/ The heart that loved her’, has a contrary traction as a plea intimating des... ...this as his essential condition, but it is worth observing that ‘recluse’ does not imply total isolation. Wordsworth’s solitude, as he left childhood, was never again to be absolute; for as consciousness developed, so did his capacity to apprehend himself, in language, so even alone he could not be alone without self-intercourse, mediated by language. His solitude was necessary for his vocation, but his vocation trespassed on that solitude; for to be a poet is to cast experience away from the self: even in egotism, isolation is disrupted by the projection of an audience. Works Cited Gil, Stephen ed. William Wordsworth: The Major Works (OUP 1984) Hartman, Geoffrey Wordsworth’s Poetry 1787-1814 (Yale University Press 1971) Morgan, Monique R. ‘Narrative Means to Lyric Ends in Wordsworth’s Prelude’ (Narrative, Volume 16, Number 3, October 2008, pp. 298-330)

Speaking In Tongues Essay -- Communication

Communication has been the hub of society sense the beginning of man. It is the way people pass information from one to the next. Animals have been known to communicate with other animals or humans. A dog will urinate in order to mark his/her territory. This action translates possession to other animals, and the dog will act aggressively defending his/her territory if needed. Other animals have actions that will translate possession, hunger, and love. Humans translate these same ideas by body language (which is non-verbal communication) and speech (which is verbal communication). Humans place their main interest in verbal communication, which consist of communication with sounds from the mouth. With any type of communication there are different languages. Many people are unaware that there are many different types of Sign Language. The languages that people speak are generally learned at an early age. After a child is born the parents beginning to speak to it, and automatically the child begins to learn how to communicate with their mouth. Understandably, whatever language, or languages, the parents speak, will be the language the child learns. However, as a person ages the ability of learning a new language depreciates, and the task becomes exceedingly difficult. Understanding this to be common knowledge, it is not surprising to read about the reaction the Jews expressed on the day of Pentecost when the apostles stud before t hem speaking in languages they had never spoken before. Today the term for this particular act is called â€Å"Speaking in Tongues,† and there has been much debate over this issue. The idea raises many questions such as: â€Å"What is a tongue?† â€Å"How did someone acquire this ability?† â€Å"What is the purpose?† And, â€Å"... ... known as the Bible. Keep in mind, if the televangelists who claim to heal by the power of God were able to do so, then why do they wait for people to come to them? Why are they not traveling from one hospital to another healing the sick and raising the dead? It is for the same reason people cannot speak in a language they have not learned, miracles have ceased (1 Corinthians 13:10). The idea of speak in an unlearned language, or speaking in tongues, is a much debated topic among religious enthusiast. This topic, like many others, will continue to be debate until the final trumpet sounds and the church rise to meet Christ in the hair. However, if one was to choose to forget everything he or she has learned about the subject, and study the scriptures for themselves, then they would discover the truth. All miracles, including speaking in tongues, have ceased.

Ergonomics Essay example -- GCSE Business Marketing Coursework

Ergonomics Ergonomics, as defined by the Board of Certification for Professional Ergonomists (BCPE), "is a body of knowledge about human abilities, human limitations and human characteristics that are relevant to design. Ergonomic design is the application of this body of knowledge to the design of tools, machines, systems, tasks, jobs, and environments for safe, comfortable and effective human use". The term ergonomics is derived from the Greek word ergos meaning "work" and nomos meaning "natural laws of" or "study of." The profession has two major branches with considerable overlap. One discipline, sometimes referred to as "industrial ergonomics," or "occupational biomechanics," concentrates on the physical aspects of work and human capabilities such as force, posture, and repetition. A second branch, sometimes referred to as "human factors," is oriented to the psychological aspects of work such as mental loading and decision-making. The profession is comprised of practicing and academic engineers, safety professionals, industrial hygienists, physical therapists, occupational therapists, nurse practitioners, chiropractors, and occupational medicine physicians. History of Ergonomics. Christensen, an expert in the said field, points out that the importance of a "good fit" between humans and tools was probably realized early in the development of the species. Indeed cavemen are known to have selected stone tools and made scoops from antelope bones in a clear display of selecting/creating objects to make tasks easier to accomplish. In the work environment, the selection and creation of tools, machines, and work processes continued. Over centuries, the effectiveness of hammers, axes and plows improved. With the Industrial Revolution, machines such as the spinning jenny (a machine that produced yarn to make cloth) and rolling mills (a method of flattening iron ore into flat sheets) were developed to improve work processes. This is the same motivation behind much of ergonomics today. The association between occupations and injuries of body muscles and bones were documented centuries ago. Bernardino Ramazinni (1633-1714) wrote about work-related complaints (that he saw in his medical practice) in the 1713 supplement to his 1700 publication, "De Morbis Artificum (Diseases of Workers)." Wojciech Jastrzebowski created the word ergonomics in 1857 ... ...ngineering Controls) Pullout steps, external handles and multilevel shelving have been installed in delivery trucks to make access to beverage cases easier. Counterbalancing devices have been added to improve hand truck stability. Beverage cartons have been redesigned for easier handling. The total weight was decreased by substituting plastic for some glass containers. Ergonomic Solution (Benefits) Reduced risk factor exposure. Employee satisfaction. Improved physical and psychological comfort. Ergonomic Solution (Method Which Verified Effectiveness) Quantitative tests of heart rate, stress/fatigue levels and discomfort reports showed statistically significant improvements in physical and psychological comfort, providing scientific justification for the changes. References R.S. Bridger. (1995) Introduction to Ergonomics. McGraw-Hill International Editions K.H.E. Kroemer & E. Grandjean. (1999) Fitting the task to the human Taylor & Francis Publishings The Human factors section, Health, Safety & Human factors laboratory, Eastman Kodak Company. (1983) Ergonomic design for people at work Van Nostrand Reinhold, New York www.ergoweb.com

Financing

On this basis, CDC has set a strong foundation as one of the largest (by both sales and production value) confectionery companies in Vietnam and aims to leverage through expansion of our reach and product strategy into daily use products to become one of the largest food & beverage companies in Vietnam. The overall goal is to meet the daily demands of our consumers. Vision: â€Å"FLAVOR YOUR LIFE† CDC creates life's flavor through wholesome, healthy, nutritious and convenient foods. Mission: Kid's mission for consumers is to identify, anticipate and meet the demands of our consumers with food, flavor and beverage products.This includes the current range of products and looks to expand further into beverages, condiments, instant foods, processed foods, eats and health supply to become a full range, food & beverage company. Our goal is to provide products that are market leading in quality, healthy, satisfying and conveniently available all our consumers. Financial: As predicted , 2012 has proven to be a very challenging year for the country as a whole and businesses in particular. GAP growth was lower than expected, inflation remained high and consumer confidence and purchasing power were reduced to marginal growth levels.These factors resulted in making it difficult for all businesses to realize their growth strategies, including us at CDC. However, despite very challenging economic environment of the past 12 months, CDC have successfully completed Stage Three of our four part growth strategy. CDC aimed for â€Å"Profitability through Efficiencies†, and they realized that objective in 2012. However we are not stopping there. They are continuing to channel our resources into our core food business and invest in our distribution and supply chain networks.Our primary goal continues to be striving for improved efficiencies which can drive profit by achieving optimal operating performance. To date, our results in this area have been impressive. They gen erated a profit of VEND 490 billion in 2012 as against VEND 349 billion the previous year. Significantly, our ROE increased from 7. 2% to 9. 1%. II. THE BODY Financial accounting is concerned with reporting to external parties such as owners, analysts, and creditors. These external users rarely have access to the information that is internal to the organization, nor do they specify the exact information that will be presented.Instead, they must rely on the general reports presented by the company. Therefore, the reporting structure is well defined and standardized. The ethos of preparation and the reports presented are governed by rules of various standard-setting organizations. Furthermore, external users generally see only summarized or aggregated data. In contrast, managers of a business oftentimes need or desire far more detailed information. This information can sometimes take on familiar formats. Subsequent chapters will reveal typical examples of budgets, segment income repor ts, and so forth.A fundamental awareness of the financial accounting processes and resulting financial statements is a vital prerequisite to understanding the framework for these typical managerial accounting reports. In addition, managers usually request reports that are tailored to specific decision- making tasks. These reports are apt to become more â€Å"free formed. † Managerial accountants must be able to adapt their generalized knowledge of accounting to develop customized data and reports that are logical and support sound management processes. Managerial accounting information tends to be focused on products, departments, and activities.It necessarily crosses over a broad range of functional areas including marketing, finance, and other disciplines. Many organizations refer to their internal accounting units as departments of strategic enhance, given their wide scope of duties. Managerial accounting information is ultimately based on internal specifications for data accumulation and presentation. These internal specifications should be clear and consistent. Great care must be taken to insure that resulting reports are sufficiently logical to enable good decisions. Specific reporting periods may be replaced with real-time data that enable quick response.And, forecasted outcomes become critical for planning. Further, cost information should be disseminated in a way that managers can focus on their business components segments. . Features of useful management accounting information in CDC. The features are required in order for management accounting information to be useful, mainly in making decisions. The information must be: relevant, understandable, timely, comparable, reliable and complete and last with cost benefits features. A) Relevant. The management needs to consider only the relevant information. The information must be relevant to decision making in process.We can understand simple, relevant information is a part of information that con sequences in different decision being made for a particular activity. The piece of information have to be able to effect decision that has to be made. Relevance accounting information is the compilation of a company's financial dealings. CDC present accounting information to internal and external business stakeholders for creation decisions. Relevant to investors, creditors, and others for investment, credit, and similar decisions, accounting information must be capable of making dissimilarity in a decision.Relevant in sequence should have predictive value, feedback value, and timeliness. Relevant information helps decision makers make predictions about future; it has Predictive Value. Relevant information also helps decision makers confirm or accurate previous prospect; it has Feedback Value Most companies must present accounting information according to national accounting standards; generally accepted accounting principles (GAP) symbolize the most trustworthy accounting standards .GAP requires accounting information to include qualitative characteristics on which business stakeholders can rely. B) Understandable. The second feature of management accounting information is that it can be understood by the user of the information. The information clear, simple and easily understood by the manager. This is because most managers do not have a financial or accounting background. Therefore, it is reasonable for the management accountant to use simple terms that can be understood by the management to guarantee that the information is used to make accurate decisions.Long winded information will only be puzzling and may cause erroneous decisions to be made. This implies the expression, with clarity, of accounting information in such a way that it will be understandable to users – who are generally assumed to have a reasonable knowledge of business and economic activities Accounting information and financial tenements should be prepared in such a way as to facil itate understanding by users of the financial statements. Information about complex matters should be presented, if important or material.Users of information and financial statements are assumed to have a reasonable knowledge of business, economy, and accounting and to be willing to study information to gain a reasonable level of financial expertise. C) Timely. A piece of information is Just useful to the management if it is received in a timely manner. If Kid's the management accounting information is received late, the correct actions cannot be taken or the decision made will no longer be of value. D) Comparable. Accounting information must be comparable. Kid's management accounting information is often used by the management to make comparisons.Accounting information and financial statements should be equipped in such a way as to assist assessment of entity information during time and also alongside information from different, but similar, entities. Comparability results when di fferent enterprises apply the same accounting management to similar events. Compliance with international accounting standards helps to enhance comparability. ) Reliable and Complete. KID'S management accounting information is always associated with the future. However, it cannot be 100% accurate. It only has to be accurate for a decision within a relevant range.Thus, important and useful information during particular period cannot be left out. This is to ensure that the information is reliable as well as complete. Reliability is the quality of information that authorized users to depend on it with assurance. This means it is verifiable, has faithful representation, and is reasonably free of errors and bias. Representative closeness refers to resplendence or agreement between a measure or description and the phenomenon that it purports to represent. That means the numbers and imagery represent what really existed or happened.Accounting information and financial statements should be prepared in such a way that they are free from material error and bias. That is that CDC represent faithfully that which they either hold themselves out to represent or could be reasonably expected to represent. F) With Cost- benefit Features. Kid's the preparation of information will certainly incur cost such as the costs of collecting, analyzing and interpreting the data obtained. Thus, it is important that the information can bring returns that cover the costs involved. In other words, the value of the information obtained must be more than the costs of obtaining it.The information must be useful before it can produce results. All in all, the accounting information is too particular, will enlarge the risk of investor decision- making, therefore the formation of the happening of internal control is leap to influence the entire capital market competence and capital market financing capacity. Thus, accounting information must allow the reader to recognized, so that it can be used pr operly. 2. Planning. CDC must plan for success. What does it mean to plan? It is about deciding on a course of action to reach a desired outcome. Planning must occur at all levels.First, it occurs at the high level of setting strategy. It then moves to broad-based thought about how to establish an optimum position to maximize the potential for realization of goals. Finally, planning must give thoughtful consideration to financial realities/ constraints and anticipated monetary outcomes (budgets). A business organization may be made up of many individuals. These individuals must be orchestrated to work together in harmony. It is important that they share and understand the organizational plans. In short, everyone needs to be on the same page. As such, clear communication is imperative. ) Strategy CDC should invest considerable time and effort in developing strategy. Employees, harried with day-to-day tasks, sometimes fail to see the need to take on strategic planning. It is difficult to see the linkage between strategic endeavors and the day-to- day corporate activities associated with delivering goods and services to customers. But, strategic planning ultimately defines the organization. Specific strategy setting can take many forms, but generally includes elements pertaining to the definition of ore values, mission, and objectives. Core values: An entity should clearly consider and define the rules by which it will play.Core values can cover a broad spectrum involving concepts of fair play, human dignity, ethics, employment/promotion/ compensation, quality, customer service, environmental awareness, and so forth. If CDC does not cause its members to understand and focus on these important elements, it will soon find participants becoming solely â€Å"profit-centric. † This behavior leads to a short-term focus and potentially dangerous practices that may provide the seeds of self-destruction. Remember that management is to build business value by making the right decisions, and decisions about core values are essential.Be aware that the Institute of Management Accountants (AMA) is a representative group for the managerial accounting profession. The IMAM has established a set of ethical standards for its members that are part of the core values for the profession. Imam's overarching ethical principles include: Honesty, Fairness, Objectivity, and Responsibility. Many IMAM members have earned the CAM (certified management accountant) and CFML (certified financial manager) designations. These certificates represent significant competencies in managerial accounting and financial management skills, as well as a pledge to follow the ethical precepts of the ‘MA.Mission: CDC attempt to prepare a pithy statement about their mission. Such mission statements provide a snapshot of CDC and provide a focal point against which to match ideas and actions. They provide an important planning element because they define Kid's purpose and direct ion. Interestingly, some organizations have avoided mission, in fear that it will limit opportunity for expansive thinking. For example, General Electric specifically states that it does not have a mission statement, per SE. Instead, its operating philosophy and business objectives are clearly articulated each year in the Letter to Shareowner, Employees and Customers.In some sense, though, Gee's tag line reflects its mission: imagination at work. Perhaps the subliminal mission is to pursue opportunity wherever it can be found. As a result, GE is one of the world's most diversified entities in terms of the range of products and services it offers. Overall, the strategic structure of CDC is established by how well it defines its values and purpose. But, how does the managerial accountant help in this process? At first lance, these strategic issues seem to be broad and without accounting context.But, information is needed about the returns that are being generated for investors; this a ccounting information is necessary to determine whether the profit objective is being achieved. Actually, though, managerial accounting goes much deeper. For example, how are core values policed? Consider that someone must monitor and provide information on environmental compliance. What is the most effective method for handling and properly disposing of hazardous waste? Are there alternative products that may cost more to acquire but cost less to dispose? What system must be established to record and track such material?All of these issues require accountability. As another example, ethical codes likely deal with bidding procedures to obtain the best prices from capable suppliers. What controls are needed to monitor the purchasing process, provide for the best prices, and audit the quality of procured goods? All of these issues quickly evolve into internal accounting tasks. B) Positioning. An important part of the planning process is positioning CDC to achieve its goals. Positionin g is a broad concept and depends on gathering and evaluating accounting information.Costumer/Profit analysis and scalability: A subsequent chapter will cover cost/volume/profit analysis. It is imperative for managers to understand the nature of cost behavior and how changes in volume impact profitability. Methods include calculating break-even points and determining how to manage to achieve target income levels. Managerial accountants study business models and the ability (or inability) to bring them to profitability via increases in scale. Global Trade and Transfer: The management accountant frequently performs significant and complex analysis related to global activities.This requires in-depth research into laws about tariffs, taxes, and shipping. In addition, global enterprises may transfer inventory and services between affiliated units in alternative countries. These transactions must be fairly measured to establish reasonable transfer prices (or potentially run afoul of tax an d other rules of various countries involved). Once again, the management accountant is called to the task. Branding / Pricing / Sensitivity / Competition: In positioning a company's products and services, considerable thought must be given to branding and its impact on the business.To build a brand requires considerable investment with an uncertain payback. Frequently, the same product can be positioned as an elite brand via a large investment in up-front advertising, or as a basic consumer product that will depend upon low price to drive sales. What is the correct approach? Information is needed to make the decision, and management will likely enlist the internal accounting staff to prepare prospective information based upon alternative scenarios. Likewise, product pricing decisions must be balanced against costs and competitive market conditions.And, sensitivity analysis is needed o determine how sales and costs will respond to changes in market conditions. Decisions about positio ning Kid's products and services are quite complex. The prudent manager will need considerable data to make good decisions. Management accountants will be directly involved in providing such data. They will usually work side-by-side with management in helping correctly interpret and utilize the information. It is worthwhile for a good manager to study the basic principles of managerial accounting in order to better understand how information can be effectively utilized in the decision process. Budgets. A necessary planning component is budgeting. Budgets outline the financial plans for an organization. There are various types of budgets. Kid's budgeting process must take into account ongoing operations, capital expenditure plans, and corporate financing. Operating Budgets: A plan must provide definition of the anticipated revenues and expenses of CDC, and more. Operating budgets can become fairly detailed. The process usually begins with an assessment of anticipated sales and procee ds to a detailed mapping of specific inventory purchases, staffing plans, and so forth.These budgets oftentimes delineate allowable levels of expenditures for various departments. Capital Budgets: The budgeting process must also contemplate the need for capital expenditures relating to new facilities and equipment. These longer-term expenditure decisions must be evaluated logically to determine whether an investment can be Justified and what rate and duration of payback is likely to occur. Financial Budgets: CDC must assess financing needs, including an evaluation of potential cash shortages. These estimates enable companies to meet with lenders and demonstrate why and when additional financial support may be needed.The budget process is quite important (no matter how tedious the process may seem) to the viability of an organization. Several of the subsequent chapters are devoted to the nature and elements of sound budgeting. 3) Directing. There are many good plans that are never re alized. To realize a plan requires the initiation and direction of numerous actions. Often, these actions must be well coordinated and timed. Resources must be ready, and authorizations need to be in place to enable persons to act according to the plan. By analogy, imagine that a composer has written a beautiful score of music.For it to come to life requires all members of the orchestra, and a conductor who can bring the orchestra into synchronization and harmony. Likewise, the managerial accountant has a major role in moving business plans into action. Information systems must be developed to allow management to maneuver the organization. Management must know that inventory is available when needed, productive resources (people and machinery) are scheduled appropriately, transportation systems will be available to deliver output, and so on. In addition, management must be ready to demonstrate compliance with contracts and regulations.These are complex tasks which cannot occur witho ut strong information resources provided by management accountants. Managerial accounting supports the â€Å"directing† function in many ways. Areas of support include costing, production management, and special analysis. A) Costing. A strong manager must understand how costs are captured and assigned to goods and services. This is more complex than most people realize. Costing is such an extensive part of the management accounting function that many people refer to management accountants as cost accountants. But, cost accounting is only a subset f managerial accounting applications.Cost accounting can be defined as the collection, assignment, and interpretation of cost. Subsequent chapters introduce alternative costing methods. It is important to know the cost of products and services. The ideal approach to capturing costs is dependent on what is being produced. Costing Methods: In some settings, costs may be captured by the Job costing method. CDC might consider tracing cos ts and assigning them to activities (e. G. , training, client development, etc. ). Then, an allocation model can be used to attribute selected activities to a Job.Such activity-based costing systems are particularly well suited to situations where overhead is high, and/or a variety of products and services are produced. Costing Concepts: In addition to alternative methods of costing, a good manager will need to understand different theories or concepts about costing. In a general sense, these approaches can be described as absorption and direct costing concepts. Under the absorption concept, a product or service would be assigned its full cost, including amounts that are not easily identified with a particular item, such as overhead items moieties called burden.Overhead can include facilities depreciation, utilities, maintenance, and many other similar shared costs. With absorption costing, this overhead is schematically allocated among all units of output. In other words, output ab sorbs the full cost of the productive process. Absorption costing is required for external reporting purposes under generally accepted accounting principles. Some managers are aware that sole reliance on absorption costing numbers can lead to bad decisions. As a result, internal cost accounting processes in CDC focus on a direct costing approach.With direct costing, a unit of output will be assigned only its direct cost of production (e. G. , direct materials, direct labor, and overhead that occurs with each unit produced). Future chapters examine differences between absorption and direct costing. B) Production. Successfully directing an organization requires prudent management of production. Because this is a hands-on process, and frequently involves dealing with the tangible portions of the business (inventory, fabrication, assembly, etc. ), some managers are especially focused on this area of oversight.Managerial accounting provides numerous tools for managers to use in support o f production and logistics (moving goods through production to a customer). To generalize, production management is about running a lean business model. This means that costs must be minimized and efficiency maximized, while seeking to achieve enhanced output and quality standards. In the past few decades, advances in technology have greatly contributed to the ability to run a lean business. Product fabrication and assembly have been improved through virtually error-free robotics.Accountability is handled via comprehensive software that tracks an array of data on a real-time basis. These enterprise resource packages are extensive in their power to deliver specific query- based information for CDC. BOB (business to business) systems provide data interchange with sufficient power to enable Kid's information system to automatically initiate a product order on its vendor's information system. Logistics is facilitated by radio frequency identification processors embedded in inventory tha t enable a computer to automatically track the quantity and location of inventory.MM (machine to machine) enables connected devices to communicate information without requiring human engagement. These developments ultimately enhance CDC efficiency and the living standards of customers who benefit from better and cheaper products. But, despite their robust power, they do not replace human decision making. Managers must pay attention to the information being produced, and be ready to adjust business processes in response. Inventory: For a manufacturing CDC inventory may consist of raw materials, work in process, and finished goods.The raw materials are the components and parts that are to be eventually processed into a final product. Work in process consists of goods that are actually under production. Finished goods are the completed units awaiting sale to customers. Each category will require special consideration and control. Failure to properly manage any category of inventory can be disastrous. Overstocking raw materials or overproduction of finished goods will increase costs and obsolescence. Conversely, out-of-stock situations for raw materials will silence the production line.Failure to have goods on hand might result in lost sales. Subsequent chapters cover inventory management. Popular techniques include Just-in-time inventory management and economic order quantity. Responsibility Considerations: Enabling and motivating employees to work at peak performance is an important managerial role. For this to occur, employees must perceive that their productive efficiency and quality of output are fairly measured. A good manager will understand and be able to explain to others how such measures are determined.Direct productive processes must be supported by many service departments (maintenance, engineering, accounting, cafeterias, etc. ). These service departments have nothing to sell to outsiders, but are essential components of operation. The costs of servi ce departments must be recovered for a business to survive. It is easy for a production manager to focus solely on the area under direct control and ignore the costs of support tasks. Yet, good management decisions require full consideration of the costs of support services.Many alternative techniques are used by managerial accountants to allocate responsibility for CDC costs. A good manager will understand the need for such allocations and be able to explain and Justify them to employees who may not be fully aware of why profitability is more difficult to achieve than it would seem. In addition, techniques must be utilized to capture the cost of quality, or perhaps better aid, the cost of a lack of quality. Finished goods that do not function as promised cause substantial warranty costs, including rework, shipping, and scrap.There is also an extreme long-run cost associated with a lack of customer satisfaction. Understanding concepts of responsibility accounting will also require o ne to think about attaching inputs and outcomes to those responsible for their ultimate disposition. In other words, a manager must be held accountable, but to do this requires the ability to monitor costs incurred and deliverables produced by defined areas of accountability (centers of responsibility). This does not happen by accident and requires extensive systems development work, as well as training and explanation, on the part of management accountants. ) Analysis. Certain business decisions have recurrent themes: whether to outsource production and/or support functions, what level of production and pricing to establish, whether to accept special orders with private label branding or special pricing, and so forth. Managerial accounting provides theoretical models of calculations that are needed to support these types of decisions. Although such models are not perfect in every case, hey certainly are effective in stimulating correct thought. The seemingly obvious answer may not always yield the truly correct or best decision.Therefore, subsequent chapters will provide insight into the logic and methods that need to be employed to manage these types of business decisions. 4) Controlling. Things rarely go exactly as planned, and management must make a concerted effort to monitor and adjust for deviations. The managerial accountant is a major facilitator of this control process, including exploration of alternative corrective strategies to remedy unfavorable situations. In addition, a recent trend is for enhanced internal controls and mandatory certifications by Coos and Scoffs as to the accuracy of financial reports.These certifications carry penalties of perjury, and have gotten the attention of corporate executives. This has led to greatly expanded emphasis on controls of the various internal and external reporting mechanisms. CDC has a person designated as controller (sometimes termed â€Å"comptroller†). The controller is an important and respecte d position within CDC also the largest corporations. CDC control function is of sufficient complexity that a controller may have hundreds of purport personnel to assist with all phases of the management accounting process.As this person's title suggests, the controller is primarily responsible for the control task; providing leadership for the entire cost and managerial accounting functions. In contrast, the chief financial officer (SCOFF) is usually responsible for external reporting, the treasury function, and general cash flow and financing management. In CDC, one person may serve a dual role as both the SCOFF and controller. Larger organizations may also have a separate internal audit group that reviews the work of the accounting and treasury units.Because internal auditors are reporting on the effectiveness and integrity of other units within a business organization, they usually report directly to the highest levels of corporate leadership. A) Monitor. Begin by thinking about controlling a car. Steering, acceleration, and braking are not random; they are careful corrective responses to constant monitoring of many variables like traffic, road conditions, and so forth. Clearly, each action is in response to having monitored conditions and adopted an adjusting response. Likewise, business managers must rely on systematic monitoring tools to maintain awareness

A midsummer nights dream By william shakespeare

Midsummer night's dream is one of the classic romantic comedy plays of William Shakespeare. William Shakespeare is the one of the best writer who ever lived.He deeply looks at the society with a very different perspective. In his play midsummer night’s dream he has depicted the feelings of love and desire with a very different point of view. Exact year when Midsummer night's dream was written is not known but it is supposed that is written around 1595 or 1596. (William Shakespeare biography and works, 1)In A Midsummer-Night's Dream, for the first time, Shakespeare uses an ‘outside force' which interferes in and controls the affairs of men. Oberon moves unseen, unheard, and unsuspected to the solution of the sole problem of the play (so far as the mortals are concerned) — that of restoring Demetrius's love to Helena.Although he differs in form and nature from Shakespeare's later notable forces of control as markedly as they differ from one another, the fairy king i s like them all both in his essential dramatic function and in the attributes which enable him to perform this function — superior power and superior awareness.Like the Fate that operates throughout Romeo and Juliet (according to the Prologue) and the Fate of which the witches are the visible figureheads in Macbeth, but unlike Duke Vincentio in Measure for Measure and Prospero in The Tempest, Oberon is supernatural and immortal. Like Vincentio and Prospero, and unlike Fate in the tragedies, he is benevolent. Like Fate itself and unlike the others, he remains always invisible to the mortal participants — but, unlike Fate, he is visible to us. Like all the others except the Fate of Romeo and Juliet, he makes observable contact with mortals, either directly or through an intermediary.Also like all the others except the Fate of Romeo and Juliet, he requires special aids or ‘props' in wielding his power.Unlike all the others, he is concerned quite incidentally with th e affairs of mortals. And, finally, he fell a little short of the others' omniscience and omnipotence: under his direction things can temporarily get out of hand.The play is a light entertainment comedy that has three main plots interlinked with each other firstly the celebrations of the wedding of Theseus the Duke of Athens, to Hippolyta, Queen of the Amazons, secondly the mishap created between the couples and the involvement of the fairies in the scenario.The story mainly revolves around the two couples who are in love with each other but a little mistake creates chaos and comedy in the story. (A midsummer nights dream- Wikipedia the free encyclopedia, 1)The play starts with the scene in Athens when four days left in the wedding and the celebrations and preparations are at their peak when Egeus arrives complaining about his daughter Hermia. With him Egeus brings two men Demetrius and Lysander. His problem is that he wants Hermia to marry Demetrius but Hermia is in deep love with Lysander and refuses to marry Demetrius.Her father continuously forces her for the marriage and also threatens her to marry Demetrius or either he will kill her or banish her according to the ancient law for a disobedient daughter.The Duke reminds Hermia of her duty as an obedient daughter to respect her father's wish and marry Demetrius and that she has time till the new moon to make up her mind regarding this matter otherwise the Duke will have to forcefully enforce the ancient law.Hearing this Hermia and Lysander decided to save their love by escaping from Athens into the nearby woods and then getting married in nearby town away from the ancient law. Hermia tells her plan to her best friend Helena who is a babble mouth and had been in love with Demetrius and can do anything to get his affection and love. She spills the plan of Hermia's escape in front of Demetrius and hope that they can catch Hermia and Lysander in the forest. (A midsummer night's dream, 1)In the forest the King of Fairies Oberon and the Queen of fairies Titania are having a quarrel about an Indian orphan boy that who will have the boy. The king wants the boy as his servant where as the queen is not allowing him demanding that she will keep the boy. (A midsummer night's dream, 1)Desperate to have the boy the king orders his most faithful fairy Puck to go and search for the magic flower, whose juice when dropped on some one’s eyes the person will fall in love immediately with the first person he sees after waking.Oberon had the plans in his mind that Titania will fall in love with anybody she sees and in return he will get the boy for himself. Puck brings the flower and puts the juice in the eyes of the sleeping Queen. The tradesmen in Athens plan to perform a crude play about Pyramus and Thisbe at the wedding of The DukeThe troupe of the players that are going to perform the play includes Nick Bottom who is a weaver and thinks he is very much clever and efficient that the role heâ₠¬â„¢s playing will make the play a big hit but his fellows do not think so they decide to go and rehearse in the woods.

Reflection Summary Essay

The previous week’s objectives covered PowerPoint in Microsoft Office, Presentation Tools, and System Development Life Cycle (SDLC). What could be applicable to your workplace or personal, and how your knowledge has increased as a result of what you experienced through the learning activities. We learned about presentation tools that are available in the marketplace and their advantages and disadvantages that they may have. Our team agreed that Microsoft Power Point is the most common and most used in the workplace and market place. We were all very familiar with how the system works, we all have worked with Power Point before. We were all very comfortable with Microsoft Power Point. There are many other presentation tools that can be used, and that are available but overall the most common is Microsoft Power Point. The next topic we had discussed was about what business go through to implement new technology. The second discussion question posted we learned was in regards to six stages of the systems development life cycle. The system development life cycle (SDLC) has six processes in which information system is process: systems investigation, system analysis, systems design, programming and testing, implementation, and operation and maintenance. These six processes are important for organizations to use when deciding on an information system; however, these processes are not only for organization, but also for personal use as well. When deciding whether to get a new operation system for a personal computer, you can have some of the same challenges. Consumers have to decide what kind of budget they have, what will the system do for them, and will the system last for a long time before having to get another system. We didn’t realize what business have to go through to implement new technology into the business plan. We learned that it can be a very long, in depth and costly process to implement a new system in the work place. In conclusion, we have learned many great things as a team about Microsoft power point, and presentation. How everyone uses power point for work and personal life. We also learned about System Development Life Cycle (SDLC). How the process can be long and expensive depending on the system  requirements. We agreed and disagreed on many things but in the end we were able to learn from one another. Working as team has made it better and easier to learn, we each collaborated on putting this reflection summary together. It has made it an even better learning experience working together as a team.

Cost Accounting Chapter 11

Horngren, C. T. , Datar, S. M. and Foster, G. (2003) Cost Accounting – A Managerial Emphasis, Pearson Education, Inc. , New Jersey, Eleventh Edition CHAPTER 11 DECISION MAKING AND RELEVANT INFORMATION 11-1 The five steps in the decision process outlined in Exhibit 11-1 of the text are: 1. 2. 3. 4. 5. Obtain information Make predictions about future costs Choose an alternative Implement the decision Evaluate performance to provide feedback 11-2 Relevant costs are expected future costs that differ among the alternative courses of action being considered.Historical costs are irrelevant because they are past costs and, therefore, cannot differ among alternative future courses of action. 11-3 No. Relevant costs are defined as those expected future costs that differ among alternative courses of action being considered. Thus, future costs that do not differ among the alternatives are irrelevant to deciding which alternative to choose. 11-4 Quantitative factors are outcomes that are m easured in numerical terms. Some quantitative factors are financial––that is, they can be easily expressed in monetary terms. Direct materials is an example of a quantitative financial factor.Qualitative factors are outcomes that are difficult to measure accurately in numerical terms. An example is employee morale. 11-5 Two potential problems that should be avoided in relevant cost analysis are: 1. 2. Do not assume all variable costs are relevant and all fixed costs are irrelevant. Do not use unit-cost data directly. It can mislead decision makers because a. it may include irrelevant costs, and b. comparisons of unit costs computed at different output levels lead to erroneous conclusions 11-6 No. Some variable costs may not differ among the alternatives under consideration and, hence, will be irrelevant.Some fixed costs may differ among the alternatives and, hence, will be relevant. 11-7 No. Some of the total unit costs to manufacture a product may be fixed costs, and, hence, will not differ between the make and buy alternatives. These fixed costs are irrelevant to the make-or-buy decision. The key comparison is between purchase costs and the costs that will be saved if the company purchases the component parts from outside plus the additional benefits of using the resources freed up in the next best alternative use (opportunity cost). 1-8 Opportunity cost is the contribution to income that is forgone (rejected) by not using a limited resource in its next-best alternative use. 11-1 11-9 No. When deciding on the quantity of inventory to buy, managers must consider both the purchase cost per unit and the opportunity cost of funds invested in the inventory. For example, the purchase cost per unit may be low when the quantity of inventory purchased is large, but the benefit of the lower cost may be more than offset by the high opportunity cost of the funds invested in acquiring and holding inventory. 1-10 No. Managers should aim to get the highest co ntribution margin per unit of the constraining (that is, scarce, limiting, or critical) factor. The constraining factor is what restricts or limits the production or sale of a given product (for example, availability of machine-hours). 11-11 No. For example, if the revenues that will be lost exceed the costs that will be saved, the branch or business segment should not be shut down. Shutting down will only increase the loss. Allocated costs are always irrelevant to the shutting down decision. 1-12 Cost written off as depreciation is irrelevant when it pertains to a past cost. But the purchase cost of new equipment to be acquired in the future that will then be written off as depreciation is often relevant. 11-13 No. Managers tend to favor the alternative that makes their performance look best so they focus on the measures used in the performance-evaluation model. If the performanceevaluation model does not emphasize maximizing operating income or minimizing costs, managers will most likely not choose the alternative that maximizes operating income or minimizes costs. 1-14 The three steps in solving a linear programming problem are: 1. 2. 3. Determine the objective function. Specify the constraints. Compute the optimal solution. 11-15 The text outlines two methods of determining the optimal solution to an LP problem: 1. Trial-and-error solution approach 2. Graphical solution approach Most LP applications in practice use standard software packages that rely on the simplex method to compute the optimal solution. 11-2 11-16 (20 min. ) Disposal of assets. 1. This is an unfortunate situation, yet the $80,000 costs are irrelevant regarding the decision to remachine or scrap.The only relevant factors are the future revenues and future costs. By ignoring the accumulated costs and deciding on the basis of expected future costs, operating income will be maximized (or losses minimized). The difference in favor of remachining is $3,000: (a) Remachine Future revenues Deduct future costs Operating income Difference in favor of remachining $35,000 30,000 $ 5,000 $3,000 (b) Scrap $2,000 – $2,000 2. This, too, is an unfortunate situation. But the $100,000 original cost is irrelevant to this decision.The difference in relevant costs in favor of rebuilding is $7,000 as follows: (a) Replace New truck Deduct current disposal price of existing truck Rebuild existing truck $102,000 10,000 – $ 92,000 $7,000 (b) Rebuild – – $85,000 $85,000 Difference in favor of rebuilding Note, here, that the current disposal price of $10,000 is relevant, but the original cost (or book value, if the truck were not brand new) is irrelevant. 11-3 11-17 (10 min. ) The careening personal computer. Considered alone, book value is irrelevant as a measure of loss when equipment is destroyed.The measure of the loss is replacement cost or some computation of the present value of future services lost because of equipment loss or damage. In the specific case des cribed, the following observations may be apt: 1. A fully depreciated item probably is relatively old. Chances are that the loss from this equipment is less than the loss for a partially depreciated item because the replacement cost of an old item would be far less than that for a nearly new item. 2. The loss of an old item, assuming replacement is necessary, automatically accelerates the timing of replacement.Thus, if the old item were to be junked and replaced tomorrow, no economic loss would be evident. However, if the old item were supposed to last five more years, replacement is accelerated five years. The best practical measure of such a loss probably would be the cost of comparable used equipment that had five years of remaining useful life. The fact that the computer was fully depreciated also means the accounting reports will not be affected by the accident. If accounting reports are used to evaluate the office manager's performance, the manager will prefer any accidents to be on fully depreciated units. 11-18 (15 min. Multiple choice. 1. (b) Special order price per unit Variable manufacturing cost per unit Contribution margin per unit Effect on operating income = $1. 50 ? 20,000 units = $30,000 increase $1,200,000 $48 9 $57 1,140,000 60,000 25,000 $ 85,000 $6. 00 4. 50 $1. 50 2. (b) Costs of purchases, 20,000 units ? $60 Total relevant costs of making: Variable manufacturing costs, $64 – $16 Fixed costs eliminated Costs saved by not making Multiply by 20,000 units, so total costs saved are $57 ? 20,000 Extra costs of purchasing outside Minimum overall savings for Reno Necessary relevant costs that would have to be saved in manufacturing Part No. 75 11-4 11-19 (30 min. ) Special order, activity-based costing (CMA, adapted). 1. Award Plus's operating income under the alternatives of accepting/rejecting the special order are: Without OneWith OneTime Only Time Only Special Order Special Order 7,500 Units 10,000 Units Revenues Variable costs: Direc t materials Direct manufacturing labor Batch manufacturing costs Fixed costs: Fixed manufacturing costs Fixed marketing costs Total costs Operating income 1 2 Difference 2,500 Units $250,000 87,500 100,000 12,500 –– –– 200,000 $ 50,000 $1,125,000 262,500 300,000 75,000 1,375,000 350,000 2 400,000 3 87,500 1 275,000 275,000 175,000 175,000 1,087,500 1,287,500 $ 37,500 $ 87,500 $300,000 ? 10,000 7,500 3 $262,500 ? 10,000 7,500 $75,000 + (25 ? $500) Alternatively, we could calculate the incremental revenue and the incremental costs of the additional 2,500 units as follows: Incremental revenue $100 ? 2,500 Incremental direct manufacturing costs Incremental direct manufacturing costs Incremental batch manufacturing costs Total incremental costs Total incremental operating income from accepting the special order $262,500 ? 2,500 7,500 300,000 ? ,500 7,500 $500 ? 25 $250,000 87,500 100,000 12,500 200,000 $ 50,000 Award Plus should accept the one-time-only specia l order if it has no long-term implications because accepting the order increases Award Plus's operating income by $50,000. If, however, accepting the special order would cause the regular customers to be dissatisfied or to demand lower prices, then Award Plus will have to trade off the $50,000 gain from accepting the special order against the operating income it might lose from regular customers. 11-5 11-19 (Cont’d. ) 2. Award Plus has a capacity of 9,000 medals.Therefore, if it accepts the special one-time order of 2,500 medals, it can sell only 6,500 medals instead of the 7,500 medals that it currently sells to existing customers. That is, by accepting the special order, Award Plus must forgo sales of 1,000 medals to its regular customers. Alternatively, Award Plus can reject the special order and continue to sell 7,500 medals to its regular customers. Award Plus's operating income from selling 6,500 medals to regular customers and 2,500 medals under one-time special order follow: Revenues (6,500 ? $150) + (2,500 ? 100) 1 1 Direct materials (6,500 ? $35 ) + (2,500 ? $35 ) 2 2 Direct manufacturing labor (6,500 ? $40 ) +(2,500 ? $40 ) 3 Batch manufacturing costs (130 ? $500) + (25 ? $500) Fixed manufacturing costs Fixed marketing costs Total costs Operating income 1 $1,225,000 315,000 360,000 77,500 275,000 175,000 1,202,500 $ 22,500 $35 = $262,500 7,500 2 $40 = 300,000 7,500 3 Award Plus makes regular medals in batch sizes of 50. To produce 6,500 medals requires 130 (6,500 ? 50) batches. Accepting the special order will result in a decrease in operating income of $15,000 ($37,500 – $22,500).The special order should, therefore, be rejected. A more direct approach would be to focus on the incremental effects––the benefits of accepting the special order of 2,500 units versus the costs of selling 1,000 fewer units to regular customers. Increase in operating income from the 2,500-unit special order equals $50,000 (requirement 1). The l oss in operating income from selling 1,000 fewer units to regular customers equals: Lost revenue, $150 ? 1,000 Savings in direct materials costs, $35 ? 1,000 Savings in direct manufacturing labor costs, $40 ? 1,000 Savings in batch manufacturing costs, $500 ? 0 Operating income lost $(150,000) 35,000 40,000 10,000 $ (65,000) Accepting the special order will result in a decrease in operating income of $15,000 ($50,000 – $65,000). The special order should, therefore, be rejected. 3. Award Plus should not accept the special order. Increase in operating income by selling 2,500 units under the special order (requirement 1) Operating income lost from existing customers ($10 ? 7,500) Net effect on operating income of accepting special order The special order should, therefore, be rejected. $ 50,000 (75,000) $(25,000) 11-6 11-20 (30 min. ) Make versus buy, activity-based costing. . The expected manufacturing cost per unit of CMCBs in 2004 is as follows: Total Manufacturing Manufactur ing Costs of CMCB Cost per Unit (1) (2) = (1) ? 10,000 $1,700,000 $170 450,000 45 120,000 12 320,000 800,000 $3,390,000 32 80 $339 Direct materials, $170 ? 10,000 Direct manufacturing labor, $45 ? 10,000 Variable batch manufacturing costs, $1,500 ? 80 Fixed manufacturing costs Avoidable fixed manufacturing costs Unavoidable fixed manufacturing costs Total manufacturing costs 2. The following table identifies the incremental costs in 2004 if Svenson (a) made CMCBs and (b) purchased CMCBs from Minton.Total Incremental Costs Make Buy $ 3,000,000 $1,700,000 450,000 120,000 320,000 $2,590,000 $3,000,000 $410,000 Per-Unit Incremental Costs Make Buy $300 $170 45 12 32 $259 $300 $41 Incremental Items Cost of purchasing CMCBs from Minton Direct materials Direct manufacturing labor Variable batch manufacturing costs Avoidable fixed manufacturing costs Total incremental costs Difference in favor of making Note that the opportunity cost of using capacity to make CMCBs is zero since Svenson woul d keep this capacity idle if it purchases CMCBs from Minton.Svenson should continue to manufacture the CMCBs internally since the incremental costs to manufacture are $259 per unit compared to the $300 per unit that Minton has quoted. Note that the unavoidable fixed manufacturing costs of $800,000 ($80 per unit) will continue to be incurred whether Svenson makes or buys CMCBs. These are not incremental costs under either the make or the buy alternative and are, hence, irrelevant. 3. Svenson should continue to make CMCBs. The simplest way to analyze this problem is to recognize that Svenson would prefer to keep any excess capacity idle rather than use it to make CB3s. Why?Because expected incremental future revenues from CB3s, $2,000,000 are less than expected incremental future costs, $2,150,000. If Svenson keeps its capacity idle, we know from requirement 2 that it should make CMCBs rather than buy them. 11-7 11-20 (Cont’d. ) An important point to note is that, because Svens on forgoes no contribution by not being able to make and sell CB3s, the opportunity cost of using its facilities to make CMCBs is zero. It is, therefore, not forgoing any profits by using the capacity to manufacture CMCBs. If it does not manufacture CMCBs, rather than lose money on CB3s, Svenson will keep capacity idle.A longer and more detailed approach is to use the total alternatives or opportunity cost analyses shown in Exhibit 11-7 of the chapter. Choices for Svenson Make CMCBs Buy CMCBs Buy CMCBs and Do Not and Do Not and Make Relevant Items Make CB3s Make CB3s CB3s TOTAL-ALTERNATIVES APPROACH TO MAKE-OR-BUY DECISIONS Total incremental costs of making/buying CMCBs (from requirement 2) Excess of future costs over future revenues from CB3s Total relevant costs $2,590,000 0 $2,590,000 $3,000,000 0 $3,000,000 $3,000,000 150,000 $3,150,000 Svenson will minimize manufacturing costs by making CMCBs.OPPORTUNITY-COST APPROACH TO MAKE-OR-BUY DECISIONS Total incremental costs of making/b uying CMCBs (from requirement 2) $2,590,000 $3,000,000 Opportunity cost: profit contribution forgone because capacity will not be used to make CB3s 0* 0* Total relevant costs $2,590,000 $3,000,000 $3,000,000 0 $3,000,000 *Opportunity cost is 0 because Svenson does not give up anything by not making CB3s. Svenson is best off leaving the capacity idle (rather than manufacturing and selling CB3s). 11-8 11-21 (10 min. ) Inventory decision, opportunity costs. 1. Unit cost, orders of 20,000 Unit cost, order of 240,000 (0. 5 ? $8. 00) Alternatives under consideration: (a) Buy 240,000 units at start of year. (b) Buy 20,000 units at start of each month. Average investment in inventory: (a) (240,000 ? $7. 60) ? 2 (b) ( 20,000 ? $8. 00) ? 2 Difference in average investment $8. 00 $7. 60 $912,000 80,000 $832,000 Opportunity cost of interest forgone from 240,000-unit purchase at start of year = $832,000 ? 0. 08 = $66,560 2. No. The $66,560 is an opportunity cost rather than an incremental or out lay cost. No actual transaction records the $66,560 as an entry in the accounting system. 3.The following table presents the two alternatives: Alternative A: Alternative B: Purchase Purchase 240,000 20,000 spark plugs at spark plugs beginning of at beginning year of each month Difference (1) (2) (3 )= (1) – (2) Annual purchase-order costs (1 ? $200; 12 ? $200) Annual purchase (incremental) costs (240,000 ? $7. 60; 240,000 ? $8) Annual interest income that could be earned if investment in inventory were invested (opportunity cost) (8% ? $912,000; 8% ? $80,000) Relevant costs $ 200 1,824,000 $ 2,400 1,920,000 $ (2,200) (96,000) 72,960 $1,897,160 6,400 $1,928,800 66,560 $ (31,640)Column (3) indicates that purchasing 240,000 spark plugs at the beginning of the year is preferred relative to purchasing 20,000 spark plugs at the beginning of each month because the lower purchase cost exceeds the opportunity cost of holding larger inventory. If other incremental benefits of holding l ower inventory such as lower insurance, materials handling, storage, obsolescence, and breakage costs were considered, the costs under Alternative A would have been higher, and Alternative B may have been preferred. 11-9 11-22 (20–25 min. ) Relevant costs, contribution margin, product emphasis. 1. Cola $18. 0 13. 50 $ 4. 50 Lemonade $19. 20 15. 20 $ 4. 00 Punch $26. 40 20. 10 $ 6. 30 Natural Orange Juice $38. 40 30. 20 $ 8. 20 Selling price Deduct variable cost per case Contribution margin per case 2. The argument fails to recognize that shelf space is the constraining factor. There are only 12 feet of front shelf space to be devoted to drinks. Sexton should aim to get the highest daily contribution margin per foot of front shelf space: Natural Orange Juice $ 8. 20 ? 5 Contribution margin per case Sales (number of cases) per foot of shelf space per day Daily contribution per foot of front shelf space 3.Cola $ 4. 50 ? 25 Lemonade $ 4. 00 ? 24 Punch $ 6. 30 ? 4 $112. 50 $96. 00 $25. 20 $41. 00 The allocation that maximizes the daily contribution from soft drink sales is: Daily Contribution per Foot of Front Shelf Space $112. 50 96. 00 41. 00 25. 20 Cola Lemonade Natural Orange Juice Punch Feet of Shelf Space 6 4 1 1 Total Contribution Margin per Day $ 675. 00 384. 00 41. 00 25. 20 $1,125. 20 The maximum of six feet of front shelf space will be devoted to Cola because it has the highest contribution margin per unit of the constraining factor.Four feet of front shelf space will be devoted to Lemonade, which has the second highest contribution margin per unit of the constraining factor. No more shelf space can be devoted to Lemonade since each of the remaining two products, Natural Orange Juice and Punch (that have the second lowest and lowest contribution margins per unit of the constraining factor) must each be given at least one foot of front shelf space. 11-10 11-23 (10 min. ) Selection of most profitable product. Only Model 14 should be produced. The ke y to this problem is the relationship of manufacturing overhead to each product.Note that it takes twice as long to produce Model 9; machine-hours for Model 9 are twice that for Model 14. Management should choose the product mix that maximizes operating income for a given production capacity (the scarce resource in this situation). In this case, Model 14 will yield a $9. 50 contribution to fixed costs per machine hour, and Model 9 will yield $9. 00: Model 9 Selling price Variable costs per unit Contribution margin per unit Relative use of machine-hours per unit of product Contribution margin per machine hour $100. 00 82. 00 $ 18. 00 ? 2 $ 9. 00 Model 14 $70. 00 60. 50 $ 9. 50 ? $ 9. 50 11-23 Excel Application Decision-Making and Relevant Information Body-Builders, Inc. Original Data Selling Price Costs Direct materials Direct manufacturing labor Variable manufacturing overhead Fixed manufacturing overhead Marketing costs (all variable) Total costs Operating Income Model 9 $100. 00 2 8. 00 15. 00 25. 00 10. 00 14. 00 92. 00 $8. 00 $70. 00 13. 00 25. 00 12. 50 5. 00 10. 00 65. 50 $4. 50 Product Mix Analysis Selling price Variable cost per unit Contribution margin per unit Relative use of machine-hours per unit of product Contribution margin per machine-hour Model 9 $100 82. 0 18. 00 2 $9. 00 Model 14 $70 60. 50 9. 50 1 $9. 50 11-11 11-24 (20 min. ) Which base to close, relevant-cost analysis, opportunity costs. The future outlay operating costs will be $400 million regardless of which base is closed, given the additional $100 million in costs at Everett if Alameda is closed. Further, one of the bases will permanently remain open while the other will be shut down. The only relevant revenue and cost comparisons are: a. $500 million from sale of the Alameda base. Note that the historical cost of building the Alameda base ($100 million) is irrelevant.Note, also, that future increases in the value of the land at the Alameda base is also irrelevant. One of the bases mu st be kept open, so if it is decided to keep the Alameda base open, the Defense Department will not be able to sell this land at a future date. b. $60 million in savings in fixed income note if the Everett base is closed. Again, the historical cost of building the Everett base ($150 million) is irrelevant. The relevant costs and benefits analysis favors closing the Alameda base despite the objections raised by the California delegation in Congress. The net benefit equals $440 ($500 – $60) million. 11-25 (25? 0 min. ) Closing and opening stores. 1. Solution Exhibit 11-25, Column 1, presents the relevant loss in revenues and the relevant savings in costs from closing the Rhode Island store. Lopez is correct that Sanchez Corporation’s operating income would increase by $7,000 if it closes down the Rhode Island store. Closing down the Rhode Island store results in a loss of revenues of $860,000 but cost savings of $867,000 (from cost of goods sold, rent, labor, utilities, and corporate costs). Note that by closing down the Rhode Island store, Sanchez Corporation will save none of the equipment-related costs because this is a past cost.Also note that the relevant corporate overhead costs are the actual corporate overhead costs $44,000 that Sanchez expects to save by closing the Rhode Island store. The corporate overhead of $40,000 allocated to the Rhode Island store is irrelevant to the analysis. 2. Solution Exhibit 11-25, Column 2, presents the relevant revenues and relevant costs of opening another store like the Rhode Island store. Lopez is correct that opening such a store would increase Sanchez Corporation’s operating income by $11,000.Incremental revenues of $860,000 exceed the incremental costs of $849,000 (from higher cost of goods sold, rent, labor, utilities, and some additional corporate costs). Note that the cost of equipment written off as depreciation is relevant because it is an expected future cost that Sanchez will incur only i f it opens the new store. Also note that the relevant corporate overhead costs are the $4,000 of actual corporate overhead costs that Sanchez expects to incur as a result of opening the new store. Sanchez may, in fact, allocate more than $4,000 of corporate overhead to the new store but this allocation is irrelevant to the analysis. 1-12 11-25 (Cont’d. ) The key reason that Sanchez’s operating income increases either if it closes down the Rhode Island store or if it opens another store like it is the behavior of corporate overhead costs. By closing down the Rhode Island store, Sanchez can significantly reduce corporate overhead costs presumably by reducing the corporate staff that oversees the Rhode Island operation. On the other hand, adding another store like Rhode Island does not increase actual corporate costs by much, presumably because the existing corporate staff will be able to oversee the new store as well.SOLUTION EXHIBIT 11-25 Relevant-Revenue and Relevant-C ost Analysis of Closing Rhode Island Store and Opening Another Store Like It. Incremental (Loss in Revenues) Revenues and and Savings in (Incremental Costs) Costs from of Opening New Closing Rhode Store Like Rhode Island Store Island Store (1) (2) Revenues Cost of goods sold Lease rent Labor costs Depreciation of equipment Utilities (electricity, heating) Corporate overhead costs Total costs Effect on operating income (loss) $(860,000) 660,000 75,000 42,000 0 46,000 44,000 867,000 $ 7,000 $ 860,000 (660,000) (75,000) (42,000) (22,000) (46,000) (4,000) (849,000) $ 11,000 1-13 11-26 (20 min. ) Choosing customers. If Broadway accepts the additional business from Kelly, it would take an additional 500 machine-hours. If Broadway accepts all of Kelly’s and Taylor’s business for February, it would require 2,500 machine-hours (1,500 hours for Taylor and 1,000 hours for Kelly). Broadway has only 2,000 hours of machine capacity. It must, therefore, choose how much of the Taylor or Kelly business to accept. To maximize operating income, Broadway should maximize contribution margin per unit of the constrained resource. Fixed costs will remain unchanged at $100,000 regardless of the business Broadway chooses to accept in February, and is, therefore, irrelevant. ) The contribution margin per unit of the constrained resource for each customer in January is: Taylor Corporation $78,000 = $52 1,500 Kelly Corporation $32,000 = $64 500 Contribution margin per machine-hour Since the $80,000 of additional Kelly business in February is identical to jobs done in January, it will also have a contribution margin of $64 per machine-hour, which is greater than the contribution margin of $52 per machine-hour from Taylor.To maximize operating income, Broadway should first allocate all the capacity needed to take the Kelly Corporation business (1,000 machine-hours) and then allocate the remaining 1,000 (2,000 – 1,000) machine-hours to Taylor. Taylor Corporation $52 ? 1, 000 $52,000 Kelly Corporation $64 ? 1,000 $64,000 Total Contribution margin per machine-hour Machine-hours to be worked Contribution margin Fixed costs Operating income $116,000 100,000 $ 16,000 11-14 11-27 (30–40 min. ) Relevance of equipment costs. 1a. Statements of Cash Receipts and Disbursements Keep Year 2, 3, 4 $150,000 (110,000) (15,000)Year 1 Receipts from operations: Revenues Deduct disbursements: Other operating costs Operation of machine Purchase of â€Å"old† machine Purchase of â€Å"new† equipment Cash inflow from sale of old equipment Net cash inflow $150,000 (110,000) ( 15,000) (20,000)* Four Years Together $600,000 (440,000) (60,000) (20,000) Buy New Machine Four Year Years Year 1 2, 3, 4 Together $150,000 (110,000) (9,000) (20,000) (24,000) 8,000 $ (5,000) $150,000 (110,000) (9,000) $600,000 (440,000) (36,000) (20,000) (24,000) 8,000 $ 88,000 $ 5,000 $ 25,000 80,000 $ 31,000 *Some students ignore this item because it is the same for each altern ative. However, note that a statement for the entire year has been requested. Obviously, the $20,000 would affect Year 1 only under both the â€Å"keep† and â€Å"buy† alternatives. The difference is $8,000 for four years taken together. In particular, note that the $20,000 book value can be omitted from the comparison. Merely cross out the entire line; although the column totals are affected, the net difference is still $8,000. 11-15 11-27 (Cont’d. ) 1b.Again, the difference is $8,000: Income Statements Keep Year 1, 2, 3, 4 Revenues Costs (excluding disposal): Other operating costs Depreciation Operating costs of machine Total costs (excluding disposal) Loss on disposal: Book value (â€Å"cost†) Proceeds (â€Å"revenue†) Loss on disposal Total costs Operating income $150,000 110,000 5,000 15,000 130,000 Four Years Together $600,000 440,000 20,000 60,000 520,000 Buy New Machine Four Years Year Together Year 1 2, 3, 4 $150,000 $150,000 110,000 6,000 9,000 125,000 110,000 6,000 9,000 125,000 $600,000 440,000 24,000 36,000 500,000 20,000* (8,000) 12,000 512,000 $ 88,000 30,000 $ 20,000 520,000 $ 80,000 20,000 (8,000) 12,000 137,000 125,000 $ 13,000 $ 25,000 *As in part (1), the $20,000 book value may be omitted from the comparison without changing the $8,000 difference. This adjustment would mean excluding the depreciation item of $5,000 per year (a cumulative effect of $20,000) under the â€Å"keep† alternative and excluding the book value item of $20,000 in the loss on disposal computation under the â€Å"buy† alternative. 1c. The $20,000 purchase cost of the old equipment, the revenues, and the other costs are irrelevant because their amounts are common to both alternatives. 2.The net difference would be unaffected. Any number may be substituted for the original $20,000 figure without changing the final answer. Of course, the net cash outflows under both alternatives would be high. The Auto Wash manager really b lundered. However, keeping the old equipment will increase the cost of the blunder to the cumulative tune of $8,000 over the next four years. 3. Book value is irrelevant in decisions about the replacement of equipment, because it is a past (historical) cost. All past costs are down the drain. Nothing can change what has already been spent or what has already happened. The $20,000 has been spent.How it is subsequently accounted for is irrelevant. The analysis in requirement (1) clearly shows that we may completely ignore the $20,000 and still have a correct analysis. The only relevant items are those expected future items that will differ among alternatives. 11-16 11-27 (Cont’d. ) Despite the economic analysis shown here, many managers would keep the old machine rather than replace it. Why? Because, in many organizations, the income statements of part (2) would be a principal means of evaluating performance. Note that the first-year operating income would be higher under the à ¢â‚¬Å"keep† alternative.The conventional accrual accounting model might motivate managers toward maximizing their first-year reported operating income at the expense of long-run cumulative betterment for the organization as a whole. This criticism is often made of the accrual accounting model. That is, the action favored by the â€Å"correct† or â€Å"best† economic decision model may not be taken because the performance-evaluation model is either inconsistent with the decision model or because the focus is on only the short-run part of the performance-evaluation model. There is yet another potential conflict etween the decision model and the performance evaluation model. Replacing the machine so soon after it is purchased may reflect badly on the manager’s capabilities and performance. Why didn’t the manager search and find the new machine before buying the old machine? Replacing the old machine one day later at a loss may make the manager appear i ncompetent to his or her superiors. If the manager’s bosses have no knowledge of the better machine, the manager may prefer to keep the existing machine rather than alert his or her bosses about the better machine. 11-28 (30 min. Equipment upgrade versus replacement (A. Spero, adapted). 1. Solution Exhibit 11-28 presents a cost comparison of the upgrade and replacement alternatives for the three years taken together. It indicates that Pacifica Corporation should replace the production line because it is better off by $180,000 by replacing rather than upgrading. SOLUTION EXHIBIT 11-28 Comparing Upgrade and Replace Alternatives Three Years Together Upgrade Replace Difference (1) (2) (3) = (1) – (2) $2,160,000 $1,620,000 $ 540,000 (90,000) 90,000 300,000 $2,460,000 750,000 $2,280,000 (450,000) $ 180,000 Cash-operating costs, $12; $9 ? 80,000 Current disposal price One-time capital costs, written off periodically as depreciation Total relevant costs Note that sales and boo k value of the existing machine are the same under both alternatives and, hence, are irrelevant. 11-17 11-28 (Cont’d. ) 2a. Suppose the capital expenditure to replace the production line is $X. Using data from Solution Exhibit 11-28, the cost of replacing the production line is equal to $1,620,000 – $90,000 + $X. Using data from Solution Exhibit 11-28, the cost of upgrading the production line is equal to $2,160,000 + $300,000 = $2,460,000.We want to find $X such that $1,620,000 – $90,000 + $X = $2,460,000 that is, $1,530,000 + $X = $2,460,000 that is, $X = $2,460,000 – $1,530,000 or $X = $ 930,000 Pacifica would prefer replacing, rather than upgrading, the existing line if the replacement cost of the new line does not exceed $930,000. Note that the $930,000 can also be obtained by adding the $180,000 calculated in requirement 1 to the replacement cost of $750,000 for the new machine assumed in requirement 1 ($750,000 + $180,000 = $930,000). 2b. Suppose t he units produced and sold each year equal y.Using data from Solution Exhibit 11-28, the cost of replacing the production line is $9y – $90,000 + $750,000, while the cost of upgrading is $12y + $300,000. We solve for the y at which the two costs are the same. $9y – $90,000 + $750,000 $9y + $660,000 $3y y = = = = $12y + $300,000 $12y + $300,000 $360,000 120,000 units For expected production and sales of less than 120,000 units over 3 years (40,000 units per year), the upgrade alternative is cheaper. When production and sales are low, the higher operating costs of upgrading are more than offset by the significant savings in capital costs when upgrading relative to replacing.For expected production and sales exceeding 120,000 units over 3 years, the replace alternative is cheaper. For high output, the benefits of the lower operating costs of replacing, relative to upgrading, exceed the higher capital costs. 3. Operating income for the first year under the upgrade and repl ace alternatives are as follows: Upgrade Replace Revenues $25 ? 60,000 $1,500,000 $1,500,000 Cash-operating costs $12 ? 60,000, $9 ? 60,000 720,000 540,000 a b Depreciation 220,000 250,000 c Loss on disposal of old production line –– 270,000 Total costs 940,000 1,060,000 Operating income $ 560,000 $ 440,000 a $360,000 + $300,000) ? 3 = $220,000 $750,000 ? 3 = $250,000 c Book value – current disposal price = $360,000 – $90,000 = $270,000 b First-year operating income is higher by $120,000 under the upgrade alternative. If first year's operating income is an important component of Azinger's bonus, he would prefer the upgrade over the replace alternative even though the decision model (in requirement 1) prefers the replace to the upgrade alternative. This exercise illustrates the conflict between the decision model and the performance evaluation model. 11-18 11-29 (30 min. Contribution approach, relevant costs. 1. Average one-way fare per passenger Commissio n at 8% of $500 Net cash to Air Frisco per ticket Average number of passengers per flight Revenues per flight ($460 ? 200) Food and beverage cost per flight ($20 ? 200) Total contribution margin from passengers per flight 2. If fare is Commission at 8% of $480 Net cash per ticket Food and beverage cost per ticket Contribution margin per passenger Total contribution margin from passengers per flight ($421. 60 ? 212) All other costs are irrelevant. $ 500 40 $ 460 ? 200 $92,000 4,000 $88,000 $480. 0 38. 40 441. 60 20. 00 $421. 60 $89,379. 20 On the basis of quantitative factors alone, Air Frisco should decrease its fare to $480 because reducing the fare gives Air Frisco a higher contribution margin from passengers ($89,379. 20 versus $88,000). 3. In evaluating whether Air Frisco should charter its plane to Travel International, we compare the charter alternative to the solution in requirement 2 because requirement 2 is preferred to requirement 1. Under requirement 2, contribution from passengers Deduct fuel costs Total contribution per flight $89,379. 0 14,000. 00 $75,379. 20 Air Frisco gets $74,500 per flight from chartering the plane to Travel International. On the basis of quantitative financial factors, Air Frisco is better off not chartering the plane and, instead, lowering its own fares. Other qualitative factors that Air Frisco should consider in coming to a decision are: a. The lower risk from chartering its plane relative to the uncertainties regarding the number of passengers it might get on its scheduled flights. b. The stability of the relationship between Air Frisco and Travel International.If this is not a long-term arrangement, Air Frisco may lose current market share and not benefit from sustained charter revenues. 11-19 11-30 (30 min. ) Relevant costs, opportunity costs. 1. Easyspread 2. 0 has a higher relevant operating income than Easyspread 1. 0. Based on this analysis, Easyspread 2. 0 should be introduced immediately: Easyspread 1. 0 $150 $ 0 0 $150 Easyspread 2. 0 $185 $25 25 $160 Relevant revenues Relevant costs: Manuals, diskettes, compact discs Total relevant costs Relevant operating income Reasons for other cost items being irrelevant are: Easyspread 1. †¢ Manuals, diskettes—already incurred †¢ Development costs—already incurred †¢ Marketing and administrative—fixed costs of period Easyspread 2. 0 †¢ Development costs—already incurred †¢ Marketing and administration—fixed costs of period Note that total marketing and administration costs will not change whether Easyspread 2. 0 is introduced on July 1, 2003, or on October 1, 2003. 2. Other factors to be considered: a. Customer satisfaction. If 2. 0 is significantly better than 1. 0 for its customers, a customer driven organization would immediately introduce it unless other factors offset this bias towards â€Å"do what is best for the customer. b. Quality level of Easyspread 2. 0. It is critical for new s oftware products to be fully debugged. Easyspread 2. 0 must be error-free. Consider an immediate release only if 2. 0 passes all quality tests and can be fully supported by the salesforce. c. Importance of being perceived to be a market leader. Being first in the market with a new product can give Basil Software a â€Å"first-mover advantage,† e. g. , capturing an initial large share of the market that, in itself, causes future potential customers to lean towards purchasing Easyspread 2. 0. Moreover, by introducing 2. earlier, Basil can get quick feedback from users about ways to further refine the software while its competitors are still working on their own first versions. Moreover, by locking in early customers, Basil may increase the likelihood of these customers also buying future upgrades of Easyspread 2. 0. d. Morale of developers. These are key people at Basil Software. Delaying introduction of a new product can hurt their morale, especially if a competitor then preem pts Basil from being viewed as a market leader. 11-20 11-31 (20 min. ) Opportunity costs (H. Schaefer). 1.The opportunity cost to Wolverine of producing the 2,000 units of Orangebo is the contribution margin lost on the 2,000 units of Rosebo that would have to be forgone, as computed below: Selling price Variable costs per unit: Direct materials Direct manufacturing labor Variable manufacturing overhead Variable marketing costs Contribution margin per unit Contribution margin for 2,000 units $20 $2 3 2 4 11 $ 9 $ 18,000 The opportunity cost is $18,000. Opportunity cost is the maximum contribution to operating income that is forgone (rejected) by not using a limited resource in its next-best alternative use. . Contribution margin from manufacturing 2,000 units of Orangebo and purchasing 2,000 units of Rosebo from Buckeye is $16,000, as follows: Manufacture Orangebo Selling price Variable costs per unit: Purchase costs Direct materials Direct manufacturing labor Variable manufacturing costs Variable marketing overhead Variable costs per unit Contribution margin per unit Contribution margin from selling 2,000 units of Orangebo and 2,000 units of Rosebo $15 – 2 3 2 2 9 $ 6 $12,000 Purchase Rosebo $20 14 Total 4 18 $ 2 $4,000 $16,000As calculated in requirement 1, Wolverine's contribution margin from continuing to manufacture 2,000 units of Rosebo is $18,000. Accepting the Miami Company and Buckeye offer will cost Wolverine $2,000 ($16,000 – $18,000). Hence, Wolverine should refuse the Miami Company and Buckeye Corporation's offers. 3. The minimum price would be $9, the sum of the incremental costs as computed in requirement 2. This follows because, if Wolverine has surplus capacity, the opportunity cost = $0. For the short-run decision of whether to accept Orangebo's offer, fixed costs of Wolverine are irrelevant.Only the incremental costs need to be covered for it to be worthwhile for Wolverine to accept the Orangebo offer. 11-21 11-32 (30-40 min. ) Product mix, relevant costs (N. Melumad, adapted). 1. Selling price Variable manufacturing cost per unit Variable marketing cost per unit Total variable costs per unit Contribution margin per unit Contributi on margin per hour of the constraine d resource (the regular machine) Total contribution margin from selling only R3 or only HP6 R3: $25 ? 50,000; HP6: $30 ? 0,000 Less Lease costs of high-precision machine to produce and sell HP6 Net relevant benefit R3 $100 60 15 75 $ 25 $25 = $25 1 HP6 $150 100 35 135 $ 15 $15 = $30 0. 5 $1,250,000 ? $1,250,000 $1,500,000 300,000 $1,200,000 Even though HP6 has the higher contribution margin per unit of the constrained resource, the fact that Pendleton must incur additional costs of $300,000 to achieve this higher contribution margin means that Pendleton is better off using its entire 50,000-hour capacity on the regular machine to produce and sell 50,000 units (50,000 hours ? 1 hour per unit) of R3.The additional contribution from selling HP6 rather than R3 is $250,000 ($1,500,000 ? $1,250,000), which is not enough to cover the additional costs of leasing the high-precision machine. Note that, because all other overhead costs are fixed and cannot be changed, they are irrelevant for the decision. 2. If capacity of the regular machines is increased by 15,000 machine-hours to 65,000 machine-hours (50,000 originally + 15,000 new), the net relevant benefit from producing R3 and HP6 is as follows: R3 Total contribution margin from selling only R3 or only HP6 R3: $25 ? 5,000; HP6: $30 ? 65,000 Less Lease costs of high-precision machine that would be incurred if HP6 is produced and sold Less Cost of increasing capacity by 15,000 hours on regular machine Net relevant benefit HP6 $1,625,000 $1,950,000 300,000 150,000 150,000 $1,475,000 $1,500,000 11-22 11-32 (Cont’d. ) Investing in the additional capacity increases Pendleton’s operating income by $250,000 ($1,500,000 calculated in requirement 2 minus $1,250,000 calc ulated in requirement 1), so Pendleton should add 15,000 hours to the regular machine.With the extra capacity available to it, Pendleton should use its entire capacity to produce HP6. Using all 65,000 hours of capacity to produce HP6 rather than to produce R3 generates additional contribution margin of $325,000 ($1,950,000 ? $1,625,000) which is more than the additional cost of $300,000 to lease the highprecision machine. Pendleton should therefore produce and sell 130,000 units of HP6 (65,000 hours ? 0. 5 hours per unit of HP6) and zero units of R3. 3.R3 Selling price Variable manufacturing costs per unit Variable marketing costs per unit Total variable costs per unit Contribution margin per unit Contributi on margin per hour of the constraine d resource (the regular machine) $100 60 15 75 $ 25 $25 = $25 1 HP6 $150 100 35 135 $ 15 S3 $120 70 15 85 $ 35 $15 $35 = $30 = $35 0 . 5 1 The first step is to compare the operating profits that Pendleton could earn if it accepted the Carter Corporation offer for 20,000 units with the operating profits Pendleton is currently earning.S3 has the highest contribution margin per hour on the regular machine and requires no additional investment such as leasing a high-precision machine. To produce the 20,000 units of S3 requested by Carter Corporation, Pendleton would require 20,000 hours on the regular machine resulting in contribution margin of $35 ? 20,000 = $700,000. Pendleton now has 45,000 hours available on the regular machine to produce R3 or HP6. R3 Total contribution margin from selling only R3 or only HP6 R3: $25 ? 45,000; HP6: $30 ? 45,000 Less Lease osts of high-precision machine to produce and sell HP 6 Net relevant benefit HP6 $1,125,000 $1,350,000 ? 300,000 $1,125,000 $1,050,000 Pendleton should use all the 45,000 hours of available capacity to produce 45,000 units of R3. Thus, the product mix that maximizes operating income is 20,000 units of S3, 45,000 units of R3, and zero units of HP6. This optimal mix res ults in a contribution margin of $1,825,000 ($700,000 from S3 and $1,125,000 from R3). Relative to requirement 2, operating income increases by $325,000 ($1,825,000 minus $1,500,000 calculated in requirement 2).Hence, Pendleton should accept the Carter Corporation business and supply 20,000 units of S3. 11-23 11-33 (35–40 min. ) Discontinuing a product line, selling more units. 1. The incremental revenue losses and incremental savings in cost by discontinuing the Tables product line follows: Difference: Incremental (Loss in Revenues) and Savings in Costs from Dropping Tables Line Revenues Direct materials and direct manufacturing labor Depreciation on equipment Marketing and distribution General administration Corporate office costs Total costs Operating income (loss) $(500,000) 300,000 0 70,000 0 0 370,000 $(130,000)Dropping the Tables product line results in revenue losses of $500,000 and cost savings of $370,000. Hence, Grossman Corporation’s operating income will b e $130,000 higher if it does not drop the Tables line. Note that, by dropping the Tables product line, Home Furnishings will save none of the depreciation on equipment, general administration costs, and corporate office costs, but it will save variable manufacturing costs and all marketing and distribution costs on the Tables product line. . Grossman’s will generate incremental operating income of $128,000 from selling 4,000 additional tables and, hence, should try to increase table sales. The calculations follow: Incremental Revenues (Costs) and Operating Income $500,000 (300,000) (42,000)* (30,000)†  0** 0** $128,000 Revenues Direct materials and direct manufacturing labor Cost of equipment written off as depreciation Marketing and distribution costs General administration costs Corporate office costs Operating income Note that the additional costs of equipment are relevant future costs for the â€Å"selling more tables decision† because they represent increment al future costs that differ between the alternatives of selling and not selling additional tables. † Current marketing and distribution costs which varies with number of shipments = $70,000 – $40,000 = $30,000. As the sales of tables double, the number of shipments will double, resulting in incremental marketing and distribution costs of (2 ? $30,000) – $30,000 = $30,000. *General administration and corporate office costs will be unaffected if Grossman decides to sell more tables. Hence, these costs are irrelevant for the decision. 11-24 11-34 (30 min. ) Discontinuing or adding another division (continuation of 11-33). 1. Solution Exhibit 11-34, Column 1, presents the relevant loss of revenues and the relevant savings in costs from closing the Northern Division. As the calculations show, Grossman’s operating income would decrease by $140,000 if it shut down the Northern Division (loss in revenues of $1,500,000 versus savings in costs of $1,360,000).Grossman will save variable manufacturing costs, marketing and distribution costs, and division general administration costs by closing the Northern Division but equipment-related depreciation and corporate office allocations are irrelevant to the decision. Equipment-related costs are irrelevant because they are past costs (and the equipment has zero disposal price). Corporate office costs are irrelevant because Grossman will not save any actual corporate office costs by closing the Northern Division. The corporate office costs that used to be allocated to the Northern Division will be allocated to other divisions. . The manager at corporate headquarters responsible for making the decision is evaluated on Northern Division’s operating income after allocating corporate office costs. The manager will evaluate the options as follows: If the manager does not close the Northern Division in 2002, the division is expected to show an operating loss of $110,000 after allocating all corporate office costs. If the manager closes the Northern Division, the division would show an operating loss of $100,000 from the write off of equipment.It would show no revenues and, hence, would not attract any corporate office costs. It would also not incur any manufacturing, marketing and distribution, and general administration costs. From the viewpoint of maximizing the operating income against which the manager is evaluated, the manager would prefer to shut down Northern Division (and show an operating loss of $100,000 instead of an operating loss of $110,000 by operating it). In fact, the manager might argue that even the $100,000 operating loss is more a consequence of accounting write offs rather than a â€Å"real† operating loss.Recall from requirement 1 that the decision model favored keeping the Northern Division open. The performance evaluation model of the manager making the decision suggests that the Northern Division be closed. Hence, the performance evaluation model is inconsistent with the decision model. 3. Solution Exhibit 11-34, Column 2, presents the relevant revenues and relevant costs of opening the Southern Division (a division whose revenues and costs are expected to be identical to the revenues and costs of the Northern Division).Grossman should open the Southern Division because it would increase operating income by $40,000 (increase in relevant revenues of $1,500,000 and increase in relevant costs of $1,460,000). The relevant costs include direct materials, direct manufacturing labor, marketing and distribution, equipment, and division general administration costs but not corporate office costs. Note, in particular, that the cost of equipment written off as depreciation is relevant because it is an expected future cost that Grossman will incur only if it opens the Southern Division.Corporate office costs are irrelevant because actual corporate office costs will not change if Grossman opens the Southern Division. The current corpora te staff will be able to oversee the Southern Division’s operations. Grossman will allocate some corporate office costs to the Southern Division but this allocation represents corporate office costs that are already currently being allocated to some other division. Because actual total corporate office costs do not change, they are irrelevant to the division. 1-25 11-34 (Cont’d. ) SOLUTION EXHIBIT 11-34 Relevant-Revenue and Relevant-Cost Analysis for Closing Northern Division and Opening Southern Division Incremental (Loss in Revenues) Revenues and and Savings in (Incremental Costs) Costs from Closing from Opening Northern Division Southern Division (1) (2) $(1,500,000) $1,500,000 825,000 0 205,000 330,000 0 1,360,000 $ (140,000) (825,000) (100,000) (205,000) (330,000) 0 (1,460,000) $ 40,000Revenues Variable direct materials and direct manufacturing labor costs Equipment cost written off as depreciation Marketing and distribution costs Division general administration c osts Corporate office costs Total costs Effect on operating income (loss) 11-35 (30–40 min. ) Make or buy, unknown level of volume (A. Atkinson). 1. Let X = 1 starter assembly. The variable costs required to manufacture 150,000X are: Direct materials Direct manufacturing labor Variable manufacturing overhead Total variable costs $200,000 150,000 100,000 $450,000 The variable costs per unit are $450,000 ? 150,000 = $3. 00 per unit. 11-26 11-35 (Cont’d. The data can be presented in both â€Å"all data† and â€Å"relevant data† formats: All Data Relevant Data Alternative Alternative Alternative Alternative 1: 2: 1: 2: Buy Make Buy Make Variable manufacturing costs $ 3X – $ 3X – Fixed general manufacturing overhead 150,000 $150,000 – – Fixed overhead, avoidable 100,000 – 100,000 – Division 2 manager's salary 40,000 50,000 40,000 $50,000 Division 3 manager's salary 50,000 – 50,000 – Purchase cost, if boug ht from Tidnish Electronics – 4X – 4X Total $340,000 $200,000 $190,000 $50,000 + $ 3X + $ 4X + $ 3X + $ 4X The number of units at which the costs of make and buy are equivalent is: All data analysis: or Relevant data analysis: $340,000 + $3X = $200,000 + $4X X = 140,000 $190,000 + $3X = $50,000 + $4X X = 140,000Assuming cost minimization is the objective, then: †¢ If production is expected to be less than 140,000 units, it is preferable to buy units from Tidnish. †¢ If production is expected to exceed 140,000 units, it is preferable to manufacture internally (make) the units. †¢ If production is expected to be 140,000 units, this is the indifference point between buying units from Tidnish and internally manufacturing (making) the units. 2. The information on the storage cost, which is avoidable if self-manufacture is discontinued, is relevant; these storage charges represent current outlays that are avoidable if self-manufacture is discontinued. Assume t hese $50,000 charges are represented as an opportunity cost of the make alternative.The costs of internal manufacture that incorporate this $50,000 opportunity cost are: All data analysis: Relevant data analysis: All data analysis: Relevant data analysis: $390,000 + $3X $240,000 + $3X $390,000 + $3X X $240,000 + $3X X = = = = $200,000 + $4X 190,000 $50,000 + $4X 190,000 The number of units at which the costs of make and buy are equivalent is: If production is expected to be less than 190,000, it is preferable to buy units from Tidnish. If production is expected to exceed 190,000, it is preferable to manufacture the units internally. 11-27 11-36 (30 min. ) Make versus buy, activity-based costing, opportunity costs (N. Melumad and S. Reichelstein, adapted). 1. Relevant costs under buy alternative: Purchases, 10,000 ? $8. 0 Relevant costs under make alternative: Direct materials Direct manufacturing labor Variable manufacturing overhead Inspection, setup, materials handling Machine ren t Total relevant costs under make alternative $82,000 $40,000 20,000 15,000 2,000 3,000 $80,000 The allocated fixed plant administration, taxes, and insurance will not change if Ace makes or buys the chains. Hence, these costs are irrelevant to the make-or-buy decision. The analysis indicates that Ace should not buy the chains from the outside supplier. 2. Relevant costs under the make alternative: Relevant costs (as computed in requirement 1) Relevant costs under the buy alternative: Costs of purchases (10,000 ? $8. 0) Additional fixed costs Additional contribution margin from using the space where the chains were made to upgrade the bicycles by adding mud flaps and reflector bars, 10,000 ? ($20 – $18) Total relevant costs under the buy alternative $80,000 $82,000 16,000 (20,000) $78,000 Ace should now buy the chains from an outside vendor and use its own capacity to upgrade its own bicycles. 3. In this requirement, the decision on mud flaps and reflectors is irrelevant to t he analysis. Cost of manufacturing chains: Variable costs, ($4 + $2 + $1. 50 = $7. 50) ? 6,200 Batch costs, $200/batcha ? 8 batches Machine rent Cost of buying chains, $8. 20 ? 6,200 a $46,500 1,600 3,000 $51,100 $50,840 $2,000 ? 10 batches In this case, Ace should buy the chains from the outside vendor. 11-28 11-37 (60 min. Multiple choice; comprehensive problem on relevant costs. You may wish to assign only some of the parts. Per Unit Fixed Manufacturing costs: Direct materials Direct manufacturing labor Variable manufac. indirect costs Fixed manufac. indirect costs Marketing costs: Variable Fixed Total $1. 00 1. 20 0. 80 0. 50 $1. 50 0. 90 Variable $3. 50 $0. 50 $3. 00 2. 40 $5. 90 0. 90 $1. 40 1. 50 $4. 50 1. (b) $3. 50 Manufacturing Costs Variable $3. 00 Fixed 0. 50 Total $3. 50 2. (e) None of the above. Decrease in operating income is $16,800. Differential $1,440,000+ $ 91,200* 720,000 + 360,000 + 1,080,000+ 360,000 – 120,000 216,000 336,000 $ 24,000 New Old Revenues 24 0,000 ? $6. 0 Variable costs Manufacturing 240,000 ? $3. 00 Marketing and other 240,000 ? $1. 50 Variable product costs Contribution margin Fixed costs: Manufacturing $0. 50 ? 20,000 ? 12 mos. = Marketing and other $0. 90 ? 240,000 Fixed product costs Operating income *Incremental revenue: $5. 80 ? 24,000 Deduct price reduction $0. 20 ? 240,000 264,000 ? $5. 80 792,000 396,000 1,188,000 343,200 120,000 216,000 $ 7,200 72,000264,000 ? $3. 00 36,000264,000 ? $1. 50 108,000 16,800 –– –– –– – $ 16,800 3 $139,200 48,000 $ 91,200 3. (c) $3,500 If this order were not landed, fixed manufacturing overhead would be underallocated by $2,500, $0. 50 per unit ? 5,000 units.Therefore, taking the order increases operating income by $1,000 plus $2,500, or $3,500. 11-29 11-37 (Cont’d. ) Another way to present the same idea follows: Revenues will increase by (5,000 ? $3. 50 = $17,500) + $1,000 Costs will increase by 5,000 ? $3. 00 Fixed overhead will not change Change in operating income $18,500 15,000 – $ 3,500 Note that this answer to (3) assumes that variable marketing costs are not influenced by this contract. These 5,000 units do not displace any regular sales. 4. (a) $4,000 less ($7,500 – $3,500) Government Contract As above $3,500 Regular Channels Sales, 5,000 ? $6. 00 Increase in costs: Variable costs only: Manufacturing, 5,000 ? $3. 0 $15,000 Marketing, 5,000 ? $1. 50 7,500 Fixed costs are not affected Change in operating income 5. (b) $4. 15 $30,000 22,500 $ 7,500 Differential costs: Variable: Manufacturing Shipping Fixed: $4,000 ? 10,000 $3. 00 0. 75 $3. 75 ? 10,000 0. 40 ? 10,000 4,000 $4. 15 ? 10,000 $41,500 $37,500 Selling price to break even is $4. 15 per unit. 6. (e) $1. 50, the variable marketing costs. The other costs are past costs, and are, therefore, irrelevant. None of these. The correct answer is $3. 55. This part always gives students trouble. The short-cut solution below is followed b y a longer solution that is helpful to students. 7. (e) 11-30 11-37 (Cont’d. Short-cut solution: The highest price to be paid would be measured by those costs that could be avoided by halting production and subcontracting: Variable manufacturing costs Fixed manufacturing costs saved $60,000 ? 240,000 Marketing costs (0. 20 ? $1. 50) Total costs Longer but clearer solution: Comparative Annual Income Statement Present Difference Proposed Revenues Variable costs: Manufacturing, 240,000 ? 3. 00 Marketing and other, 240,000 ? $1. 50 Variable costs Contribution margin Fixed costs: Manufacturing Marketing and other Total fixed costs Operating income $1,440,000 720,000 360,000 1,080,000 360,000 120,000 216,000 336,000 $ 24,000 $ – +132,000 – 72,000 $1,440,000 852,000* 288,000 1,140,000 300,000 60,000 216,000 276,000 $ 24,000 $3. 00 0. 25 0. 30 $3. 55 – 60,000 $ 0 This solution is obtained by filling in the above schedule with all the known figures and working â⠂¬Å"from the bottom up† and â€Å"from the top down† to the unknown purchase figure. Maximum variable costs that can be incurred, $1,140,000 – $288,000 = maximum purchase costs, or $852,000. Divide $852,000 by 240,000 units, which yields a maximum purchase price of $3. 55. 11-31 11-38 (15 min. ) Make or buy (continuation of 11-37). The maximum price Class Company should be willing to pay is $3. 9417 per unit. Expected unit production and sales of new product must be half of the old product (1/2 ? 240,000 = 120,000) because the fixed manufacturing overhead rate for the new product is twice that of the fixed manufacturing overhead rate for the old product.Proposed Make New Old Present Product Product Total Revenues $1,440,000 $1,080,000 $1,440,000 $2,520,000 Variable (or purchase) costs: Manufacturing 720,000 600,000 946,000* 1,546,000 Marketing and other 360,000 240,000 288,000 528,000 Total variable costs 1,080,000 840,000 1,234,000 2,074,000 Contribution margin 360,000 240,000 206,000 446,000 Fixed costs: Manufacturing 120,000 120,000 120,000 Marketing and other 216,000 60,000 216,000 276,000 Total fixed costs 336,000 180,000 216,000 396,000 Operating income $ 24,000 $ 60,000 $ (10,000) $ 50,000 *This is an example of opportunity costs, whereby subcontracting at a price well above the $3. 50 current manufacturing (absorption) cost is still desirable because the old product will be displaced in manufacturing by a new product that is more profitable.Because the new product promises an operating income of $60,000 (ignoring the irrelevant problems of how fixed marketing costs may be newly reallocated between products), the old product can sustain up to a $10,000 loss and still help accomplish management's overall objectives. Maximum costs that can be incurred on the old product are $1,440,000 plus the $10,000 loss, or $1,450,000. Maximum purchase cost: $1,450,000 – ($288,000 + $216,000) = $946,000. Maximum purchase cost per unit: $946,0 00 ? 240,000 units = $3. 9417 per unit. Alternative Computation Operating income is $9. 00 – $8. 50 = $0. 50 per unit for 120,000 new units Target operating income Maximum loss allowed on old product Maximum loss per unit allowed on old product, $10,000 ? 40,000 = Selling price of old product Allowance for loss Total costs allowed per unit Continuing costs for old product other than purchase cost: Fixed manufacturing costs––all transferred to new product Variable marketing costs Fixed marketing costs Maximum purchase cost per unit $60,000 50,000 $10,000 $0. 0417 $6. 0000 0. 0417 6. 0417 $ – 1. 20 0. 90 2. 1000 $3. 9417 11-32 11-39 (30 min. ) Appendix). 1. Optimal production plan, computer manufacturer (Chapter X = Units of printers Y = Units of desktop computers Objective: Maximize total contribution margin of $200X + $100Y Constraints: For production line 1: 6X + 4Y ? 24 For production line 2: 10X ? 0 Sales of X and Y: X – Y ? 0 Negative productio n impossible: X 0 ? Y ? 0 2. Solution Exhibit 11-39 presents a graphical summary of the relationships. The sales-mix constraint here is somewhat unusual. The X – Y ? 0 line is the one going upward at a 45-degree angle from the origin. The optimal corner is the point (2, 3), 2 printers and 3 computers. The corner point where the production line 1 and production line 2 constraints meet is X = 2, Y = 3 that can be calculated by solving: 6X + 4Y = 24 (1) Production line 1 constraint 10X = 20 (2) Production line 2 constraint From (2) X = 20 ? 10 = 2 Substituting for X in (1) 6 ? 2 + 4Y = 24 4Y = 24 – 12 = 12 Y = 12 ? = 3 The corner point where the production line 2 constraint and the product-mix constraint meet is X = 2, Y = 2 that can be calculated by solving: 10X = 20 (2) Production line 2 constraint X – Y = 0 (3) Product-mix constraint From (2) X = 20 ? 10 = 2 Substituting for X in (3) Y = 2 Using the trial-and-error method: Trial 1 2 3 4 Corner (X; Y) (0; 0) (2; 2) (2; 3) (0; 6) Total Contribution Margin $ 200(0) + $100(0) = $ 0 200(2) + 100(2) = 600 200(2) + 100(3) = 700 200(0) + 100(6) = 600 The optimal solution that maximizes operating income is 2 printers and 3 computers. 11-33 11-39 (Cont’d. ) SOLUTION EXHIBIT 11-39 Graphic Solution to Find Optimal Mix, Information Technology, Inc. Product Line 1 Constraint Product Y Production in Units 6 Product Line 2