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4 years ago

Why are costs and benefits weighed when determining whether something gets produced

Business

1 answer:

katrin2010 [14]4 years ago

7 0

Answer:

Costs and benefits are weighed to determine if producing the good will be profitable.

Explanation:

Production of goods refers to the process through which raw material and resources are converted to a finished product. In most economies, production of goods are services is necessary to meet the demand for these goods. Companies and firms utilize resources like labor and materials to produce finished products. This is usually a costly activity that needs to be planned and organized for it to be successful. Since most businesses is for profit making, the production process has to be done in such a way that in the end, profits are made. Production processes requires financial strategies to be applied and assessed to ensure that the process is profitable in the long run.

An example of a financial analysis that can be used is the cost benefit analysis. The cost benefit analysis involves determination of all the resources that will be needed as input. The input is then convert into monetary terms, then summed together. The total amount of input in monetary terms is the cost, since that i the total amount needed to process the raw materials to finished goods. The future benefits are also forecasted and converted into monetary terms. The comparison of the costs versus the benefits forms what is collectively termed as the cost and benefits analysis.

When the costs outweigh the benefits, then the good should not be produced. When the costs are equal to the benefits, it means the business will break-even, so there will be no profits, it is advisable not to produce the good. Finally, when the benefits outweigh the costs, it is advisable to produce the good.

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Bill Pope has developed a new device that is so exciting he is considering quitting his job in order to produce and market it on

labwork [276]

Answer:

Costs of: Opportunity Sunk Variable Fixed MOH Product Selling Differential

Garage rent (Fixed)........................................X

Utilities (Fixed).................................................X

Cost of the industrial design course (Sunk) ... ''the cost has been spent''

Equipment rented .(Fixed)...............................X

Material cost (Variable)...................X

Labor cost (Variable).......................X

Present salary (Opportunity cost / Differential Cost)..'He wont earn anymore'

Advertising (Fixed and Selling Costs)............X...................................X

Explanation:

Costs of: Opportunity Sunk Variable Fixed MOH Product Selling Differential

Garage rent (Fixed)........................................X

Utilities (Fixed).................................................X

Cost of the industrial design course (Sunk) ... ''the cost has been spent''

Equipment rented .(Fixed)...............................X

Material cost (Variable)...................X

Labor cost (Variable).......................X

Present salary (Opportunity cost / Differential Cost)..'He wont earn anymore'

Advertising (Fixed and Selling Costs)............X...................................X

1. Garage rent is fixed Manufacturing Overhead because he will pay a fixed rent amount every month.

2. Utilities is fixed Manufacturing Overhead because he will pay a fixed amount every month.

3. Cost of the industrial design course is Sunk because the cost has been spent already

4. Equipment rented is fixed Manufacturing Overhead because he will pay a fixed amount every month.

5. Material cost is variable because it will depend on how much produced every month.

6. Labor cost is variable because it will depend on how much produced every month.

7. Present salary is an Opportunity cost because wont earn salary anymore when he starts the business; this is also differential because it is the difference between the cost of the two alternative decisions

Advertising is a fixed Selling costs because he will pay a fixed amount every month and it is related to sales not production.

4 0

3 years ago

Ceteris paribus, a decrease in the demand for automobiles will

OLEGan [10]

Here are the answers: Ceteris Paribus, we would expect the following to be the cause of a decrease in the demand for the automobiles and these are: Increased gasoline prices, the expectations of the consumers that the prices of the automobiles will depreciate the following year and that the significant recession will develop and will last for a year. (Answers are based from the actual options attached to this question.)

5 0

3 years ago

Incomplete manufacturing costs, expenses, and selling data for two different cases are as follows.(a) Indicate the missing amoun

Sliva [168]

Answer:

Incomplete manufacturing costs:

Case 1 Case 2

Direct materials used $9,700 $3,900

Direct labor 5,100 8,100

Manufacturing overhead 8,400 4,100

Total manufacturing costs 23,200 16,100

Beginning work in process inventory 1,100 9,100

Ending work in process inventory 7,200 3,100

Sales revenue 25,000 31,500

Sales discounts 2,600 1,500

Cost of goods manufactured 17,100 22,100

Beginning finished goods inventory 5,000 3,400

Goods available for sale 22,100 25,500

Cost of goods sold 18,600 22,900

Ending finished goods inventory 3,500 2,600

Gross profit 3,800 7,100

Operating expenses 2,800 2,000

Net income 1,000 5,100

Explanation:

To work out the missing figures involves some manoeuvres of the figures, working up or down as the case may be. For example, to calculate the cost of goods sold in Case 1, I deducted the ending inventory of finished goods from the Goods available for sale. With this figure, it becomes possible to work out the Gross profit and the Net income.

3 0

3 years ago

General Widget partnership assets amount to $34,000 after liquidation. Frank, Gene, and Hank, equal partners, each contributed $

maks197457 [2]

Answer:

$7,000

Explanation:

Balance to be distributed = Assets amount after liquidation - Creditor - Gene loan to the business

Therefore,

Balance to be distributed = $34,000 - $23,000 - $5,000 = $6,000

Since there is no agreement among the partners regarding the distribution of profits, the amount to be distributed will be shared equally for each partners as follows:

Each partner's of the amount to be distributed = $6,000/3 = $2,000

Amount received by Gene = Loan amount from + Distributed balance share

= $5,000 + $2,000

Amount received by Gene = $7,000

Therefore, Gene gets $7,000 in distribution.

8 0

3 years ago

What are three ways that can ensure your message is clear and not misnunderstood?

N76 [4]

Your communication style matches theirs

ask them what they heard. how they might explain it to others

keep your message on one subject. don't confuse the subject with multiple ideas

4 0

3 years ago