Answer: Increased profit as opposed to making them internally.
Explanation:
Make or buy decisions are management decisions as to whether production components should be produced internally or outsourced.
Buy decision
Unit price= $34
Total unites= 19900
Total cost= $34*19900=$676,600
Make decision
$
Direct materials 178,000
Direct Labor. 380,000
Variable overhead. 104,000
Relevant fixed overhead 260,000
Total $922,000
Unit price for make=922000/19900
Unit price=$46.33
Since buying outside is more cheaper than producing internally, it will be more profitable to outsource(buy).
Answer:
The term Operating leverage refers to the degree to which a firm uses debt financing (or other types of fixed-cost financing) to fund its operations.
Explanation:
Operating leverage is a measure of how revenue growth translates into growth in operating income
Solution:
Let's start by assuming that the taxi ride demand is extremely elastic, to the extent that it is vertically sluggish! If the cabbies raise the fair price by 10% from 10.00 per mile to 11.00 per kilometre, the number of riders remains 20.
Total income before fair growth= 20* 10= 200.
Total income following fair growth = 11* 20= 220.
A 10% increase in the fare therefore leads to a 10% increase in the driver's revenue.
Therefore, the assumption in this situation is that the cab drivers think the taxi driving requirement is highly inelastic.
The demand curve facing the drivers of the cab is still inelastic, but not vertically bent.
When the rate increased from 10% to 11, riders declined from 20% to 19%
Total revenue before fair growth is 20* 10= 200
The gap between revenue and fair growth is 19* 11= 209
This means that a realistic 10% raise doesn't result in a 10% boost on income Because the market curve for taxi rides is not 100% inelastic, but rather low inelastic, so that a fair increase (control) allows consumers to lose their incomes.
Answer:
<u>means that management has to investigate every budget difference.</u>
Explanation:
- Management has an exception as the practice f examining the financial and operational results of a business. Only bringing the issues to the attention of management when substantial differences in budgets or within the expected amount.
- The concept assumes that business managers handle cases that derive them from the norms and have the main disadvantage of calculation mistakes that results from a large variety of data and finding errors to be consuming activity.
