A capital budget is an estimate of capital expenditure requirements. It is a formal plan that details the fixed assets that a business intends to acquire. A capital budget is part of the annual budget for an organization.
Capital budgets are prepared for assets with a useful life of more than one year. These assets help generate revenue for the business for many years. Capital expenses usually involve heavy cash outflow and are prepared after wide consultations with relevant departments and authorities.
As long as the marginal benefits are higher than the marginal costs you are better off continuing the activity.
Consider the example of eating pizza. Each slice of pizza gives you happiness and helps fill you up (marginal benefit), but each slice also has lots of calories and fat (marginal cost). As long as you are still hungry and getting enjoyment from eating, you should keep eating. But once you reach the point where you are too full then you should stop, because the costs now outweigh the benefits.
Explanation:This question is self explanatory,Alchian and Demsetz are of the options that firms involves a group of people coming to produce goods which brings about greater output than that of individuals .Their focus was mainly on team production in analysing the theory of firms rather than output per individual
Opportunity costs are very important costs to look at because they help a company know if they are picking the best alternative available to them.
Out-of-pocket costs are also quite important because the company needs to know if there is a chance that they will have to pay for special features in the project that are not part of the original project but need to be paid for anyway as these monies come out of the cash reserve.
Incremental costs focus on the additional costs involved in a project and so are very important. When making a decision for processing a good further for instance, management needs to know if the incremental cost will be covered by the extra profit that will be gained.
The expected balance of Accounts Payable on 31 January is $6020
Explanation:
The expected closing balance of Accounts payable will include the amount of payable for purchases made in January which are still outstanding at the end of the month. According to the policy of the company, 50% of a month's purchases will be paid in the following month. Thus, the ending balance of accounts payable will be 50% of January's purchases.
