Cost flow assumptions and effects of inventory errors
Cost flow assumptions and effects of inventory errors - Math Problem Example
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(Ans)- When we calculate Cost of Goods Sold (CGS) using FIFO, no matter what method we use, the earliest price of available goods is used no matter how many other buying transactions occur in the mean time. However while using LIFO; whenever we make a new purchase transaction, the cost per unit value changes to that of the latest purchase.
As the capital expenditure is marked in negative, the NPV is computed by adding the Capital Expenditure to the summation of the PVs of the ten cash flows.
The deduction of the capital expenditure value from the summation of the above mentioned PVs gives us the project’s NPV which is equal to 57.
The technique revolves around five (5) simple steps. These steps are: i. Setting up a probability distribution for each of the three variable – material cost, labor cost and utilities cost ii. Preparing a cumulative probability distribution for each of the three variables iii.
In most cases such inefficiencies are caused by monopoly pricing or taxation (Brent 89). In other words, a deadweight loss can be termed as the total surplus resulting from market distortion especially from the side of government regulations on prices and in most cases the levied taxes.
The student has selected a very good example of a manufacturing concern that implements the job order costing system in order to account for the cost of every job completed. In airplane manufacturing, each job, which is supposedly the complete manufacturing of a plane, requires substantial cost which primarily include material and highly skilled technical cost.
But curtailing overproduction and reducing or eliminating inventories could lead to missed opportunities or higher gains during periods of higher demand, specially on products that see little or no change on their manufacturing, composition, or function.” My Response To The Student’s Answer: Throughout the course of history, management accounting writers have formed an opinion that there is an inversely proportional link between the allocation of fixed overheads and the want or incentive to over produce inventory.
Cash flows are the finances a corporation acquires from its daily sales and spends it in the operations of the business at that particular period. It is the liquidity position of the company and does not constitute for sales credit (Mulford & Comiskey, 2005).
Activity Based Costing encourages managers to watch activities or functions that are value added . These are operational acts that help identify the activities or functions that get customers. Management should study cost drivers in decision making.
Based on the graph, significant difference in red cell folate levels exists between Groups I and II. A significant difference may also exist between Groups I and III. However, there is little difference in mean folate levels between II and III.
The data satisfies the assumption of independence.
The balance sheet showed that the assets of the company increased with the despite of increasing sales. Cash decreased because the company sold more of their products on credit rather than on cash, which can be observed by the growing number of Account receivables which manifested a figure of $0.632 million FY 2007, which were $0.35 million a year before.
Free cash flow model of valuation estimates value of a firm based on its fundamentals. The company is expected to pay its shareholders based on intrinsic value of the firm. In addition, this value is reflected by net present cash flow. It’s
3 pages (750 words)Math Problem
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