Production and Cost Analysis
Not what you're looking for?
SLP Assignment Readings
Required Reading
Links to Cost Analysis
gordonhensley (2012, July 18.) Cost Analysis Lecture [Video file]. Retrieved from https://www.youtube.com/watch?v=SUberLlz0Us
Purchase this Solution
Solution Summary
The expert examines production and cost analysis. Answered in 1054 words with seven references are cited.
Solution Preview
The purpose of this paper is to explain the relationships between total cost, output, and the price of labor and capital, as well as how they can be used to guide a manager's decisions. Costs are an underlying imperative for a manager who has to make business decisions. For example, a change in production output could cause certain costs to increase or decrease while having no effect on other costs. These changes in costs can be predictable if we understand the nature of the cost. Examples illustrating how prices of inputs affect managerial decisions in the current market for fuel will be provided. The examples will also discuss the implications for corporate profits.
Fixed costs are costs that are the same in total, but which vary for each unit as production output changes. Examples of fixed costs include costs incurred by a plant, such as
• Rent
• Depreciation of a building
• Salaries of plant managers
• Insurance
• Property taxes (1)
In contrast, variable costs remain constant in terms of the cost per unit, but changes proportionally as production output changes. Examples of variable costs include
• Direct materials
• Price of labor, paid based on a per unit basis
• Plant supplies
• Electricity used to operate machinery or equipment (1)
Capital is typically used in the purchase of buildings and equipment, which are both fixed costs. Total cost consists of both fixed costs and variable costs. As production output increases, total cost usually increases as well due to the increase in total variable costs to produce the increased quantity of product. The average total cost, however, is expected to decrease initially, then increase, forming a U-shaped curve. Initially, as the ...
Education
- MSc, California State Polytechnic University, Pomona
- MBA, University of California, Riverside
- BSc, California State Polytechnic University, Pomona
- BSc, California State Polytechnic University, Pomona
Recent Feedback
- "Excellent work. Well explained."
- "Can you kindly take a look at 647530 and 647531. Thanks"
- "Thank you so very much. This is very well done and presented. I certainly appreciate your hard work. I am a novice at statistics and it is nice to know there are those out there who really do understand. Thanks again for an excellent posting. SPJ"
- "GREAT JOB!!!"
- "Hello, thank you for your answer for my probability question. However, I think you interpreted the second and third question differently than was meant, as the assumption still stands that a person still independently ranks the n options first. The probability I am after is the probability that this independently determined ranking then is equal to one of the p fixed rankings. Similarly for the third question, where the x people choose their ranking independently, and then I want the probability that for x people this is equal to one particular ranking. I was wondering if you could help me with this. "
Purchase this Solution
Free BrainMass Quizzes
Social Media: Pinterest
This quiz introduces basic concepts of Pinterest social media
Learning Lean
This quiz will help you understand the basic concepts of Lean.
Employee Orientation
Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.
Motivation
This tests some key elements of major motivation theories.