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Are relevant revenues and relevant costs the only information needed by managers to select among alternatives?...
Are relevant revenues and relevant costs the only information needed by managers to select among alternatives? Examples,
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Expert Solution
(Q) Are relevant revenues and relevant costs the only information needed by managers to select among alternatives?
(Ans) False,qualitative factors,as well as relevant revenues and relevant costs need to be considered when selecting among alternatives.The need for a decision arises in business because a manager is faced with a problem and alternative courses of action are available. In deciding which option to choose he will need all the information which is relevant to his decision; and he must have some criterion on the basis of which he can choose the best alternative. Some of the factors affecting the decision may not be expressed in monetary value. Hence, the manager will have to make 'qualitative' judgments, e.g. in deciding which of two personnel should be promoted to a managerial position. A 'quantitative' decision, on the other hand, is possible when the various factors, and relationships between them, are measurable..
ekkarill92 answered 5 hours agoRelated Solutions
Understand the concept of relevant revenues and costs. What makes a revenue or cost relevant? ________________________________________________...
Understand the concept of relevant revenues and costs. What
makes a revenue or cost relevant?
________________________________________________
________________________________________________
________________________________________________
Know and understand the following terms:
Avoidable costs
_______________________________________________________________
Opportunity costs
_____________________________________________________________
Relevant Costs
________________________________________________________________
Differential Costs
______________________________________________________________
Sunk Costs
___________________________________________________________________
Differential Revenues
___________________________________________________________
Understand the concept of Cost Hierarchy and Cost Avoidance.
What are the different cost hierarchies and when are they
eliminated?
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
Review examples of costs in the above 4 categories that we
covered in class...
Identifying Relevant Costs and Revenues The Village of Bomont operates a power plant on a river...
Identifying Relevant Costs and Revenues
The Village of Bomont operates a power plant on a river that flows
through town. The village uses some of this generated electricity
to operate a water treatment plant and sells the excess electricity
to a local utility. The city council is evaluating two alternative
proposals:
Proposal A calls for replacing the generators
used in the plant with more efficient generators that will produce
more electricity and have lower operating costs. The salvage value
of...
19-23 Quality improvement, relevant costs, relevant revenues. AquaPro produces water purifiers for the household. Business is...
19-23 Quality improvement, relevant costs, relevant revenues.
AquaPro produces water purifiers for the household. Business is
good but Derek, the manager, has noticed that customers complain
because they find leakages in the plastic nozzles used. AquaPro
provides a warranty for each machine and charges $115 for each of
them. AquaPro installed 5,000 machines last month and 20% of them
have experienced this leakage problem. Each repair costs $35 for
the company. Derek believes that the problem can be eliminated by...
A & B Enterprises is trying to select the best investment from among two alternatives. Each...
A & B Enterprises is trying to select the best investment
from among two alternatives. Each alternative involves an initial
outlay of $100,000. Their cash flows follow:
YEAR A
B
130,000 0
230,000 25,000
330,000 35,000
430,000 45,000
530,000 50,000
Evaluate and rank each alternative based on
a.payback period
b.net present value (use a 10% discount rate) and
c.internal rate of return.
A & B Enterprises is trying to select the best investment from among two alternatives. Each...
A & B Enterprises is trying to select the best investment
from among two alternatives. Each alternative involves an initial
outlay of $100,000. Their cash flows follow:
YEAR
A
B
1
30,000
0
2
30,000
25,000
3
30,000
35,000
4
30,000
45,000
5
30,000
50,000
Evaluate and rank each alternative based on
a. payback period
b. net present value (use a 10% discount
rate) and
c. ...
There are various investment decision rules, which financial managers may select. Choose one of the alternatives...
There are various investment decision rules, which financial
managers may select. Choose one of the alternatives to the NPV, and
compare and contrast one of the selected alternatives with NPV
(payback period, discounted payback period, IRR or profitability
index.
Relevant Revenues and Costs Scenario(11) Brad Winston is the owner and operator of Fishing Unlimited, a...
Relevant Revenues and Costs
Scenario(11)
Brad Winston is the owner and operator of Fishing Unlimited, a
charter fishing business operated out of Oregon Inlet, NC. Brad has
been taking groups of guests offshore to fish for tuna and marlin
for over 15 years. He purchased his current fishing boat when he
started the business, but now believes that a larger and better
outfitted vessel would allow him to increase the rate he charges
per charter. Currently he can carry a...
Computer Technology Enterprises is trying to select the best investment from among four alternatives. The company’s...
Computer Technology Enterprises is trying to select the best
investment from among four alternatives. The company’s required
rate of return is 14%. The initial cost and future cash
flows of the alternatives are presented below. You
can use Excel to solve this problem. If you do, please submit your
homework document and the Excel file.
Year
Alternative A ($)
Alternative B (S)
Alternative C ($)
Alternative D ($)
0
-200,000
-200,000
-200,000
-200,000
1
70,000
0
60,000
90,000
2
80,000...
Medical Technology Enterprises is trying to select the best investment from among four alternatives. The company’s...
Medical Technology Enterprises is trying to select the best
investment from among four alternatives. The company’s cost of
capital (WACC) is 12%. The initial cost and future cash flows of
the alternatives are presented below (See pages 383 – 390). You can
use Excel to solve this problem. If you do, please submit your
homework document and the Excel file.
Year
Alternative A ($)
Alternative B (S)
Alternative C ($)
Alternative D ($)
0
-400,000
-400,000
-400,000
-400,000
1
1400,000...
Henry is trying to select the best investment from among 3 alternatives. Each alternative involves an...
Henry is trying to select the best investment from among 3
alternatives. Each alternative involves an initial outlay of
200,000$. Their cash flows returns for each project are as follows
(in $):
year project
A project B
project C
1
110,000
150,000
0
2
120,000
140,000
0
3
130,000
130,000
145,000
4
140,000 0
155,000
5
150,000 0
160,000
a) Evaluate and rank each alternative
based...
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