discuss the cost management skills . discuss the cost and benefits of planning in detail ( must include minimum 600 words )

A VALUE- ADDED COST IS THE COST OF AN ACTIVITY THAT A COMPANY CAN ELIMINATE WITHOUT AFFECTING THE PRODUCT'S VALUE TO THE CUSTOMER. TRUE OR FALSE

Cost Allocation:

- What are the three required steps in cost allocations?

- What is the best reasons to use cost allocations and when it might be appropriate not to use cost allocations.

Death Spiral:

- What is the concept of the death spiral?

- What are some of the problems that can be associated with it, please provide ways to resolve it.

Total cost of ownership for a personal vehicle

Compare the total cost of ownership for the purchase of two personal vehicles of your choice (use two that are currently for sale!). One vehicle should be a new car, while the second should be a used car that would serve as a reasonable substitute for the new car (i.e. don’t compare a Civic and Tahoe… you don’t have to compare the same exact vehicle model, but make sure they are in the same ‘class’).

What costs should you include?Maintenance/repairs, motor vehicle taxes, insurance, fuel… plus anything else you believe is relevant. This is going to require extra research, including things such as miles per gallon calculations, typical maintenance/repair needs, average insurance costs, and local motor vehicle tax information.

Also consider how long you expect your ownership period to be… will you drive the vehicles until they fall apart? Or will you trade it in after several years? Regardless of which you choose, you should estimate a salvage value at the end of your ownership period (again, this salvage value estimate will require some research into expected resale values).

1. Provide a description of vehicle #1, a new car. Calculate its total cost of ownership, being as detailed as possible in your costs.

Calculate the Net Present Value of this series of cash flows using a discount rate of 4%.

Calculate the Net Present Value of this series of cash flows using a discount rate of 7%.

The revenue and cost functions for a particular product are given below. The cost and revenue are given in dollars, and x represents the number of units .

R(x) = −0.8x² + 704x

C(x) = 264x + 57120

(a) How many items must be sold to maximize the revenue?
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(b) What is the maximum revenue?
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(c) Find the profit function.
P(x) = ___________

(d) How many items must be sold to maximize the profit?

_______________

(e) What is the maximum profit?

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(f) At what production level(s) will the company break even on this product? (Enter your answers as a comma-separated list.)
units

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Explain the concept of a weighted average cost of capital and a minimum cost level of leverage. Contrast the equilibrium theory and pecking order theory approaches to explaining a firm’s capital structure. How applicable are these theories to agricultural finance?

Assume that the paperclip industry is a monopoly and marginal cost is equal to average cost. The average and marginal cost of paper clip production is 125, and the interest rate is 10 %. Demand for paperclips is equal to Q=100-2/3 P. What is the optimal quantity, per period CS, and per period license revenues?

1. The weighted average cost of capital (WACC) is calculated as the weighted average of cost of component capital, including debt, preferred stock and common equity. In general, debt is less expensive than equity because it is less risky to the investors. Some managers may intend to increase the usage of debt, therefore increase the weight on debt (W_d). Do you think by increasing the weight on debt (W_d) will reduce the WACC infinitely? What are the benefits and costs of using a lot of debt?

2. Do you think it is necessary for a firm to adjust its overall WACC according to the risk of each individual project? Why? If a firm insists that it will use only one WACC to evaluate all its projects, what would be the consequence in the long term?