Chapter 11
Relevant costs differ between several alternative decisions while the expenses that have been incurred previously or committed for future activities that later become irrelevant to the decision-making process is the sunk costs. The concept of opportunity cost is the benefit that is forgone especially when the selected option prevents the benefits from any alternative option. The value stream is the components of all activities that are needed during the creation of the customer value for class goods and services.
The joint process of production is the one in where multiple outputs arise naturally from a common output resource. According to this chapter, the split-off point in the production process is where there is an emergence of individual identities (Blocher, Stout, Juras, & Cokins, 2015). Lastly, the predatory pricing only exists when an enterprise has a price set below the average variables cost, and it has plans for raising the prices to recover the losses as a result of low prices.
Chapter 12
Capital investment involves projects with a large expenditure of funds, and there is an expectation of future benefits over many years. On the other hand, capital budgeting is the process of identifying, selecting, evaluating, and controlling capital investments. In this chapter, the term yield-to-maturity is the long term bond yield that is expressed as a yearly rate, and its calculation considers the current market price of the bond. Simila4rly, the CAPM- Capital Asset Pricing Model is the relationship of the risk return for the equity securities. It can be applied during the estimation of the required rate of return.
Chapter 13
The sequence of activities within the company that starts with research and development then design, manufacturing, distribution, and customer service is the cost life cycle. On the other hand, the sales life cycle is the sequence of phases in the life of a product or service that is in the market from the introduction to the market, sales growth, maturity, decline, and withdrawal from the market.
Chapter 14
The concept of nonfinancial
Repetitive operations like power consumption or direct materials in an automated manufacturing need a consistent data for the underlying process to be in control. Therefore, managers of such operations cannot wait for the financial reports to make a correction on the manufacturing process. The indicators of real-time nonfinancial performance can assist the managers to control their operations. Consequently, the performance indicators of the nonfinancial like the defect rates, and process time can be given to the decision makers on a real time basis. Moreover, the application of nonfinancial performance indicators is preferred by the operating personnel because they relate to factors under their control. This implies that the performance indicators are related to factors that are familiar to the operating personnel.
Chapter 16
The role of sales productivity is to provide the available resources that are needed by the manufacturer to invest in the product design, customer service, and product quality in the long run. Therefore, productivity can provide the resources by reducing time and money required in manufacturing, thus making funds available for other purposes.
References
Blocher, E., Stout, D., Juras, P., & Cokins, G. (2015). Cost Management: A strategic Emphasis (7th ed.). McGraw-Hill Education.
