Efficiency and Cost of Production Production efficiency is defined as the level at which a company is no longer capable of producing additional amounts of a commodity or good devoid of lowering the level of production of another product. Efficiency in production is attained and realized when a product is manufactured and formed at its least average total cost. It outlines sufficient production devoid of wasting important resources (Investopedia, 2016). In delineation, economies of scale are the factors that make the average cost of commodity production and manufacture to decrease as the volume of its output rises (The Economist, 2008). Internal economies of scale are cost savings that accrue to a company irrespective of the market, industry or setting in which it operates. On the other hand, external economies of scale are those that profit a company owing to the manner in which its industry is organized (The Economist, 2008). In order for Autoedge to attain economies of scale, it is suggested that the firm ought to lay emphasis in obtaining ways to curtail or disseminate fixed costs so as to diminish the cost incurred for every unit as the quantities of production rise. Fixed costs are outlays that remain at a predetermined price, and do not vary when the volume of production increases or declines. Fixed costs consist of equipment, land, overhead, and wages. Regardless of whether products are manufactured...
These include bulk procurement of raw materials, employing highly competent personnel and guaranteeing proper and satisfactory education and training. Other recommended approaches encompass the procurement of more capable equipment, expansion of the manufacturing process, acquisitions or mergers with smaller tech companies and making certain that there is incessant open communication within the supply chain (Carlino, 2012). For instance, relocation to the United States implies an increase in wages, which in turn increases the fixed costs incurred by the company. In an endeavor to execute such changes to its system of manufacturing operations, the company could conceivably have the capacity to sustain the prevailing operation plant for production. In particular, this is as a result of the lower costs incurred in production. What is more, the main consumers will not have to face increased prices of the…
Dibsa should turn towards the market-based pricing strategy, which sees the implementation of competitive prices for the 3-in-1 Lawnmower. The selection of this combination of strategies would generate several impacts upon the company, but most of them would be obvious at product lifecycle level. In this order of ideas: The sales revenues would be significantly high throughout the first six months and they would allow the company to cover for
Economics Discussions Production Costs Postal Service (USPS) operates at a loss but its closest competitors -- UPS and FedEx -- both operate at a profit. Suggest how fixed costs have contributed to the situation of the USPS. Provide support for your response. I would suspect that the fixed costs of contributing to employee's retirement funds (Risk Analysis Research Center, 2009, p. 4) and also their restriction from closing local offices (Slentz and McCann,
overhead costs and various methods in which the overhead costs are classified. Ehrhard Brigham, a renowned author, states that a business cannot consider all kind of money that it earns as profits. The reason for not calling the entire amount "profit" is that the business has to pay expenses for carrying out business activities and processes. These expenses are regarded as the operating costs. (Brirgham, 2008) International Accounting Standards Board
If your next-best alternative to seeing the movie is reading the book, then the opportunity cost of seeing the movie is the money spent and the pleasure you forgo by not reading the book. The word opportunity in opportunity cost is actually redundant. The cost of using something is already the value of the highest-valued alternative use. Nevertheless, as contract lawyers and airplane pilots know, redundancy can be a
Because of these types of figures, it should come as no surprise that economists and others that analyze this type of issue are greatly interested in what type of role benefits play within the labor market. Utilizing a simple theory of the labor market indicates that employers are generally concerned regarding the level of total worker compensation as opposed to the division between the wages that they actually pay and
Leverage permits superior possible returns to the investor than otherwise would have been obtainable but the probable for loss is in addition superior, since the investment becomes valueless, the loan principal and all accumulated interest on the loan still need to be paid back (Kotarski, 2009). In monetary economics it has been projected for a long time that financial capital is put into a company each time the probable return
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