Cost, Profit and Cost Function Essay Example | Topics and Well Written Essays - 1000 words

Cost, Profit and Cost Function - Essay Example did not have adequate information regarding cost, profit and the various nuances of cost of the company, the profit and also cost functions. So in order to give them a complete understanding of the various methods of determining the cost function, relationship between cost and profit have been discusses, the basic concepts of cost function has been explained and then the methods for determining cost function has been evaluated. Cost, Profit and Cost Function There are many factors that are included in profit planning, such as cost, profitability and volume. Here the focus would be only on cost and profit. Cost is inversely proportional to profit, that means lower the cost, higher the profit (Jayapandian 2008, 393). The revenue curve is controlled by the customers, while the organization can only control the cost curve. The fluctuations in the variable cost changes the slope of the cost curve, but the increase of fixed cost may totally wipe out the profits of the company. Variable cos t has high frequency of fluctuation than fixed costs. When the cost of the company equals its generated income, then it is termed as breakeven point. The margin above this point is the profit of the company (Kolitz, Quinn, and McAllister 2009, 301-303). Cost functions are nothing but economic formula that replicates the functions of the output and input prices. In a layman’s language we can say that it simply involves finding the cost of materials for production of a particular quantity of goods. Cost function is actually a mathematical explanation which estimates the changes in cost with the levels of change related to such cost. For example: actives involved in preparing the operating machines and production runs. Cost function can be explained through graphical representation in which measurement of activity levels, such as machine hours required or the total amount of goods produced in the given time can be assessed (Horngren 1967, 308). There are various methods of calcu lating cost function, such as engineering, visual fit, regression, and account analysis. The engineering analysis is past experienced based review of cost in a systematic manner. Visual fit as the name suggest is a representation of data in a scatter diagram. Regression analysis includes mathematical formula to ascertain the cost equation that fits the data best. High low method utilizes linear algebra for the determination of fixed and variable costs, but the results are not reliable. Lastly, account analysis deals with analyzing the accounting records and determining the behavioral patterns (Whittington and Delaney 2007, 398-399). Conclusion Cost and profit go hand in hand. Cost of the company needs to be reduced to increase profit. Cost functions include functions like planning and controlling the various activities of the organization and accurately estimates the projected fixed and variable cost. There are various methods that are utilized to estimate the cost function such as regression method, engineering method, account method, visual fit method, high-low method, etc. The usage of each of these methods depends on the data available and the type of analysis required by the manager. Presentation 6 Introduction In this presentation the relationship between volume, costs and price would be explained so as to show the effect of changes in each element on the other. Bond & ltd. wanted to project the changes in profit figures due to fluctuations in volume and cost. So in this presentation an explanation of all these terms would be sated for the management to understand the concepts carefully. Cost, profit and volume can be represented graphically and also in the form of equation. Graphical representation is easier for managers to understand, as they can easily

An analysis of the current and future use of internet technologies of Essay

An analysis of the current and future use of internet technologies of ''Hallmark Cards'' - Essay Example However, the suitability of such company driven technological initiatives will depend on how the effectiveness of the internet applications in meeting the set goals and objectives (Smith and Kidd 2000, p 45-50). The internet has basically changed commerce (Smith and Kidd 2000, p 45-50). The most basic forms of communication such as written and verbal communication between a business and its consumers and suppliers have been changing. Electronic communication, in the form of the internet, keeps on changing the commercial activity for consumers and businesses. E-commerce can therefore be defined as the sharing of product and service information, developing and improving human business relationships, while transacting business over the internet (Canzer 2006 p. 97-99). Hallmark was founded in 1910 and is currently the world’s most well-known producer of greeting cards. Hallmark creative artists produce several designs for greeting cards and other products each year. The greening cards and other products are produced in 38 dissimilar languages and are sold to more than 100 countries in the world (Regan 2009 p. 150-159). At hallmark, an advertising e-business model is based on earning revenues in exchange for the placement of advertisements on the firm’s website. Just like traditional media such as television, newspaper and radio, advertising in the internet involves advertisers’ support of distributed online entertainment or information likely to be accepted by consumers, who see advertising as the cost they have to incur to receive free content online. The internet provides Hallmark with the opportunity to create unique design and interaction with the targeted audience (Pierce 2005 p 18-23). The advertising model in the internet has necessitated the entry of small production studios and small entertainment artists who seek to get advertising revenues as well as to put up for sale their products online. There are no