By Victor Sower
This publication offers the enterprise expert a concise consultant to the construction and powerful use of either inner and exterior rate versions. improvement of inner fee versions is mentioned with illustrations displaying how they are often deployed to aid in new product improvement, pricing judgements, make-or-buy judgements and the id of possibilities for inner method development tasks. The construction and use of exterior fee versions are mentioned delivering perception into how their use can force collaborative development efforts between provide chain companions, higher arrange for cost negotiations, and continue negotiations serious about evidence instead of emotions--all whereas bearing in mind destiny discussions with most well liked providers to target extra strategic and operational development tasks, and no more on pricing. a couple of precise rate version examples are supplied to coach on either how expense types are built, and to illustrate how they've been successfully deployed
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Extra info for Better Business Decisions Using Cost Modeling, Second Edition
53 Carton With 50,000 units annually requiring unfolding, hanging, and steaming and an average selling price of $15 per garment, the team determined that the difference in cost of $15,053 ($55,025 − $39,972) was nominal. However, a conservative assumption was made after further discussions with marketing and store operations managers that reallocating the time store associates spent on this activity to more sales-focused customer interaction would cause an increase in sales of at least 5%. When the gross margin dollars of this sales gain are added back into the equation, the case for a switch to the supplier model became even more compelling.
When constructing cost models within a spreadsheet environment, the auditability can be improved markedly by implementing a number of key best-practice techniques. Chief among these is to avoid referencing outside workbooks where possible—that is, separate spreadsheets and files. Links to outside workbooks are difficult to follow, and if the structure, cell reference, or location of that workbook were to change, the tool would no longer function. , C43). Instead, name cells and cell ranges in a consistent format that allows you to distinguish assumption variables, decision variables, and calculated fields.
Revenue and cost per unit are constant). The point at which the total revenue (TR) and total cost (TC) lines intersect is referred to as the breakeven point (BEP), which may be expressed in either units (BEPU) or revenue dollars (BEP$). At production volumes (PV) above the BEP, total profit is represented by the vertical difference between the TR and TC lines. At production volumes below the BEP, total loss is represented by the vertical difference between the TR and TC lines. The graphical BEP model is constructed as follows: Plot the fixed cost as a horizontal line extending from that point on the vertical ($) axis.