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University of Maryland Global Campus (UMGC) *

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620

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Economics

Date

Feb 20, 2024

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docx

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1. Discuss the concepts that were most challenging for you in the readings and review material. How did the practice exercises help clarify these? Margin of Safety was a new concept for me and one that stood out to me as a front-line manager. This measure is quite important to understand how much “water the ship can take on” before it sinks. The practice exercises allowed me to put this method to practice with real numbers and begin to imagine my own department numbers in the equation. Activity Based Cost Accounting was also a new and quite difficult concept for me to understand. There is no room for error, so it is important to understand how to categorize costs to activities correctly. I found myself referring back to the examples in the readings to help me work through the practice exercises. 2. What did you learn that will help you analyze LGI's cost structure to increase its productivity and put the company on a path to a sustainable future? There were a few concepts that stood out as important to increase productivity and project a sustainable future for Largo Global Inc. Chapter 3 provided insight into Breakeven Analysis which will allow LGI leadership to understand their baseline breakeven to help plan for increase in profits. It is important to understand where you stand with the basic expenses needed to keep the business running before projecting how to increase profit. Chapter 3 also provided insight into Target Net Income and how to calculate LGI’s with the current financials and allows leaders to plug & play with their goal net income and the financials needed to achieve it. Chapter 7 allows LGI leaders to analyze which products cost the most to produce and soak up the resources.
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