A company invests considerable time and money to develop sophisticated cost functions that rate high on all evaluative criteria. In the course of using the cost functions, a manager notes that in several instances, the actual costs were different from the predicted costs, resulting in lower profits during one quarter of the year. The question of the value of the cost function is asked. Please provide some suggestions on how to respond to the manager.

A company invests considerable time and money to develop sophisticated cost functions that rate high on all evaluative criteria. In the course of using the cost functions, a manager notes that in several instances, the actual costs were different from the predicted costs, resulting in lower profits during one quarter of the year. The question of the value of the cost function is asked. Please provide some suggestions on how to respond to the manager.

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

See similar textbooks

Similar questions

What are the characteristics of opportunity costs? Please explain them using examples you can find from the textbook.(Accounting for Decision Making and Control 10th Edition)
How can an in-depth analysis of the competitive landscape help inform the pricing strategy of a streaming company partnering with Roku to offer a 4k streaming stick to new subscribers? Discuss the importance of understanding competitors' pricing strategies, bundled offerings, and perceived value in the market. When developing a pricing strategy for the partnership between a streaming company and Roku, what factors should be considered to determine the perceived value of the 4k streaming stick? How can the assessment of features, capabilities, and benefits of the device compared to alternative options help determine its pricing positioning? Analyzing the target market is crucial for establishing an effective pricing strategy. How can demographic, psychographic, and geographic factors influence the pricing decisions of the streaming company and Roku when offering the 4k streaming stick? Discuss the importance of understanding consumer behavior, willingness to pay, and price sensitivity…
What is marketing mix? In your opinion, which of the marketing mix elements is more critical in which period of the product life cycle for a highly complex, totally new product? 2. Discuss the growth strategies. If your company/product is experiencing threat of substitute products or direct competitors, which of the growth strategy do you think are less suitable, why? 3. Among the three major functions of an organization, finance has two distinct tasks. What is the function/ role of finance department in organizations and why is this department important? What are the different methods that a start-up can reach funding, please describe and discuss advantages and disadvantages of internal and external funding methods. 4. Describe the concept of guerrilla marketing. Why is guerrilla marketing particularly suitable for entrepreneurial firms?
If you suggest a BEST-COST strategy for a new company that manufactures a computing device (like tablet or laptop). What would you recommend for its product design (R&D); manufacturing; targeted consumers; product distributions; pricing; marketing and sales; and customer services? Please justify your recommendations.
In an analyzation of the auto industry in the US using Porter's Five Forces (including the level of competition within the industry) riding a bicycle, taking public transportation and walking are examples of items that appear in which ONE of the five forces? Select one: a. Threat of Substitutes b. Bargaining Power of the Buyer c. Bargaining Power of the Supplier d. Threat of New Entrants
Explain why a product or service’s contribution (selling price minus variable cost) is an important element in developing a marketing strategy, giving examples to illustrate your answer.
WHAT ARE KEY COST COMPONENTS? THE MONETARY CONSEQUENCES OF THE MEANS TO CARRY OUT THE VALUE PROPOSITION
You are the marketing director for a minor league baseball team, and (not unlike a certain major league baseball team in this city) you are interested in ways to increase attendance.You think that attendance is likely driven by several factors, including how competitive the team is, the weather, and certain price promotions which are offered periodically throughout the season (e.g., ‘Buck Night’, where all parking, hot dogs and soft drinks are only $1). Based on data from several prior seasons, you estimate the following regression model for attendance: attend= 1000 + 10,000 win% + 1500 sun + 1200 sun*promo where, attend = attendance in number or patronswin% = team’s winning percentage (a measure of how competitive they are)sun = 1 if the weather is sunny, 0 elsepromo = 1 if the game offered a price promotion, 0 else. a) Draw a graph of the relationship between attendance and the team’s winning percentage, for the case when there is a price promotion on a sunny night. Also, graph…
Regarding product life-cycle planning, good marketing managers know that Multiple Choice competing firms may introduce a product during any stage of the product life cycle. every brand must go through the sales decline stage. market introduction is usually profitable for the innovator. any change in an existing product results in a new product life cycle.
You have a "Cash Cow" Product Line based on the BCG Matrix assessment. The Product Line is in the "maturity stage" of its PLC with a large base of customers. Which of these investment strategies make the most sense? Stop investment and abandon the product line Inject significant profit from your "star" product to try and fuel growth and improve market-share Divert some profits from this "cash cow" product to try and save a "dog" product line in the "decline" stage of its PLC Invest in introducing product line and brand extensions for this "Cash Cow" product line as you further segment your target market
Review the seven Ps of services marketing. How would they change your strategy in the simulation? How do the challenges of executing the additional Ps of services marketing relate to your previous, current, or potential work experiences based on industry? Provide specific examples.