Fifth edition Alnoor Bhimani Charles T. Horngren Srikant M. Datar Madhav V. Rajan Farah Ahamed

Download 1.72 Mb.

View original pdf

Page	170/469
Date	01.12.2021
Size	1.72 Mb.
	#57828

1 ... 166 167 168 169 170 171 172 173 ... 469

solutions-manual-to-bhimani-et-al-management-and-cost-accounting-pearson-2012-1

Effects of revenue mix on profit
This section raises an important question How short is the short run A grey area requiring judgement the short run is often defined as the length of time FC will remain fixed, or hard to change, in the normal course of business. To help students internalise the mix concept, suggest that they visualise the software being sold only in bundles of 3 units 2 Do-Alls plus 1 Superword. Explain that bundling is a good way to think of a problem, even though it need not be literally true. Some students find it easier to analyse CVP problems with multiple products in terms of bundles – in the Do-All illustration,
1 bundle would include 2 Do-Alls and 1 Superword.

Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012 USP = 2 × €200 + €130 = €530
UVC = 2 × €120 + €90 = €330
FC = €2,000
€530Q − €330Q − €2,000 = 0
Q
= 10 bundles
→ (2 Do-Alls/bundle) × 10 bundles = 20 Do-Alls
(1 Bundle/bundle) × 10 bundles = 10 Superwords This example illustrates how the CM helps firms decide which products to push. In the absence of production constraints, shifting the marketing efforts to high CM products – if successful – can increase profits dramatically. This is one reason why the dealers push loaded (high CM) rather than stripped-down cars. If, however, the firm faces production constraints, such as limited MH or DLH, then management should push products that have the highest CM per unit of the constraint.

Download 1.72 Mb.

Share with your friends:

1 ... 166 167 168 169 170 171 172 173 ... 469