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Modern Tires Case Study

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(1)- A-Five step decision making:- The five step decision making processes which can be used by Modern Tires are: First, identify the problem and uncertainties. Most decision making starts with some sort of problem. The consumer develops a need or a want that they want to be satisfied. Second, obtain information. Gathering information before making a decision helps managers gain a better understanding. Third, make predictions about the future. Forth, make decision by choosing among alternatives. Once they have determined what will satisfy their want or need they will begin to seek out the best deal. This may be based on price, quality, or other factors that are important for them. They read many reviews and compare prices, ultimately …show more content…

Direct material ending balance= 50,000+ 480,000-360,000= 170,000 $ B-To find the work in process ending balance first

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= 2,000; Intersecting cell of 28 and 6% is 0.461297; Multiply number in cell by 2,000 = 922.59= There is 922.59 Interest Earned. $200,000 + $33,600 = $233,600; 200,000+922.59 = 200,922.5925x 1 = 25 6% divided by 1 = 6%; corresponding cell= 0.23300 Multiplied by 500,000 = 116,500 PV= Future Value / 1 + Annual Interest

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For example, if Lowes head manager tells each of its workers that they are going to only serve people who ask for help because he is tired of seeing time wasted. This manager is only going by his side of things. While step 7 is implemented it is not successfully used. While being used in the Lowes manner, “Implementing the Decision” as team to allow each hardware section to decide whether to ask each customer they see if they “need help,” or wait for the customers to ask the employees. Allowing for each team member to change methods and accomplish step 8 by “Evaluating the Decision.”

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Therefore, a company must anticipate how much other companies will charge for a similar product to have competitive pricing. This turns into an application of game theory. This happens when two firms (or

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Direct labor which is a human resource will be recalculated on the basis of sales of 3 million bikes. It may happen to produce 1 million products, they require 50000 employees but to produce 3 million products they require 200000 employees and to be on safer size, 10% extra labor will be recruited which will give a total of 220000 employees. Therefore it is clearly understood that the company can prepare their Labor Requirement budget directly from the sales budget. The same concept will apply to overhead and capital expenditures because overheads are directly proportional to the production and if the sales are high, product will automatically are high. Similarly quantity requirement will lead to the requirement of machines.

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Analysis c. How does Wilkerson’s existing cost system operate? Develop a diagram to show how costs flow from factory expense accounts to products. Costing systems help companies determine the cost of a product related to the revenue it generates. Two common costing systems used in business are traditional costing and activity-based costing.

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Step 5: Allocate overhead costs to products. The activity costs should be absorbed back into the individual products by multiplying the predetermined overhead rate for each activity by the level of cost driver activity used by the product Total activity costs can them be added to labour and material costs as normal.

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• Price may need to be adjusted downwards to hold off competitors and maintain market share. : The major pricing decision is whether to set a price above, below or about even with the competitors’ price. This influences Microsoft office to list their product in premium priced list, however, all the other products, which have alternatives in the market, are priced competitively. • Promotion continues to suggest the product is tried and true: Microsoft has a certain amount of promotion, which is mainly used for its premium products which have a large share of the market. Or the promotions are used for products which are in high competition segments like phones with collaboration in other companies.

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To remain profitable and provide value, Dyson should align its pricing objectives and initial pricing strategy with the firm’s mission and target consumers. Innovation—one of the firm’s core values—is costly. In addition, consumers often believe

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The buyer's bargaining power is moderate. There are many companies in market providing similar products. Because of this reason, buyers such as hospital and other healthcare organization have an option to

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In the case of hotels, suppliers create different consumer segments, we can relate to them as lower-end consumers, and higher-end consumers. Obviously, hotels cannot set the price that higher-end consumers are willing to pay, because all lower-end consumers will not be able to afford the good. Inversely, if hotels set the price that lower-end consumers are willing to pay, higher-end consumers gain huge consumer surplus, thus lowering the profit for the suppliers. In order to take the consumer surplus, hotels keep lower prices for some rooms in order to target lower-end consumers and offer some higher quality rooms (for example presidential suits) to target higher-end consumers. The difference in revenues providing different rooms and the same ones is seen below.

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Now, Cost of equity (Re) = 8.95% + 1.21×7.43% = 17.94% While determining the cost of debt we again used 8.95%,30 year U.S. Government Interest Rate given in Table B as the risk free rate plus 1.10% debt rate premium above Government rate, which is given in Table A. Cost of debt (Rd) = 8.95% + 1.10% =

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