Chapter 6 - Cost analysis. Chapter 6 examines closely related issues concerning the firm’s costs. Managers are continually seeking less costly ways to produce and sell the firm’s goods and services. | Chapter SIX Cost Analysis Delete each element of capability until system capability is totally gone and 30 percent of the cost will still remain. ~Norman Augustine, Augustine’s Laws For Discussion Allocating Costs A sporting goods firm recently experimented with producing a new line of shoes: cross-training shoes for boys 10 to 16 years old. How should the company’s fixed costs be allocated between this new shoe line and other lines? Relevant Costs Opportunity Costs & Economic Profits Economic Profit Starting a Business Fixed and Sunk Costs Business Behavior—Sunk Costs Cost of Production Short-Run Costs Long-Run Costs Short-Run versus Long-Run Cost Figure A Firm’s Total Costs Figure A Firm’s Average and Marginal Costs Figure Short-Run versus Long-Run Cost Returns to scale and scope Returns to Scale Economies of Scope E-Commerce and Cost Economies Flexibility and Innovation Figure U-Shaped, Long-Run Average Cost Figure Three examples of Long-Run Average Cost Cost | Chapter SIX Cost Analysis Delete each element of capability until system capability is totally gone and 30 percent of the cost will still remain. ~Norman Augustine, Augustine’s Laws For Discussion Allocating Costs A sporting goods firm recently experimented with producing a new line of shoes: cross-training shoes for boys 10 to 16 years old. How should the company’s fixed costs be allocated between this new shoe line and other lines? Relevant Costs Opportunity Costs & Economic Profits Economic Profit Starting a Business Fixed and Sunk Costs Business Behavior—Sunk Costs Cost of Production Short-Run Costs Long-Run Costs Short-Run versus Long-Run Cost Figure A Firm’s Total Costs Figure A Firm’s Average and Marginal Costs Figure Short-Run versus Long-Run Cost Returns to scale and scope Returns to Scale Economies of Scope E-Commerce and Cost Economies Flexibility and Innovation Figure U-Shaped, Long-Run Average Cost Figure Three examples of Long-Run Average Cost Cost Analysis and Optimal Decisions A Single Product The Shut-Down Rule Multiple Products Multiple Products: A Numerical Example Allocating Costs: Revisited Figure A Firm’s Optimal Output Figure Shutting Down Appendix to Chapter 6 TRANSFER PRICING A Market for Chips Transfer Pricing: A Numerical Example Figure Transfer . | Chapter SIX Cost Analysis Delete each element of capability until system capability is totally gone and 30 percent of the cost will still remain. ~Norman Augustine, Augustine’s Laws For Discussion Allocating Costs A sporting goods firm recently experimented with producing a new line of shoes: cross-training shoes for boys 10 to 16 years old. How should the company’s fixed costs be allocated between this new shoe line and other lines? Relevant Costs Opportunity Costs & Economic Profits Economic Profit Starting a Business Fixed and Sunk Costs Business Behavior—Sunk Costs Cost of Production Short-Run Costs Long-Run Costs Short-Run versus Long-Run Cost Figure A Firm’s Total Costs Figure A Firm’s Average and Marginal Costs Figure Short-Run versus Long-Run Cost Returns to scale and scope Returns to Scale Economies of Scope E-Commerce and Cost Economies Flexibility and Innovation Figure U-Shaped, Long-Run Average Cost Figure Three examples of Long-Run Average Cost Cost Analysis and Optimal Decisions A Single Product The Shut-Down Rule Multiple Products Multiple Products: A Numerical Example Allocating Costs: Revisited Figure A Firm’s Optimal Output Figure Shutting Down Appendix to Chapter 6 TRANSFER PRICING A Market for Chips Transfer Pricing: A Numerical Example Figure Transfer Pricing
