cash flows from math lib - variable manufacturing overhead...

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ORIE 350 Notes: continued 1. CVP get rest - 2. budgeting a. interest is not included as an expense for ROI, etc 3. variances a. GET HELP ON VOLUME, ETC 4. capital budgeting a. if a loan has a IRR less than our required interest rate – good load b. if investment has an IRR higher than our hurdle rate – good investment c. if there is only outflows, then you cannot calculate IRR, if there is only inflows, then it is undefined (infinite) d. payback – period required to have complete returns on investments e. IRR – makes present value of future cash flows equal to present value today f. NPV – used for irregular cash flows as opposed to IRR g. Excel fucks up and doesn’t add in payment (original value) when computing NPV 5. variable and absorption costing a. variable treats only those costs of production that vary with output as product costs. Those would usually be direct material, direct labor, and
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Unformatted text preview: variable manufacturing overhead i. fixed manufacturing overhead is not treated as a product cost with this method. Rather it is treated as a period cost and charge d off as an expense each period. b. Comparison of both i. Deferral of fixed manufacturing costs under absorption costing ii. Differences in inventory values iii. When production exceeds sales, Net income is higher using absorption costing iv. When sales exceed production, net income is lowering using absorption costing 6. throughput costing, and other costing a. throughput: the rate at which the manufacturing system generates money i. calculated as sales revenue minus total period costs 1. GAAP rewards managers that build inventory 2. Variable costing causes managers to focus on reducing variable costs 3. throughput costing causes managers to focus on increasing production 4....
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