Wednesday, August 21, 2019
Statistics Essays Histogram
Statistics Essays Histogram A histogram is often used for representing data from a continuous variable which are summarised as a grouped frequency distribution. We use Excel to generate a Box to represents both the original and the corrected sets of data. The result is the following diagram: The different methods of diagrammatic representation of statistical data are bar chat, histogram, steam and leaf, and lineplots. The bar chart is more appropriate to data from a discrete distribution that are summarised using a frequency distribution. A histogram is often used for representing data from a continuous variable which are summarised as a grouped frequency distribution. A histogram is therefore similar to a bar chat, but is used to present continuous data. Steam and leaf gives a visual representation similar to the histogram but has the advantage that it does not lose the detail of the individual data point in the grouping. All these diagrams serve to examine the general shape of the distribution of data and help in making conjecture about values of quantities such as the median, the mean or the interquartile range. The last one, the lineplot, is often appropriate for smaller data sets, and can be useful for example to check whether toe data sets have a common varianc e. We denote by  and  the mean of the original set and the corrected set respectively. Then we have: i.e. . i.e. . Since we have an even number of observation, the median in this case will be the midpoint of the two middle observations. That’s: For the original set the median is ; For the corrected set the median is . The standard deviation of each data set is given by , where ,  are the different values in each data set. Hence: For the original set, , and for the corrected set . The lower quartile is defined to be the th observation counting from below, and the upper quartile is the same but counting from above. The interquartile is simply the difference between the upper and the lower quartile. We have the results in the following table. Original set Corrected set Lower quartile 3.815 3.7475 Upper quartile 3.3925 3.3925 Interquartile 0.4225 0.355 Question 2 Theoretically, the fact that 9 and 12 can be made up in as many ways as 10 and eleven 11 means that both sets of numbers should have the same probability to appear. The first thing that should be noted here is the fact that this is true if and only if when we throw a dice, all the numbers have the same probability of appearance, which if not always the case in practice when if when we need to allow consideration such as the on uniformity of the surface on which the dice is thrown, the angle and the velocity at which the is thrown, and even any deformation on the dice which all have an effect on the number that we will get. This problem thus highlights the impossibility of the probability to be an absolutely precise science as oppose to the other branches of mathematics. Question 3 The probability that a film processed on machine X is . Also, the quality of a film is independent of the quality of all the films processed before it. Thus the probability that three films randomly chosen from a batch coming from machine X is simply . Let’s denote by the event â€Å"the batch came from machine X†,  the event â€Å"the three film are all of good quality†. Clearly, what we are asking for is the probability that  and occur at the same time, which is the probability that the three films are all of good quality and the batch came from machine X. Using the theory of conditional probabilities, we have: . Since all  of all films are processed on machine X, then .  is simply the probability the probability that we calculated above. Thus . Hence: . Question 4 At each question only two things can happen: 1-the student can answer the correctly, and we denote by the probability that this does happen; 2-or the student can choose the wrong outcomes among the five possible, and we denote by  the probability that this does happen. Obviously we must have . Given that only five outcomes are available at each question, only one of which being correct, we have , and . The experiment that consists in answering a single question can therefore be viewed as a Bernoulli experiment with parameter . Hence, Taking all the multiple-choice examination can be viewed as Binomial experiment with parameter , where . Let’s  be the random variable representing the number of correct answer achieved by the student. Clearly, the distribution of  Binomial with parameter . The probability that the student passes the test is the , which is equivalent to . But: , where for each , . Hence,. This gives us , and thus the probability that the student passes the test is . Question 5 Bayes Formula Let E, F be subsets of some sample space S, and let Fc be the complement of F in S. We can express E as because in order for a point to be in E it must be either in E and F or in E but not in F. As EF and EFc are mutually exclusive we can write Applying this to the conditional probability equation gives . Consider the following problem: We have three boxes labelled U1, U2 and U3. Each of them contains a mix of white and red balls. The proportion of white balls is each of them is as follows: 30% for U1, 60% for U2, 40% for U3. We draw one ball from U1; if it is a white ball then we draw a ball in U2, otherwise we draw a ball in U3. We would like to find the probability that the first draw gives a red ball knowing that the second draw has given a given a white ball. We denote by the event â€Å"the second draw is made in the box Ui†,  the event â€Å"the second draw gives a white ball†. Clearly, if the first draw gives a red ball, then the second can be made only in U3. Thus the probability that the first draw gives a red ball knowing that the second draw has given a given a white one is exactly the same as the probability that the second ball comes from U3 knowing that it is a white ball, which is nothing else than . Using the Bayes’ formula, we have .                             (1) It can be easily seen that  and  are mutually exclusive as a the second draw can not happen in both U2 and U3 simultaneously. Also since the second draw can happen only either in U2 or U3, then  gives all the possibility on where the second draw can happen. That is why . The top of the fraction (1) is simply application of the conditional probability. Hence:
Tuesday, August 20, 2019
Stylishly Reborn Alice In Wonderland Film Studies Essay
Stylishly Reborn Alice In Wonderland Film Studies Essay The original version of Alices Adventures in Wonderland by Lewis Carroll is a well-known fairy tale for describing a fantasy world populated by peculiar creatures. A girl named Alice who falls down a rabbit hole connected to a fantasy world described as Wonderland. The newly released movie Alice in Wonderland in 2010 by the director Tim Burton portrays a nineteen-year-old Alice who, 13 years after her previous visit, returns for the first time as a young girl. Tim Burton has a recognizable and distinctive style and thematic content which turn his work into an oeuvre and themselves into auteur which means that Tim Burton slightly changed the original Alice to his style of Alice by adding some different story in the movie. Burton is one such filmmaker, a director who has earned the status of auteur. By portraying grown up Alice, Tim Burton addresses some of both dark and bright sides of the adults society in a stealthy way described as Underland in the movie with visu al elements under the predominant perspective in the shape of fairy tale. In other words, there are hidden sides of Alice in Wonderland such as the use of drugs, gender roles and social hierarchy buried under the fairy tale. This paper analyzes how Tim Burton expresses visual elements to imply hidden meanings of the dark and problematic side and some of the bright side of the adults real society. Kim 2 The movie Alice in Wonderland, released in 2010, brought freshness to the storyline and came out with even deeper meanings implied visually keeping the classic story of Alice in Wonderland by the director Tim Burton. The film adapts many elements besides Carrolls book, rendering it digressive and derivative in the storyline. The movie should not be considered only as a fairy tale for children. Because of the directors style and narrative choices, the movie contains more actual emotional connection by using high quality techniques such as camera movements, colors, angles and lightings. The movie remains a fairy tale but under the surface of the story, it also contains deep psychological structures expressed by the director Tim Burtons style of visual elements such as graphics, camera movements, the contrast between light and shade, and textures in the frames having some deeper messages such as the use of drugs or the dictatorship according to the social class. These visual elements al low the director to represent some hope for the future real society and some of the corrupted adults world hidden under the innocence of a fairy tale. I have naturally thought that no matter what is shown on the movie screen, Alice in Wonderland should always be for innocent children with full of imagination. However, the movie Alice in Wonderland by Tim Burton should be regarded as a story of illustrating some parts of corrupted society with the aesthetic visuals shown on the screen. Cleaver and Erdman, who wrote Changing Images Of Alice, reported that analysis of images of Alice found that although the character of Alice was presented differently through time, there were no major changes to the story (Screen 12). The reason is because there had been no remarkable changes in the story of Alice in Wonderland other than Tim Burtons version of it. Tim Burton Kim 3 tried adapting some new point of views by illustrating Alice as a nineteen-year-old girl which implies that she is going to be an adult and enter the adults society soon so that Tim Burton can address deeper messages into the movie with his own style. Daniel Sieden who is engaged in education scholar said that Tim Burton explained the goal of the movie Alice in Wonderland is to try to make it an engaging movie with real emotional connection that he had never felt in other Alice stories (Examiner). The reason why Tim Burton made the film is because to make the original Alice in Wonderland even unique with his own story line making it as Alices second trip to Wonderland which is changed to Underland for grown up Alice. Tim Burton sets up the situation that she does not remember ever being there in the past. Alice mistakenly called Wonderland to Underland in the movie so it is called Underland through the movie which I think was great transition word from Wonderland which implies more c hildrens world with full of curious to Underland which more implies adults dark side of the real world. By setting Alice not remembering visiting Wonderland, Tim Burton connects emotional attachment of being in real Underland reflecting the real world in his style. Moreover, according to Niemiec, author of A Wonderland Journey Through Positive Psychology Interventions, said that though it is a continuation of the classic story in many respects, it is also a unique tale in its own right. Alice is now a 19-year-old, in the movie and she must decide whether she wants to accept the marriage proposal of Hamish, the son of a lord. As she wanders away from the engagement party to reflect on the proposal, her curiosity leads her down the rabbit hole into Wonderland which was referred as Underland in the film. Alices emergence as a heroine is not only about helping others but also about identity, autonomy, competence, and self-development. Burtons version is superior in creativity and Kim 4 depth, as well as more resonant with the themes of positive psychology (2). As Niemiec mentions, Tim Burton described well in fantasy way by setting up Alice as a grown up woman. Tim Burton added a chain of a connection between teenagers turning to adults and entering the real grown-up world. Tim Burton pursues his own style of Alice in Wonderland not only with the story of it but also astonishing visual elements generated based on the computer-animated skills. He uses a variety of formal structures such as camera movements, angles, lighting styles, colors, shot framings and visual transitions in each scene in his movie. These various uses of the techniques support discovering some hidden meanings such as the use of drugs, gender roles, and social hierarchy under the surface of the storyline. Throughout the whole movie, there are hundreds of scenes that represent the adults society such as the use of drugs, gender roles and social hierarchy. There are some brief examples showing the use of drugs, gender roles and social hierarchy. Simply, smoking Caterpillar is one of the scenes that shows the use of drugs. For the gender role, First of all, the genre of Alice in Wonderland by Tim Burton is an adventurous fantasy. Therefore, there were a lot of scenes that can never happen in the real world even if the movie actually reflects the real world. Thus, there were a lot of scenes that can be interpreted to the use of drugs. When I decided to criticize Alice in Wonderland in my own argument, I personally thought that the film has some sort of allegory for a drug trip which I had never thought of when I read the original Alice in Wonderland in a book when I was a child. It was hard to not see all of the use of drugs once I realized they are in the movie expressed well by visual elements. According to the Unreality Magazine, actually many scenes can be interpreted as the uses of the drugs in Alice in Wonderland such as cocaine, nitros oxide, LSD, crystal meth, marijuana and some more. Almost every scene implied some popular drugs that are big problems in the real world. The way of drawing each scene with the various uses of colors, camera movements, and angles, some characters in the movie can be discovered as using drugs by some changes of their behaviors. For example, almost right after entering the Underland, Alice looks for the Caterplillar called Absolem. The Caterpillars house was hidden by a smoke which seems to be a smoke from cigarettes. At this moment of the scene, the audience can notice that the Caterpillar is definitely smoking a cigarette. When Alice meets the Caterpillar, the Caterpillar is holding a pipe while he talks with Alice. Alice coughs several times because of the smoke from the cigarette. This scene is fairly obvious that the Caterpillar is smoking a cigarette which contains nicotine. Also, Ti m Burton sets Alice and the Caterpillar face each other while talking to each other when the Caterpillar is smoking. This scene reflects the real world that adults smokes in front of people while talking with some people even if they are children no matter how young they are. It implies that adults do not really care the danger of smoking cigarettes to growing up children. This scene addresses problematic side of the corrupted world. People do not actually realize cigarettes are also a kind of drugs. Therefore, they just smoke cigarettes in front of children and the scene shows how adults are not aware of children. Unlike some of the other movies of my childhood such as The Little Mermaid or Beauty and the Beast, Alice had no inclination to find her way to Prince Charming. She instead embraced a childlike curiosity that got her both into trouble and out of it. The gender roles played out in Disneys newer, live action version of Alice in Wonderland are a bit different than both Carolls original book and Disneys original film, however. The fact that the new Alice in Wonderland features a much older Alice, on the verge of marriage, exposes a bit of our societys infatuation with portraying a much older image as favorable (can kids just not be kids anymore?) This idea of marriage helps exemplify the gender roles present, however. There is much pressure on Alice to not only marry the geeky red-headed aristocrat, but his mother also assumes she will fill her proper gender role by spouting off all of his dietary needs at the very start of the film. Alice seems to go along with it at first, but later catches her sisters husband cheating-this seems to be the turning point in her attitude, and possibly the cause of her running away after the proposal. It is important to note that within Alice in Wonderland most of the leadership roles are fulfilled by women-the Queen of Hearts is, of course, the particularly brutal ruler. The White Queen, on the other hand, is the softer, feminine queen that is slowly gaining discreet support. The gender roles of these two queens are very important, especially when you take into consideration the effect their predicament has on Alice. The Queen of Hearts demonstrates that in order to get ahead you must take on a violent and fear-inducing persona-traditionally masculine in our society. The White Queen embraces no such violence, and states a few times within the film that acting violently is against her vows. However, she has no qualms sending others to do her dirty work-hence sending Alice to slay the Jabberwocky (cutting off his head, no less). Though the main leadership roles of Alice in Wonderland are held by females, it seems the brains behind the operation in both cases happen to fall with men-the Red Knight for the Red Queen, and most ironically the Mad Hatter for the White Queen. This gives the gender roles an interesting place. The Red Queen is comically shown to be quite stupid-and rather naÃÆ' ¯ve as well. The manipulative Knight rules Wonderland through the Queen. The White Queen may be the ruling figurehead trying to rise up in power, but it is the Mad Hatter that leads and organizes the resistance against the Red Queen. Really, the White Queen does little other than stand as a symbol. I commended the makers of Alice in Wonderland at first for allowing the White Queen to retain her femininity, but it was because of her particular lack of action that I was a bit saddened. She needed Alice to save her kingdom and stand as her champion, but again, Alice had to take on masculine traits in order to do this. Now, I have no problems with females embracing courage within childrens movies. Empowering girls is a great action to take, but I feel at the same time that it is a bit archaic that in order to succeed one must take on masculine characteristics. In this way, the gender roles within Alice in Wonderland are a bit hegemonic in nature-perpetuating the idea of masculine as ideal in our society. This ideal is perpetuated in the end of the film. I loved that Alice did not end up marrying, and became a part of the company her father left behind-a positive message showing that Alice indeed has the adventurous nature of her father. But forsaking the traditional female gender role to embrace a more masculine version also isnt the answer. What would have been the proper ending for Alice in Wonderland? There is no easy answer here. I dont believe that the ending was improper, or sexist. It is obviously attempting to empower young girls to seek new horizons, which I entirely support. My suggestion is perhaps to not make the contrast between feminine and masculine quite so sharp. It shouldnt be settle down and be a housewife vs. adventure with your fathers trade route and see the world, after slaying a hideous creature. Gender roles today should be much more fluid in their interpretation, I believe. Why such a stark dichotomy between masculine and feminine within Alice in Wonderland, as well as our own culture? Im not saying we should perpetuate historical female gender roles, but we shouldnt demonize them either. The point is to consider all gender attributes to be equal, and just as likely within every person. Alice in Wonderland does a good job of showing females embracing masculine characteristics (in bot h positive and negative ways), but they do little in showing men with fluid gender roles, positively embracing typically female gender attributes. I think Alice in Wonderland made a good effort at empowering young girls to overcome their traditional gender roles to broaden horizons. I believe by giving the White Queen highly feminine traits, and the Red Queen negatively violent traits, we see a step in the right direction in getting away from idealized aggressive masculine traits. Though there are some obvious issues, I would say Alice in Wonderland did a relatively good job in promoting healthy gender roles to the youth of our culture. But more work is still yet to be done.
Monday, August 19, 2019
Pretentious Mothers in Williams’ The Glass Menagerie and Amy Tans’ Two
In the play The Glass Menagerie by Tennessee Williams and the short story â€Å"Two Kinds†by Amy Tan, a theme of embattled control is established through the association with their children. William’s long-winded Amanda is an overpowering, delusional Southern belle mother. Dead set on finding her slightly handicapped daughter Laura a suitable husband, and dictating how her creative, yet bored, son Tom should conduct himself in life. Amanda, through her nagging and domineering instructions over everything each of her children do, from how they eat, to how they should live out their lives, pushes them into mental seclusion. The subsequent overbearing behavior by Amanda in due course drives Tom away leaving Laura in complete solitude with her mother. In a likewise manner, Tan depicts her character Suyuan as a very ambitious overconfident Chinese mother with visions of grandeur for her daughter Jing-Mei. Suyuan after being influenced by a television show decides th at Jing-Mei is to become a child prodigy. Through strict educational instructions, she drives Jing-Mei to a point of contentious revolt. The consequences of Suyuan’s authoritarian treatment to make Jing-Mei a star result in an outburst, after a talent show, causing a deep rift of silence between the two that lasts for twenty years. The parental domineering nature of Amanda in The Glass Menagerie and Suyuan in â€Å"Two Kinds†ultimately fail to force any lasting influential direction on their children, compelling them to follow entirely contradictory paths than the ones preferred by their mothers, forcing their children into rebellion. Nonetheless both mothers wield strong authority over their children, and the motives behind their dictatorial control are directly rela... ...ious physical and mental control over her daughter to become a child prodigy results in a belligerent resistance by Jing-mei. The confrontation between Suyuan and her daughter ultimately drives a rift between the two that lasts for many years. In summary Amanda and Laura would appear to have yielded similar disappointing results by their endeavors to control the destinies of the children. Works Cited Tan, Amy. "Two Kinds." Kirszner, Laurie G. and Stephen R. Mandell. Literature: Reading, Reacting, Writing, Compact Seventh Edition. Ed. Karen Mauk. 7th. Upper Saddle River, New Jersey: Michael Rosenberg, 2009. 694-702. Williams, Tennessee. "The Glass Menagerie." Kirszner, Laurie G. and Stephen R. Mandell. Literature: Reading, Reacting, Writing, Compact Seventh Edition. Ed. Karen Mauk. 7th. Upper Saddle River, New Jersey: Michael Rosenberg, 2009. 1628-1677. Pretentious Mothers in Williams’ The Glass Menagerie and Amy Tans’ Two In the play The Glass Menagerie by Tennessee Williams and the short story â€Å"Two Kinds†by Amy Tan, a theme of embattled control is established through the association with their children. William’s long-winded Amanda is an overpowering, delusional Southern belle mother. Dead set on finding her slightly handicapped daughter Laura a suitable husband, and dictating how her creative, yet bored, son Tom should conduct himself in life. Amanda, through her nagging and domineering instructions over everything each of her children do, from how they eat, to how they should live out their lives, pushes them into mental seclusion. The subsequent overbearing behavior by Amanda in due course drives Tom away leaving Laura in complete solitude with her mother. In a likewise manner, Tan depicts her character Suyuan as a very ambitious overconfident Chinese mother with visions of grandeur for her daughter Jing-Mei. Suyuan after being influenced by a television show decides th at Jing-Mei is to become a child prodigy. Through strict educational instructions, she drives Jing-Mei to a point of contentious revolt. The consequences of Suyuan’s authoritarian treatment to make Jing-Mei a star result in an outburst, after a talent show, causing a deep rift of silence between the two that lasts for twenty years. The parental domineering nature of Amanda in The Glass Menagerie and Suyuan in â€Å"Two Kinds†ultimately fail to force any lasting influential direction on their children, compelling them to follow entirely contradictory paths than the ones preferred by their mothers, forcing their children into rebellion. Nonetheless both mothers wield strong authority over their children, and the motives behind their dictatorial control are directly rela... ...ious physical and mental control over her daughter to become a child prodigy results in a belligerent resistance by Jing-mei. The confrontation between Suyuan and her daughter ultimately drives a rift between the two that lasts for many years. In summary Amanda and Laura would appear to have yielded similar disappointing results by their endeavors to control the destinies of the children. Works Cited Tan, Amy. "Two Kinds." Kirszner, Laurie G. and Stephen R. Mandell. Literature: Reading, Reacting, Writing, Compact Seventh Edition. Ed. Karen Mauk. 7th. Upper Saddle River, New Jersey: Michael Rosenberg, 2009. 694-702. Williams, Tennessee. "The Glass Menagerie." Kirszner, Laurie G. and Stephen R. Mandell. Literature: Reading, Reacting, Writing, Compact Seventh Edition. Ed. Karen Mauk. 7th. Upper Saddle River, New Jersey: Michael Rosenberg, 2009. 1628-1677.
Sunday, August 18, 2019
juniper :: essays research papers
Western Juniper’s Growing Influence in Eastern Oregon Estimated Acreage          1936          1988      > 10 percent cover     420,000          2.2 million      Total area with juniper               6 million Volume of current stand     --------     467 million cubic feet Private landowners own 58 percent of the area and 49 percent of the volume BLM is the principle owner of public lands with juniper – 79 percent of publicly owned juniper forest Over  ½ of the present juniper forest became established between 1850 and 1900 (greatest increase came between (1879 and 1918).      Rate of Establishment           1650 – 1800          2900 acres/year           1800 – 1850          8200 acres/year           1850 – 1900          23,100 acres/year           1900 – 1940           6000 acres/year 52 percent of juniper grows in the 10 – 15 inch precipitation zone 41 percent of juniper grows between 4000 – 5000 ft. in elevation Juniper crown intercepts more that  ½ of the annual precipitation Juniper transpires water year round compared to seasonal transpiration of other vegetation Juniper roots can extend several times the crown diameter Almost 50 percent of juniper forests have crown covers 10-20 percent Juniper woodlands have up to 10 times the erosion rate of sagebrush – grass ecotypes (Buckhouse et. al.) Average cubic volume of wood per acre in juniper forests is 200 cubic feet Over half the area of juniper forests have fewer than 50 trees per acre Counties with more that  ½ million acres of juniper           Crook           857,000               Harney          884,000           Grant          539,000               Jefferson     582,000 Information from: Gedney, D.R. et.al. (1999). Western Juniper in Eastern Oregon. USDA Forest Service. Pacific Northwest Research Station. General Technical Report, PNW-GTR-464, November 1999. Buckhouse, J. et al. (1982). Potential Sediment Production within Vegetative Communities in Oregon’s Blue Mountains. Journal of Soil and Water Conservation. Vol. 37, Number 2. Pgs. 120 – 122. Tim Deboodt OSU Crook County Extension Agent Prineville, OR The Drying of Oregon Potential water use of Western Juniper within current juniper area 500,000 acre feet to 920,000 acre feet per year      This is the equivalent of a river flowing year round at 680 to 1000 cfs per day
What Do We Really Know About The Beginning Of Time? Essay -- Essays Pa
What Do We Really Know About The Beginning Of Time? Most people take for granted important discoveries, such as the Big Bang. It is widely accepted that the Big Bang created the universe, and while most people can explain the basic theory behind it, little else is common knowledge. Calvin of Calvin and Hobbes called it â€Å"The Horrendous Space Kablooie,†but many people do not grasp the enormous concept (Milne). How exactly do you prove how time began? A writer for Scientific American put this subject into perspective: â€Å"If you’re religious, this is like looking at God†(Milne). Cosmology is the study of the universe, its workings, how it was made, and what it will become. How the universe began has always been a wonder to humans. One of the first widely accepted theories in the 1700s, called infinite expanse, explained that the universe is infinite, with no beginning and no end. This theory had more to do with the philosophy of the time than actual science; however, there was no way to prove or disprove the theory. It was not until the 1920s that Edwin Hubble was able to study the deep sky, objects very faint and far away. In 1929, Hubble proved that stars are clumped in large galaxies, and many galaxies exist beyond our own in a universe that takes light billions of years to travel across. Not only did Hubble prove that galaxies exist, but by observing redshifts (a shift toward red in the visual spectrum of light because of the receding effect of an object) also proved that the galaxies were getting farther apart. Shortly after Hubble’s discovery, a Belgian priest and mathematics teacher by the name of Georges Lemaitre published his own theory that was based off of Hubble’s observations. He said that if the galaxies in the u... ... as many more significant discoveries are bound to happen in the near future that will help clear up the situation (Milne). It is certainly an age for discovery, and understanding newly published discoveries does not require a doctorate. While astrophysics is not everyday, practical knowledge, it can be very impressive to undersand and explain to others how time began. Works Cited â€Å"Big Bang Theory.†Encarta Encyclopedia Standard 2004. 2003 PC ed. Glanz, James. â€Å"Accelerating the Cosmos.†Astronomy.com. 2001. 25 Mar. 2004. Lacey, Jake. â€Å"Milky Way III.†http://members.cox.net/llacey14/jakestars.html. 2003. 29 Mar. 2004. Milne, Rich. â€Å"The Origin Of The Universe.†http://www.leaderu.com/orgs/probe/docs/origuniv.html. 1995. 25 Mar. 2004. Schomaker, William. â€Å"Physicists Put Brakes on Accelerating Universe Theory.†Astronomy.com. 2002. 25 Mar. 2004.
Saturday, August 17, 2019
The Strategic Management Process
In the current business environment, knowledge evolves rapidly and the useful life span of organizational skills is decreasing, which means survival and competitiveness of an organization is linked to its ability to learn and include its findings in their strategic management process. Having cited the criticality of strategic management on the survival of today's business, it is of paramount importance that in this weeks issue I deal on the subject of Strategic Management Process.Key Definitions I would like to start by defining some key words and phrases that are associated with the strategic management process. A Strategy is a company's long-term plan for how it will balance its internal strengths and weaknesses with its external opportunities and threats to maintain a competitive advantage. Strategic management is the process of identifying and executing the organization's mission by matching its capabilities with the demands of its environment.Strategic planning is the process by which the guiding members of an organization envision its future and develop the necessary procedures and operations to achieve that future (Goodliest, teal, 1992). This definition takes us away from the notion that strategic landing is a staff Job and focuses us more on process that requires senior leaders of an organization to set its strategic direction. Strategic plans are important because strategic planning to a few elite in an organization, it should be noted that there different levels of strategic planning.These are corporate level strategies, business level strategies and functional level strategies. The concept of strategic management builds on the definition of strategic planning, recognizing that although planning is the prelude of strategic management, it is not sufficient if it is not followed by the plowmen and implementation of the plan and the evaluation of the plan in action. Strategic management is therefore a systems approach to identifying and making the neces sary changes and measuring the organization's performance as it moves toward its vision.It is the process where managers establish an organization's long term direction, set specific performance objectives; develop strategies to achieve these objectives in light of all the relevant internal and external circumstances, and undertake to execute the chosen direction. The strategic management process is Hereford a series of steps that formulates the strategic planning, implementation and evaluation. This process is depicted by many model/drawings which basically depict the strategic management steps. Most of these models only differ in to the extent to which they simplify the process but they generally agree on major elements.Strategic Management Process Model Fig. 1 It can be seen from fig 1 above that strategic management process is an iterative process as depicted by the arrows. Strategic planning comprises (see Figure 3-1) the first 5 of 7 strategic management tasks: (1) Defining th e business and developing a session, (2) Evaluating the firm's internal and external strengths, weaknesses, opportunities, and Threats, (3) formulating a new business statement, (4) translating the mission into strategic goals, and (5) formulating strategies or courses of action.The entire 7- Step 1: Define the Current Business Every company must choose the terrain on which it will compete?in particular, what products it will sell, where it will sell them, and how its products or services will differ from its competitors'. Therefore, the most basic strategic decisions managers make involve deciding â€Å"what business†their firms should be in: For instance, in terms of the products or services they'll sell the geographic locales in which they'll sell them, and how they'll distinguish their products or services from competitors'.They ask, â€Å"Where are we now in terms of the business we're in, and what business do we want to be in, given our company's opportunities and thr eats, and its strengths and weaknesses? †Managers then choose strategy to drive the company to achieve the vision. This may be better enshrined in a vision statement as a sort of shorthand to married how they see the business down the road. The company's vision is a general statement of its intended direction that shows, in broad terms, â€Å"what they want to become. Two management gurus, Warren Bennie and Bert Mans say, To choose a direction, a leader must first have developed a mental image of a possible and desirable future state for the organization. This image, which we call a vision, may be as vague as a dream or as precise as a goal or mission statement. The critical point is that a vision articulates a view of a realistic, credible, attractive future or the organization, a condition that is better in some important ways than what now exists.Visions are usually in longer terms, broader images; managers also formulate mission statements to communicate the purpose of t heir (company) present existence. Whereas visions usually lay out in very broad terms what the business should be, the mission lays out in broad terms what their main tasks are now. The mission statement of the company that I work for is; ‘To be the preferred supplier of electricity regionally and abroad. ‘ The mission statement is, to bring convenience to our valued customers through provision of electricity and related services. ‘ Step 2: Perform External and Internal Audits (Environmental scanning).Strategic planning starts by methodically analyzing external and internal situations. The strategic plan should provide a direction for the firm that makes sense, in terms of the external opportunities and threats the firm faces and the internal strengths and weaknesses it possesses. To facilitate this strategic external/internal audit or environmental scanning, we use SOOT analysis. This involves using a SOOT chart to impel and organize the process of identifying com pany Strengths, Weaknesses, Opportunities, and Threats. When doing internal audits or scan companies should check for their strength and weakness.They should capitalist on their strength to create a competitive advantage in their industry, strengths can be in the form of a hardworking organizational culture which they can ride upon in order to have an edge over other like firms. However companies should also not turn a blind eye on their weaknesses. Weakness doesn't mean that one is incapable but being aware of them calls for a decision to avert them. Weakness can be in the form of lake of strategic objectives that are meant to reduce the effects of the weaknesses. External audits scan for Opportunities and Threats.These can be at micro and macro levels. At macro level businesses should look into the Political, Economic, Social, Technical, Environmental and Legal (PESTLE) environment for threats and opportunities. Step 3: Formulate New Business and Mission Statements In light of the situation analysis (environmental scanning), leaders/managers should determine what their new business should be, in terms of what products it will sell, here it will sell them, and how its products or services will differ from its competitors? This may call for establishing or crafting new Mission and Vision statements to stir the company.Step 4: Translate the Mission into Strategic Goals Saying the mission is â€Å"to provide electricity' is one thing; implementing that mission for your managers is another. The firm's managers need strategic goals. What exactly does that mission mean, for each department, in terms of how we'll boost electricity supply? The Government of Zanzibar has recently adopted a new appraisal system or all parallels, government ministries and institution under its new economic blueprint called JIM-ASSET. The system is called Integrated Results Based Management System.Under this system organizational missions are translated into tangible short-term, mid-ter m and long-term goals which are measurable and specific. Strategic goals are the steps to the envisioned future. Not having them is like sitting for a meeting and coming up with no resolutions or action items. Step 5: Formulate Strategies to Achieve the Strategic Goals Again, a strategy is a course of action. It shows how the enterprise will move from the business it is in now to the business it wants to be in (as laid out by its vision, mission, and strategic goals), given the firm's opportunities, threats, strengths, and weaknesses.The strategies bridge where the company is now, with where it wants to be tomorrow. The best strategies are concise enough for the manager to express in an easily communicated phrase that resonates with employees. These are best described as strategic objectives. Keeping the strategy clear and concise helps ensure that employees all hare that strategy and so make decisions that are consistent with it. Specific performance targets are needed in all areas affecting the survival and success of a company, and they are needed at all levels of management.The act of establishing formal objectives not only converts the direction the company is headed into specific performance targets to be achieved but also guards against drift, aimless activity, confusion over what to accomplish and loss of purpose. Step 6: Implement the Strategies â€Å"What we think, know or believe in is, in the end of little consequence. The only consequence is†¦. What we do. (Hands, 1995). Strategy implementation means translating the strategies into actions and results?by actually hiring (or firing) lines.Strategy implementation involves drawing on and applying all the management functions: planning, organizing, leading, and controlling (POOL). According to Tom Peters and Robert Waterman, a model termed the Seven â€Å"S†Model provides a framework of implementation of a strategic change. Structure changes may have to be made to cope with strategic cha nges, while systems may need also with the new strategic direction. Skills may need to be upgraded or reshuffled properly. Style or culture of management may need also to be readjusted accordingly.All these have their energy directed to achieve the strategic goals (Vision) as depicted on fig 2 above. Step 7: Evaluate Performance Strategies don't always succeed. For example, TN-Holdings failed when it massively rolled out its Subs across the nation in order to be closer to where its customers are. The strategy failed dismally in the following year because of a huge liquidity crunch that is currently bedeviling our economy?because of evaluation management quickly re-strategists and came up with a new business model. Managing strategy is an ongoing process.
Friday, August 16, 2019
Decision Making – Cost Accounting
Decisions Involving Alternative Choices Structure: 13. 1 Introduction Objectives 13. 2 Decision Making 13. 3 Types of Costs 13. 4 Types of Choices Decisions 13. 5 Make or Buy Decisions 13. 6 Addition / Discontinuance of a Product line 13. 7 Sell or Process Further 13. 8 Operate or Shut down 13. 9 Exploring New Markets 13. 10 Maintaining a desired level of profit 13. 11 Summary 13. 12 Terminal Questions 13. 13 Answers to SAQs and TQs 13. 1 Introduction In the previous unit we learnt about Marginal Costing.Marginal costing is the ascertainment of marginal cost and of the effect on profit of changes in volume by differentiating between fixed costs and variable costs. Marginal cost is the amount at any given volume of output by which aggregate costs are changed if the volume of output is increased or decreased by one unit. Marginal costing is a very useful tool for management because of its applications. It is used in providing assistance to the management in vital decision-making both s hort term and long term. Differential analysis is the process of estimating the consequences of alternative actions that a decision maker may take.It is used both for short term and long term decisions. Short term decisions relates to fixing price for the product, selecting a suitable product mix, diversification of the product etc while long term deals with capital budgeting decisions. Objectives After studying this unit, you should be able to:  · Explain the steps involved in decision making process  · Know various types of decision choices  · Analyze and interpret various decision choices 13. 2 Decision Making Decision making is the process of evaluating two or more alternatives leading to a final choice known as alternative choice decisions.Decision making is closely associated with planning for the future and is directed towards a specific objective or goal. Decision model contains the following decision-making steps or elements: 1. Identify and define the problem 2. Iden tify alternative as possible solutions to the problem. 3. Eliminate alternatives that are clearly not feasible 4. Collect relevant data (costs and benefits) associated with each feasible alternative 5. Identify cost and benefits as relevant or irrelevant and eliminate irrelevant costs and benefits from consideration. . Identify to the extent possible, non-financial advantage and disadvantage about each feasible alternative. 7. Total the relevant cost and benefits for each alternative 8. Select the alternative with the greatest overall benefits to make a decision 9. Implement or execute the decision 10. Evaluate the results of the decision made. 13. 3 Types of Costs A decision involves selecting among various choices. Non routine types of decisions are crucial and critical to the firm as it involves huge investments and involve much uncertainty.Short term decision making is based on relevant data obtained from accounting information.  · Relevant Cost are costs which would change as a result of the decision.  · Opportunity costs are monetary benefits foregone for not pursuing the alternative course. When a decision to follow one course of action is made, the opportunity to pursue some other course is foregone.  · Sunk costs are historical cost that cannot be recovered in a given situation. These costs are irrelevant in decision making.  · Avoidable costs are costs that can be avoided in future as a result of managerial choice.It is also known as discretionary costs. These costs are relevant in decision making.  · Incremental / Differential costs are costs that include variable costs and additional fixed costs resulting from a particular decision. They are helpful in finding out the profitability of increased output and give a better measure than the average cost. Self Assessment Questions: 1. Relevant Costs are costs which would _________as a result of the decision. 2. ___________ are historical cost that cannot be recovered in a given situation. 3.Opp ortunity costs are _________________for not pursuing the alternative course 4. ____________ is also known as discretionary cost. 13. 4 Types of Choices Decisions The application of incremental / differential costs and revenues for decision making is known as decision situations or types of choice decisions.  · Make or Buy decisions  · Selection of a suitable product mix  · Effect of change in price  · Maintaining a desired level of profit  · Diversification of products  · Closing down or suspending activities  · Alternative course of action  · Own or Lease  · Retain or Replace Change or Status quo  · Export or Local sales  · Expand or Contract  · Take or Refuse order  · Place special orders  · Select sales territories  · Sell at split-up point or process further. 13. 5 Make or Buy Decisions Make or buy decisions arise when a company with unused production capacity consider the following alternatives a) To buy certain raw materials or subassemblies from outside suppliers b) To use available capacity to produce the items within the company. c) The quality and type of item which affects the production schedule d) The space required for the production of item ) Any transportation involved due to the location of production facility f) Cost of acquiring special know how required for the item. Illustration 1: The Anchor Company Ltd produces most of its electrical parts in its own plant. The company is at present considering the feasibility of buying a part from an outside supplier for Rs. 4. 5 per part. If this were done, monthly costs would increase by Rs. 1,000 The part under consideration is manufactured in Department 1 along with numerous other parts. On account of discontinuing the production of this part, Department 1 would have somewhat reduced operations.The average monthly usage production of this part is 20,000 units. The costs of producing this part on per unit basis are as follows. |Material |Rs. 1. 80 | |Labour (half-hour) | 2. 40 | |Fixed overheads |0. 80 | |Total costs |5. 00 | Solution [pic] The company should continue the practice of producing the part in Department1. Illustration 2: ABC ltd plans utilize its idle capacity by making components parts instead of buying them from suppliers.The following are the data available for decision to make or buy: | |Unit cost | |Direct Material |12. 5 | |Direct Labour |8. 0 | |Variable manufacturing overhead |5. 0 | The company purchases the part at a unit cost of Rs. 30. The company has been operating at 75% of normal capacity. Fixed manufacturing cost is 17 lakhs. The cost to manufacture 50000 units is:  |Unit cost |Total cost | |Direct material |12. 5 |6,25,000 | |Direct labour |8. 0 |4,00,000 | |Variable manufacturing o/h |5. 0 |2,50,000 | |Total incremental cost |25. 5 |12,75,000 | |Cost to purchase part |30. |15,00,000 | |Net advantage in parts production |4. 5 |2,25,000 | Inference: The total incremental cost by producing the part in-house is Rs. 25 . 50 while the cost incurred on purchase of the part from suppliers is Rs. 30. 00. There is a clear advantage to the company to produce the part in-house. 13. 6 Addition or Discontinuance of a Product line or Process The decision to add or eliminate an unprofitable product is a special case of product profitability evaluation.When a firm is divided into multiple sales outlets, product lines, divisions, departments it may have to evaluate their individual performance to decide whether or not to continue operations of each of these segments. Illustration 3: The Hi-tech Manufacturing Company is presently evaluating two possible processes for the manufacture of a toy, and makes available to you the following information: |Particular |Process A |Process B | | |Rs. Rs. | |Variable cost per unit |12 |14 | |Sales price per unit |20 |20 | |Total fixed costs per year |30,00,000 |21,00,000 | |Capacity (in units) |4,30,000 |5,00,000 | |Anticipated sales (next year, in units) |4,00,000 |4,00,000 | You are required to suggest: ) Which process should be chosen? Substantiate your answer. ii) Would you change your answer as given above if you were informed that the capacities of the two processes are as follows: A 6, 00,000 units; B 5, 00,000 units? Why? Substantiate your answer. Solution Comparative Profitability Statement |Particular |Process A |Process B | | |Rs. |Rs. | |(i) Selling price per unit |20 20 | |Variable cot per unit |12 |14 | |Contribution per unit |8 |6 | |Total annual contribution (as per anticipated sales) |32,00,000 |24,00,000 | |Total fixed costs per year |30,00,000 |21,00,000 | |Total Income |2,00,000 |3,00,000 | |Process B may be chosen | | | |Total contribution (if utilized to present capacity and sold) |34,40,000 |30,00,000 | |Less : Fixed costs |30,00,000 |21,00,000 | |Total Income |4,40,000 |9,00,000 | |Process B may be chosen | | | |(ii) Total contribution (if capacity of A of 6,00,000 units and|48,00,000 |30,00,000 | |of B 5,00, 000 units) | | | |Less : Fixed costs |30,00,000 |21,00,000 | |Total Income |18,00,000 |9,00,000 | Process A may be chosen. Illustration 4: Addition of second shift Ulfa Ltd produces a single product in its plant. This product sells for Rs. 100 per unit. The standard production cost per unit is as follows: |Raw materials (5 kgs @ Rs. 8 |Rs. 40 | |Direct labour (2 hours @ Rs. ) |10 | |Variable manufacturing overheads |10 | |Fixed manufacturing overheads |20 | | |80 | The plant is currently operating at full capacity of 1, 00,000 units per years on a single shift. This output is inadequate to meet the projected sales manager has estimated that the firm will lose sales of 40,000 units next years if the capacity is not expanded Plant capacity could be doubled by adding a second shift. This would require additional out-of-pocket fixed manufacturing overhead costs of Rs. 10,00,000 annually. Also, a night work wage premium equal to 25 per cent of the standard wage would have to be paid during the second shift.However, if annual production volume were 1,30,000 units or more, the company could take advantage of 2 per cent quantity discount on its raw material purchases. You are required to advise whether it would be profitable to add the second shift in order to obtain the sales volume of 40,000 units per year? Solution Decision analysis |Particulars |Profit without expansion |Profits with expansion | |Sales revenue |Rs. 1,00,00,000 |Rs. 1,40,00,000 | |Less: variable costs: | | | |Raw materials (Rs 39. 0 x 1,40,000) |40,00,000 |54,88,000 | |Direct labour |10,00,000 |15,00,000 | |Variable manufacturing overhead |10,00,000 |14,00,000 | |Contribution |40,00,000 |56,12,000 | |Less : fixed costs (Rs. 1,00,000 x 20) |20,00,000 |30,00,000 | |Net Income |20,00,000 |26,12,000 | Yes, it would be profitable to add the second shift as it would increase profits by Rs. 6, 12,000.Illustration 5: Assume a company is considering dropping product B from its line because acc ounting statements shows that product B is being sold at a loss. | | | |Product |A |B |C |Total | |Sales revenue |50,000 |7,500 |12,500 |70,000 | |Cost of sales: | | | | | |D. Material |7,500 |1,000 |1,500 |10,000 | |D.Labour |15,000 |2,000 |2,500 |19,500 | |Indirect manufacturing cost (50% of |7,500 |1,000 |1,250 |9,750 | |Direct labour) | | | | | |Total |30,000 |4,000 |5,250 |39,250 | |Gross margin On sales |20,000 |3,500 |7,250 |30,750 | |Selling & Admn |12,500 |4,500 |4,000 |21,000 | |Net income |7,500 |(1,000) |3,250 |9,750 | Additional information: a) Factory Overhead cost is made up of fixed cost of Rs. 5850 and variable cost of Rs. 3900. b) Variable cost by products are: A – Rs 3000, B – Rs 400 and C – Rs 500 c) Fixed costs and expense will not be changed if product B is eliminated d) Variable selling and administrative expenses are to the extent of Rs. 11000 can be traced to the product: A-Rs. 7,500; B- Rs. 1500 and C- Rs. 2000 e) Fixed selling and admn expense are Rs. 10000 Solution: [pic]If the sale of product B were discontinued, the marginal contribution would be lost and the net income would be reduced by Rs. 2,600. Assume that after dropping product B, the sales of product A increased by 10%. The total profit of the firm will not increase by this sales increase. Product A makes only a marginal contribution of 34% (17000/50000) |Sales revenue of Product A |50000 |100% | |Variable cost of Product A |33000 |66% | |Marginal contribution of Product A |17000 |34% | On additional sales of Rs. 5000 the marginal contribution would be Rs. 700 |Sales revenue 10% of 50000 |5000 | |Variable cost 66% |3300 | |Marginal contribution (34%) |1700 | This contribution is less than Rs. 2,600 now being realized on the sales of product B. it would take additional sales of product A of approximately Rs. 7,647 to equal the marginal contribution of Rs. 2,600 mow being made by product B: [pic]= Rs. 7,647 It is possible that dropping product B may res ult in reduction in some of the fixed costs. Products B now contributes Rs. 2,600 towards recovery of fixed costs and expenses. Only if the fixed costs and expenses can be reduced by more than this amount, it will be advisable to drop product B. 13. Sells or Process Further A firm is frequently faced with the problem of continuing with the existing policies or plans or change to new ones. Such change could be in the form of selling a partially processed product (semi finished) or process further. While taking a decision about such matters, the management must keep in mind the long term consequence and the interest of the firm. Illustration 6: A firm sells semi finished product at Rs. 9 per unit. The cost to manufacture the semi finished product is Rs. 6. Further processing can be done at an additional cost of Rs. 3 per unit and the final product can be sold at Rs. 15 per unit. The firm can produce 10,000 units.The analysis is shown below: | |Sell |Process & Sell | |Sales revenu e (10,000 units) |Rs. 90,000 |1,50,000 | |Less : Manufacturing costs |60,000 |90,000 | |Profit |30,000 |60,000 | There is a net advantage of Rs. 30,000 in processing the product further. The market value of the partially processed product (Rs. 90,000) is considered to be opportunity cost of further processing. The figure of net advantage of Rs. 30. 00 can be arrived at in the following manner also: |Revenue from sale of final product (10,000 x 15) | |Rs. 1,20,000 | |Less : Additional processing cost (10,000 x 3 ) |30,000 | | |Revenues from sale of intermediate product |90,000 |1,20,000 | |Net advantage in further processing | |Rs. 30,000 | 13. 8 Operate or Shutdown Various factors both external and internal affect the functioning of the firm. In such situations it becomes necessary for a firm to temporarily suspend or shutdown the activities of a particular product, department or a unit as a whole.Illustration 7: A company operating below 50% of its capacity expects tha t the volume of sales will drop below the present level of 10,000 units per month. Management is concerned that a further drop in sales volume will create a loss and has under consideration a recommendation that operation be suspended, until better market conditions prevail and also a better selling price. The present operation income statement is as follows: | |Rs |Rs | |Sales revenue (10,000 units @ Rs. 3. 00) | |30,000 | |Less : Variable costs @ Rs. 2. 0 per unit |20. 000 | | |Fixed costs |10,000 | | |Net Income | |0 | Suggest the management at what point should the operation be suspended. The fixed cost remains only Rs 4000 if operation is shutdown. The following income statements have been prepared for sales at different capacities: [pic] It would appear that shutdown is desirable when the sale volume drops below 6,000 units per month, the point at which operating losses exceed the shutdown cost. 13. 9 Exploring New MarketsDecisions regarding entering new m arkets whether within the country or other the country should be taken after considering the following factors:  · Whether the firm has surplus capacity to meet the new demand?  · What price is being offered by the new market?  · Whether the sale of goods in the new market will affect the present market for the goods? Illustration 8: The following figures are obtained from the budget of a company which is at present working at 90% capacity and producing 13,000 units per annum. | |90% |100% | | |Rs. |Rs. |Sales |15,00,000 |16,00,000 | |Fixed Expenses |3,00,500 |3,00,600 | |Semi- Fixed Expenses |97,500 |1,00,500 | |Variable Overhead Expenses |1,45,000 |1,49,500 | |Units made |13,500 |15,000 | Labour and material costs per unit are constant under present conditions. Profit margin is 10 per cent. a) You are required to determine the differential cost of producing 1,500 units by increasing capacity to 100 per cent. b) What would you recommend for an export price for these 1,500 units taking into account that overseas prices are much lower than indigenous prices? Solution |Basic Calculation: |Rs. | |Sales at 90% capacity 15,00,000 | |Less: Profit 10% |1,50,000 | |Cost of Goods sold |13,50,000 | |Less : Expenses (Fixed, semi-variable and variable) |5,43,000 | |Cost of Material and Labour |8,07,000 | |Labour and Material at 100% capacity = |Rs. 8,07,000 x 100/90 | | |= 8,96,667 | Differential cost analysis can now be done as follows: Capacity levels |90% |100% |Different cost | |Production (Units) |13,500 |15,000 |1,500 | |Material and Labour |8,07,000 |8,96,667 |89,667 | |Variable overhead expenses |1,45,000 |1,49,500 |4,500 | |Semi-variable expenses |97,500 |1,00,500 |3,000 | |Fixed expenses |3,00,500 |3,00,600 |100 | | |13,50,000 |14,47,267 |97,267 | a) Different Cost = Rs. 97,267 (Rs. 14,47,267 – 13,50,000) b) Minimum price for export = [pic]= Rs. 64. 84 per unit At this price, there is no addition to revenue; any price above Rs. 64. 84 per unit may be acceptable. Note: It has been presumed that i) No capital investment is necessary ii) No export charges are incurred and ii) The export price will have no effect on the home market where the product will continue to be sold at the old price. It has also been assumed that necessary precaution have been taken to ensure that the product is not ‘dumped back’. 13. 10 Maintaining a Desired level of profit When deciding between alternative courses of actions the criterion should be to select the project which yields the greatest contribution. Illustration 9: A company is considering expansion. Fixed costs amount to Rs. 4, 20,000 and are expected to increase by Rs. 1, 25,000 when plant expansion is completed. The present plant capacity is 80,000 units a year. Capacity will increase by 50 per cent with the expansion. Variable costs are currently Rs. 6. 0 per unit and are expected to go down by Rs. 0. 40 per unit with the expansion. The current selling price is Rs. 16 per unit and is expected to remain same under either alternative. What are the break- even points under either alternative? Which alternative is better and why? Solution [pic] The profitability after expansion is very good and hence it is better to expand. Illustration 10: Disposal of inventories ABC Ltd has on hand 5,000 units of a product that cannot be sold through regular sales. These were produced at a total cost of Re. 1, 50,000 and would normally have been sold for Rs. 40 per unit. Three alternatives are being considered. i. Sell the items as scrap for Rs. per unit ii. Repackage at a cost of Rs. 20,000 and sell them at Rs. 8 per unit iii. Dispose them off at the city dump at removal cost of Rs. 500. Which alternative should be accepted? Solution Exhibits the decision analysis [pic] Alternative II should be accepted. 13. 11 Summary  · Decision making is the process of evaluating two or more alternatives leading to a final choice known as alternative choice decisions. Decision making is closely associated with planning for the future and is directed towards a specific objective or goal.  · A decision involves selecting among various choices. Non routine types of decisions are crucial and critical to he firm as it involves huge investments and involve much uncertainty. Short term decision making is based on relevant data obtained from accounting information.  · Relevant Cost are costs which would change as a result of the decision.  · Opportunity costs are monetary benefits foregone for not pursuing the alternative course. When a decision to follow one course of action is made, the opportunity to pursue some other course is foregone.  · Sunk costs are historical cost that cannot be recovered in a given situation. These costs are irrelevant in decision making.  · Avoidable costs are costs that can be avoided in future as a result of managerial choice. It is also known as discretionary costs.These costs are relevant in decision making.  · Incremental / Differential costs are costs that include variable costs and additional fixed costs resulting from a particular decision. They are helpful in finding out the profitability of increased output and give a better measure than the average cost. 13. 12 Terminal Questions 1. Avon garments Ltd manufactures readymade garments and uses its cut-pieces of cloth to manufacture dolls. The following statement of cost has been prepared. |Particulars |Readymade garments |Dolls |Total | |Direct material |Rs. 80,000 |Rs. 6,000 |Rs. 6,000 | |Direct labour |13,000 |1,200 |14,200 | |Variable overheads |17,000 |2,800 |19,800 | |Fixed overheads |24,000 |3,000 |27,000 | |Total cost |1,34,000 |13,000 |1,47,000 | |Sales |1,70,000 |12,000 |1,82,000 | |Profit (loss) |36,000 |(1,000) |35,000 |The cut-pieces used in dolls have a scrap value of Rs 1,000 if sold in the market. As there is a loss of Rs. 1,000 in the manufacturing of dolls, it is suggested to discontinue their manufacture. Advise th e management. 2. The ABC Company Ltd produces most of its own parts and components. The standard wage rate in the parts department is Rs. 3 per hour. Variable manufacturing overheads is applied at a standard rate of Rs. 2 per labour – hour and fixed manufacturing overheads are charged at a standard rate of Rs 2. 50 per hour. For its current year’s output, the company will require a new part. This part can be made in the parts department without any expansion of existing facilities.Nevertheless, it would be necessary to increase the cost of product testing and inspection by Rs. 5,000 per month. Estimated labour time for the new part is half an hour per unit. Raw materials cost has been estimated at Rs. 6 per unit. The alternative choice before the company is to purchase part from an outside supplier at Rs 9 per unit. The company has estimated that it will need 2,00,000 new parts during the current years. Advise the company whether it would be more economical to buy or m ake the new parts. Would your answer be different if the requirement of new parts was only 1,00,000 parts? 13. 13 Answers to SAQ and TQs Answer to SAQ 1. Change 2 Sunk cost 3. Monetary benefits foregone 4. Avoidable cost Answers to TQs: . Discontinue manufacture of dolls | |Readymade garments |Dolls |Total | |Total cost |134000 |13000 |147000 | |Profit (loss) |36000 |(1000) |35000 | 2. Decision analysis : 200000 units – The company is advised to make the new part. The differential costs favouring the decision of making the component is Rs40000 Decision analysis : 100000 units – The company is advised to buy from an outside supplier. Total cost to manufacture 100000 units is Rs. 9,10,000.
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