RSM322H1 Study Guide - Final Guide: Product Differentiation, Lean Manufacturing, Cash Flow
Document Summary
Strategies: cost leader (price taker, customers are price inelastic, generic, concentration: cost control), product differentiation (medium-small sized customer base, branded, concentration: r&d, quality control, small order quantities), market niche (price elastic, 1-few customers, branded, cost reduction, Main design components of cost control are the flexible budget and variance analysis using standard costs (find through regression and past manufacturing experience) and quantities of inputs as the basis for control. Over/underabsorbed overhead = actual overhead cost incurred overhead absorbed. Also = aoh ( ohr x sv) (whereby aoh is actual overhead costs incurred, ohr is overhead rate and sv is standard volume) Overhead spending = aoh [foh +(voh x av)] Overhead efficiency = [foh + (voh x av)] [foh + ( voh x sv)] Overhead volume = [foh + ( voh x sv)] (ohr x sv) (whereby foh is fixed overhead, voh is variable overhead, av is actual volume, sv is standard.
