Define Value Chain Analysis

question 8

Essay

 Define value chain analysis. Discuss the two types of activities in a firm's value chain.

Project future costs or expenses based on given data.

Calculate the total variable manufacturing cost per unit.

Apply cost estimation techniques to administrative expenses and utilities.

Understand and apply the high-low method to analyze cost behavior.

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Definitions:

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to products or job orders, based on a planned amount of activity.

Machine-Hours

A measure of production output or activity based on the number of hours machines are run, used in allocating machine-related costs to products.

Variable Manufacturing Overhead

Costs in the manufacturing process that fluctuate with the level of production output, such as utilities or materials.

Machine-Hours

A measure of production time, representing the number of hours machines are operated in the production process.