An external factor which affects the business environment means the factor beyond the control of business. These can be broadly classified into micro and macro environment.
Micro Business Environment: It means the forces which are immediate close to the business organization and influence its functioning. It affects different firms in different ways depending upon its circumstances. Micro environment consists of following parameters: Continue reading
Meaning: Business ethics refers to the standards and principles which govern the business activities. It means doing business activities with rational thinking and honesty. A business requires ethics for its success. Now a days availability of proper safety measures for employees, satisfaction of consumers and protection of environment are modern business standards. Continue reading
The word social security originated in USA in 1935. It means to help the people when they are unemployed and exposed to risk such as sickness, accidents, old age, maternity etc.
Scope of Social security:
It is in form of maternity benefits, health insurance, voluntary and compulsory insurance, provident fund schemes. These social security programs vary from country to country but have the following three common characteristics: Continue reading
Economics is considered as science of wealth as it is a study of the factors which are responsible for wealth generation. Thus in Economics we study a body of knowledge which relates to wealth. Economics as a science of wealth Economist Adam Smith, J. B. Say, John Mill, F. A. Walker and Riccardo. Adam Smith is known as a Father of Modern Economics and 1776, he has written a book called “An Enquiry into Nature and causes of wealth of Nation”. Continue reading
Human wants are unlimited and the resources to satisfy these wants are scarce. Every individual tries to satisfy more and more of his wants. The scarcity of resources in relation to wants give rise to the problem “how to use limited resources to get maximum satisfaction”. This give rise to problem of choice which means we have to select the best alternative among all. The central problems of an economy is further divided into four following basics problems: Continue reading
Posted in Economics
It is a predetermined cost, as it is determined in advance what should be the cost of production. When standard cost is used for the purpose of cost control it is known as standard costing. Now the question arises what is standard cost? Standard cost means cost based on the technical estimate of material, labour, overhead for a specific period of time under specific working condition. Continue reading
Master in Business Administration (MBA) is one of the most popular and acclaimed professional courses. It prepares students for the challenging mid-level positions in the corporate world.
There is a common notion that MBA graduates are able to multi-task and are highly skilled to meet the targets and organizational goals, while helping to generate higher revenues. This increases the rate of employment among MBA graduates. Continue reading
meaning of Differential costing
It is the change in cost, due to change in the output or change in sale. It may be increase or decrease in cost. For example present cost is 300000 if work is done by labour and if the work is done by machines the expected cost is 200000 so the differential cost is 100000 so the management has to decide regarding the replacement of labour by machines as it will increase profit by 100000.
Differential costing —– in this fixed cost is considered. It also helps in taking managerial decisions. It is ascertained on the basis of absorption costing as well as marginal cost.
Marginal costing———in this fixed cost is not added to get marginal cost of the product. It is calculated on the basis of contribution. It also helps in knowing the key factor, contribution, p/v ratio. It is also helpful in accounting records.
The following are the 4 applications of marginal costing:
1. Cost control: in marginal costing there is fixed cost as well as variable cost . fixed cost is controlled by top management and variable cost is controlled by lower management. Sometimes there are the cases when profit decreases even when sale increases in such situations marginal cost helps the concern in finding out the reasons. Continue reading
In the last article, we have done the objectives of profit volume ratio, today we will discuss the concepts of the same. There are four concepts in profit volume or p/v ratio:
1) Contribution: contribution is the difference between sale and marginal cost i.e.
Contribution= sale – marginal cost
it is also calculated by contribution= fixed expenses+ profit
it is different from profit as it include fixed cost and profit and it is based on the marginal cost concept while profit does not include fixed cost and it is based on common cost concept. Continue reading