Prime Cost, Pricing Strategies, Production, and Budgeting
Prime Cost and Conversion Cost
Prime Cost: Direct Materials (DM) + Direct Labor (DL). These costs are most convincingly associated with and traceable to a specific product.
Conversion Cost: DL + Overhead (OH). Costs directly or indirectly necessary for transforming raw materials and purchased parts into a saleable, finished product.
Pricing Strategies
Pricing: What the seller believes the buyer will pay for a certain product. It can be fixed or negotiated.
Geographical Pricing
- Ex-works Pricing: The customer
Electronic Funds, Cards, and Postal Services
Electronic Fund Transfer (EFT)
Under EFT, a bank transfers wages and salaries directly from the company’s account to the accounts of the company’s employees. Other examples of EFTs include online payment of electricity bills, water bills, insurance premiums, house taxes, etc.
Automatic Teller Machines (ATMs)
An ATM is an automated machine. With the help of an ATM, money can be withdrawn or deposited by inserting a card and typing your Personal Identity Number (PIN). This machine operates 24/7.
Debit
Read MoreSingle Currency and CAP: Disadvantages and Impact
Disadvantages of a Single Currency
Inability to Set National Interest Rates
By joining a single currency, a country may lose control over one of its main economic instruments: the ability to react to inflation by raising interest rates. Interest rates must be set centrally according to what the entire single currency area requires. If the trade cycles of different countries do not converge, some nations will suffer, as central policies may amplify any existing problems. For example, since the Euro,
Read MoreBanking Operations: Accounts, Deposits, and Loans
Banking Operations
Banking operations are contracts between a financial entity and a client, involving the deposit or delivery of money. There are three types of operations:
- Activities aimed at winning customers.
- Liabilities towards the provision of funds to customers.
- Bank service delivery in exchange for commissions.
Opening of Account
The process begins with an opening request. The bank provides a form to collect all necessary data.
Registration of Signatures
A bank submission form where data is collected,
Read MoreMarket Economy: Supply, Demand, and Economic Systems
Market Dynamics: Supply and Demand
A higher price leads to less quantity demanded, while a lower price results in more quantity demanded. The market demand curve illustrates the relationship between the quantity demanded of a good for all individuals and its price, assuming other factors like income, tastes, preferences, and prices of related goods remain constant.
Supply in the Market
The supply of a particular property depends on several factors, including technology, prices of production factors,
Read MoreUnderstanding the Characteristics and Functions of Money
Money plays a crucial role in modern economies. Here’s a breakdown of its key characteristics and functions:
Characteristics of Money
- Durable: Money must be durable and not easily perishable.
- Transportable: It should be easy to carry, with a high value relative to its weight.
- Divisible: Money must be divisible into smaller units without losing value, facilitating transactions of different sizes.
- Homogeneous: Each unit of money should be identical to others, ensuring consistent value in exchanges.
- Limited