Does the company make decisions based on depreciation or overhead? If so, does this lead to… 1 answer below »
Assessment 2: Managerial Economics Analysis & Report (2500 words)
Students select a real-world case study based on their own industry or workplace context, and submit a 2500-word report on an appropriate aspect of business economics. The assessment task is intended to simulate the composition of a formal report to senior management concerning a strategic initiative.
Following the problem solving and decision making approach discussed in Chapter 1 to solve the following issues relevant to the selected workplace industry and incorporate the following:
a. Does the company make decisions based on depreciation or overhead? If so, does this lead to bad decisions? What can be done to fix the problem? What was the profit consequence of the change [Refer to Chapter 3 of the prescribed textbook especially on Sunk Cost of Depreciation or Fixed Cost of Overhead].
b. Describe an extant decision made by the company. Discuss the marginal cost and marginal benefit of the decision. Was the right decision reached? If not, what should be done differently? What was the profit consequence of the change? [Chapter 3: Benefits, Costs, and Decisions].
c. Describe an investment decision the company has made. Discuss the opportunity costs and benefits of the decision. Did your company make the right decision? If not, what would you do differently? What was the NPV of the investment? [Refer to Chapter 5 of the prescribed textbook: Investment Decisions: Look Ahead and Reason Back].