When using the free-cash flow model, cash flows are discounted at the weighted average cost of capital (WACC) and when using the dividend discount model, dividends are discounted at….
Managing Fixed and Variable Costs for Organization
Purpose of Assignment
In this week, students are learning about managing different types of economic costs. Organizations typically have either high fixed costs or low fixed costs, and it is important to understand how business decisions differ in organizations with high fixed costs from organizations with low fixed costs.
Resources: Tutorial help on Excel® and Word functions can be found on the Microsoft® Office website. There are also additional tutorials via the web offering support for Office products. Hoover’s Company Profiles by ProQuest located in the University Library
Choose two publicly-held organizations. One organization must have high fixed costs and low variable costs, and the other organization must have low fixed costs and high variable costs.
Note: A publicly-held organization is a private-sector firm that is owned by stock holders. Companies with high fixed costs include manufacturing companies, such as automobile manufactures, whereas service companies, such as accounting firms, might have low fixed costs.
Create a minimum 8-slide Microsoft® PowerPoint® presentation, including detailed speaker notes or voiceover, analyzing the methods of managing cost depending on the cost construction. Research the University Library for recent publications regarding each company and the industry data. The analysis should include the following:
Analyze your two chosen companies’ cost construction. Do the companies have high fixed costs or low fixed costs? Do the companies have high variable costs or low variable costs? What evidence presents itself to support your findings?
In Excel®, chart the relationship between total cost and the number of units produced (output) for each organization/company. Plot two lines on the graph – one line for each company you analyzed. Copy your graph from Excel® and paste it into your PowerPoint® presentation.
Analyze currently used methods to minimize costs for the companies and provide recommendations how to improve the process of minimizing costs based on the available information for the industries in which the companies operate. Note: Companies are categorized by the industries they operate in. For example, Wal-Mart is a company operating within the retail trade industry. Hoover’s Company Profiles by ProQuest located in the University Library may be helpful.
Cite a minimum of three peer-reviewed sources.
Format the assignment consistent with APA guidelines.
Click the Assignment Files tab to submit your PowerPoint® presentation and your Excel® file.