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# Week 15 learning objectives

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### Week 15 learning objectives

1. 1. Week 15Learning Objectives
2. 2. Costing Analysis• Cost-Benefit Ratio: – Cost Benefit ratio = Benefit / Ratio – The Costs of the software A,B and C Software A B C Fixed Costs 5,000 10,000 20,000 Variable Costs 1,000 5,000 10,000 10% Contingency 600 1,500 3,000 Total Costs 6,600 16,500 33,000 – From the analysis above, software A looks the cheapest to purchase.
3. 3. Costing Analysis• Cost-Benefit Ratio: – The Benefits of the software A,B and C Software A B C Enhance Productivity 1,000 10,000 5,000 Better response to customer 5,000 20,000 1,000 Total Benefits 6,000 30,000 6,000Software A B CCost-Benefit ratio 6,000 / 6,600 30,000 / 16,500 6,000 / 33,000 = 0.91 = 1.82 = 0.18 From the cost-benefit ratio calculation above, it is noted that software B brings the best benefit to the company.
4. 4. Costing Analysis• Cost-Benefit Analysis: Description Total Tot. monthly cost Purchase cost (depreciation 5 yrs.) - 10,000 10,000/5/12 = - 167 License (depreciation 5 yrs.) - 50,000 50,000/5/12 = - 833 Revenue +30,000 Productivity Gain +5,000 Better customer orders +1,000 Net Savings +3,500
5. 5. Break-Even• Break Even , N = Fixed Cost (Fc) / unit cost where unit cost = selling price – Unit variable costExample:Fc = 15,000Selling Price = 500Unit var cost = 50N = 15,000 / (500 – 50) = 33
6. 6. ROI, Return of Investment• ROI = (Gain – Cost ) / Cost• Example: Gain = 10,000 Cost = 8,000 ROI = (10,000 – 8,000) / 8,000 = 0.25
7. 7. Eastman Kodak Co• Video on Kodak declaring bankruptcy• Digital world of film• Question: If you were given a project to start- up Kodak what are the list of things that you would embark on?
8. 8. Last Chapter• Video on Control of project• Project tracking & closing