In this issue of Math in the News we look at statistics related to Russian meteor that recently crash-landed. Watch some compelling eyewitness video and explore how the path of meteor was reconstructed. For more media resources go to http://www.media4math.com.
In this issue of Math in the News, we look at the last flight of the Shuttle Discovery on a 747 and compare the weight of this freight and that of a 747 with passengers. Which is heavier? For more media resources, go to http://www.media4math.com
In this issue of Math in the News we look at statistics related to Russian meteor that recently crash-landed. Watch some compelling eyewitness video and explore how the path of meteor was reconstructed. For more media resources go to http://www.media4math.com.
In this issue of Math in the News, we look at the last flight of the Shuttle Discovery on a 747 and compare the weight of this freight and that of a 747 with passengers. Which is heavier? For more media resources, go to http://www.media4math.com
1 Chapter 2 Relevant Costs and Bene.docxhoney725342
1
Chapter 2
Relevant Costs and Benefits,
Fixed/Mixed/Variable Cost
2
Lecture Outline
• Which cost and benefits should we focus on in
decision-making?
Ø relevant costs and benefits
§ sunk costs
§ time horizon: short-term vs long-term
• How do costs behave?
Ø fixed, mixed, and variable costs
3
Evaluating decisions
• Our general framework:
Ø for each option, compute
Value = Benefits – Costs
(or Profit = Revenue – Costs for for-profit firms)
Ø choose the best option (highest value or profit)
• To evaluate decisions, we measure how they affect costs and
benefits (=> value or profit):
Ø which costs/benefits should we focus on?
(relevant costs and benefits)
Ø how do they change? (fixed / mixed / variable costs)
4
Which costs/benefits should we focus on?
• Relevant costs and benefits:
Ø A cost or a benefit is relevant (for a specific decision
situation) if it differs across the decision options.
Ø Only focus on relevant costs and benefits in making
decisions (irrelevant costs and benefits will be the same regardless of
what you choose, and can be ignored)
5
Sunk Costs
• Sunk costs = costs that have been incurred in the past
• Our decisions today will not change them
• They are no longer relevant => IGNORE THEM
• Example: you have spent 10 years and $2 billion trying to develop a vaccine
for cancer. You vaccine does not work (it turns patients into zombies). Your
have two options: do nothing (status quo), or invest $10 million more to
weaponize the vaccine and then sell it to the Pentagon for $50 million.
What should you do?
status quo sell to Pentagon
revenues $0 $50 million
costs $0 $10 million
profit (value) $0 $40 million
you can ignore
the sunk costs
($2billion)
6
Time Horizon: Short-term vs Long-term
• Whether a cost is relevant depends on the time horizon:
short-term versus long-term
• Capacity resources (buildings, equipment, skilled salaried
staff) are difficult to adjust on short notice due to technological
and contractual constraints
• In the short term, capacity resources are non-controllable
(cannot be adjusted)
=> capacity costs (rent, depreciation, salaries) are non-
controllable => irrelevant
• In the long term, capacity resources are controllable (can be
adjusted)
=> capacity costs are controllable => can be relevant
• Resources like materials and unskilled hourly workers can be
adjusted on short notice
=> controllable both in the short-term and in the long-term
=> can be relevant regardless of the time horizon
7
How do costs change with our decisions?
Fixed, mixed and variable costs
• production costs for iPhone 5:
Ø components and materials* (purchased from suppliers):
§ LCD display: $28.50, from LG
§ touch screen: $10, from Wintek
§ processor: $10.75, from Samsung
§ flash memory: $27, from Samsung
§ etc...
§ Total components and materials ...
A hands-on activity for explore a variety of math topics, including:
* Circumference and Diameter
* Linear functions and slope
* Ratios
* Data gathering and scatterplot
For more math resources, go to www.media4math.com.
More Related Content
Similar to Math in the News: Issue 112--Back-to-School Purchases
1 Chapter 2 Relevant Costs and Bene.docxhoney725342
1
Chapter 2
Relevant Costs and Benefits,
Fixed/Mixed/Variable Cost
2
Lecture Outline
• Which cost and benefits should we focus on in
decision-making?
Ø relevant costs and benefits
§ sunk costs
§ time horizon: short-term vs long-term
• How do costs behave?
Ø fixed, mixed, and variable costs
3
Evaluating decisions
• Our general framework:
Ø for each option, compute
Value = Benefits – Costs
(or Profit = Revenue – Costs for for-profit firms)
Ø choose the best option (highest value or profit)
• To evaluate decisions, we measure how they affect costs and
benefits (=> value or profit):
Ø which costs/benefits should we focus on?
(relevant costs and benefits)
Ø how do they change? (fixed / mixed / variable costs)
4
Which costs/benefits should we focus on?
• Relevant costs and benefits:
Ø A cost or a benefit is relevant (for a specific decision
situation) if it differs across the decision options.
Ø Only focus on relevant costs and benefits in making
decisions (irrelevant costs and benefits will be the same regardless of
what you choose, and can be ignored)
5
Sunk Costs
• Sunk costs = costs that have been incurred in the past
• Our decisions today will not change them
• They are no longer relevant => IGNORE THEM
• Example: you have spent 10 years and $2 billion trying to develop a vaccine
for cancer. You vaccine does not work (it turns patients into zombies). Your
have two options: do nothing (status quo), or invest $10 million more to
weaponize the vaccine and then sell it to the Pentagon for $50 million.
What should you do?
status quo sell to Pentagon
revenues $0 $50 million
costs $0 $10 million
profit (value) $0 $40 million
you can ignore
the sunk costs
($2billion)
6
Time Horizon: Short-term vs Long-term
• Whether a cost is relevant depends on the time horizon:
short-term versus long-term
• Capacity resources (buildings, equipment, skilled salaried
staff) are difficult to adjust on short notice due to technological
and contractual constraints
• In the short term, capacity resources are non-controllable
(cannot be adjusted)
=> capacity costs (rent, depreciation, salaries) are non-
controllable => irrelevant
• In the long term, capacity resources are controllable (can be
adjusted)
=> capacity costs are controllable => can be relevant
• Resources like materials and unskilled hourly workers can be
adjusted on short notice
=> controllable both in the short-term and in the long-term
=> can be relevant regardless of the time horizon
7
How do costs change with our decisions?
Fixed, mixed and variable costs
• production costs for iPhone 5:
Ø components and materials* (purchased from suppliers):
§ LCD display: $28.50, from LG
§ touch screen: $10, from Wintek
§ processor: $10.75, from Samsung
§ flash memory: $27, from Samsung
§ etc...
§ Total components and materials ...
A hands-on activity for explore a variety of math topics, including:
* Circumference and Diameter
* Linear functions and slope
* Ratios
* Data gathering and scatterplot
For more math resources, go to www.media4math.com.
Tutorials--The Language of Math--Variable Expressions--Multiplication and Sub...Media4math
This set of tutorials provides 32 examples of converting verbal expressions into variable expressions that involve multiplication and subtraction. Note: The download is a PPT file.
Tutorials--The Language of Math--Numerical Expressions--Multiplication Media4math
This set of tutorials provides 40 examples of converting verbal expressions into numerical expressions that involve multiplication. Note: The download is a PPT file.
Tutorials--The Language of Math--Numerical Expressions--Division Media4math
This set of tutorials provides 40 examples of converting verbal expressions into numerical expressions that involve division. Note: The download is a PPT file.
Tutorials--The Language of Math--Numerical Expressions--SubtractionMedia4math
This set of tutorials provides 40 examples of converting verbal expressions into numerical expressions that involve subtraction. Note: The download is a PPT file.
Tutorials--Language of Math--Numerical Expressions--AdditionMedia4math
This set of tutorials provides 40 examples of converting verbal expressions into numerical expressions that involve addition. The verbal expressions include these terms:
Plus
Increased by
In addition to
Added to
More than
In this issue of Math in the News we explore logarithmic functions to model the thawing of frozen turkeys. We look at USDA guidelines to determine data points and use a graphing calculator to create mathematical models.
Palestine last event orientationfvgnh .pptxRaedMohamed3
An EFL lesson about the current events in Palestine. It is intended to be for intermediate students who wish to increase their listening skills through a short lesson in power point.
The French Revolution, which began in 1789, was a period of radical social and political upheaval in France. It marked the decline of absolute monarchies, the rise of secular and democratic republics, and the eventual rise of Napoleon Bonaparte. This revolutionary period is crucial in understanding the transition from feudalism to modernity in Europe.
For more information, visit-www.vavaclasses.com
The Indian economy is classified into different sectors to simplify the analysis and understanding of economic activities. For Class 10, it's essential to grasp the sectors of the Indian economy, understand their characteristics, and recognize their importance. This guide will provide detailed notes on the Sectors of the Indian Economy Class 10, using specific long-tail keywords to enhance comprehension.
For more information, visit-www.vavaclasses.com
This is a presentation by Dada Robert in a Your Skill Boost masterclass organised by the Excellence Foundation for South Sudan (EFSS) on Saturday, the 25th and Sunday, the 26th of May 2024.
He discussed the concept of quality improvement, emphasizing its applicability to various aspects of life, including personal, project, and program improvements. He defined quality as doing the right thing at the right time in the right way to achieve the best possible results and discussed the concept of the "gap" between what we know and what we do, and how this gap represents the areas we need to improve. He explained the scientific approach to quality improvement, which involves systematic performance analysis, testing and learning, and implementing change ideas. He also highlighted the importance of client focus and a team approach to quality improvement.
Students, digital devices and success - Andreas Schleicher - 27 May 2024..pptxEduSkills OECD
Andreas Schleicher presents at the OECD webinar ‘Digital devices in schools: detrimental distraction or secret to success?’ on 27 May 2024. The presentation was based on findings from PISA 2022 results and the webinar helped launch the PISA in Focus ‘Managing screen time: How to protect and equip students against distraction’ https://www.oecd-ilibrary.org/education/managing-screen-time_7c225af4-en and the OECD Education Policy Perspective ‘Students, digital devices and success’ can be found here - https://oe.cd/il/5yV
How to Make a Field invisible in Odoo 17Celine George
It is possible to hide or invisible some fields in odoo. Commonly using “invisible” attribute in the field definition to invisible the fields. This slide will show how to make a field invisible in odoo 17.
Read| The latest issue of The Challenger is here! We are thrilled to announce that our school paper has qualified for the NATIONAL SCHOOLS PRESS CONFERENCE (NSPC) 2024. Thank you for your unwavering support and trust. Dive into the stories that made us stand out!
2. What you will learn
• Summary
• In this issue of Math in the News we look at the prices and
purchases parents and teachers make during back-to-school
shopping
• Determine the price of items before and after tax by
multiplying by percents and decimals.
• Compare prices in a table
3. School Supplies
• Every August and September, schools compile a list of supplies
students will need for school.
• Basic supplies include…
• Pencils
• Paper
• Binders
• Today, kids might also need…
• A computer
• An iPad
4. Money-Saving Tips
• Check out this local news video on how to
save money on school supplies.
• http://newyork.cbslocal.com/2016/08/11/back-
to-school-shopping/
5. The Cost of School Supplies
• School supplies can add up! Especially when you
include the 6% - 8% sales tax (depending on the
state).
• Visit http://taxfoundation.org/article/state-and-local-
sales-tax-rates-2016 to see the sales tax rate in
your state!
• In the next slides, we’ll look at how to find the price
of an item before and after sales tax.
6. What’s the total cost after
sales tax?
• When you see an item at a store and it’s marked
with a price, say $5.25, but that’s not the total cost
you pay. That’s the price BEFORE tax.
• To find the total cost of an item after sales tax,
Price + Tax = Total cost
7. How do you calculate the tax?
• To find the tax, multiply the cost by the sales tax
rate as a percent or a decimal:
Tax = Price x Sales Tax Rate
8. What is the formula for total
cost?
Total Cost = Price + Price • Sales Tax
= Price (1 + Sales Tax)
9. Example 1
Problem
• What is the cost of a notebook that costs $5.25 with a 6%
sales tax?
Solution
Total Cost = Price (1 + Sales Tax)
= 5.25 (1 + 0.06)
= 5.25 • 1.06
= 5.57
10. Example 2
Problem
• Take a look at the pre-tax price of some common back-to-
school items:
• Box of 40 #2 pencils: $4.99
• Plastic Pencil Case: $2.04
• Package of lined paper: $2.54
• Package of 5 binders: $28.99
• What’s the total cost?
Source:http://www.target.com/s?category=0%7CAll%7Cmatchallpartial%7Call+categories&searchTerm=binder
11. Example 2
Solution
• When you have multiple items, first add all the individual
prices to find the Total Price. Calculate the tax on the Total
Price.
Total Price = 4.99 + 2.04 + 2.54 + 28.99 = 38.56
Total Cost = Total Price (1 + Sales Tax)
= 38.56 • (1 + 0.06)
= 38.56 • 1.06
= 40.87
12. Tax-free Holiday!
• As you can see, there’s a big difference
between the before-tax price and the after-tax
price, especially for more expensive items.
• To help families and teachers, many states
participate in a “tax-free” holiday where, for
one weekend, people shop tax-free.
• How much money would you save?
13. Your Turn!
• Take a look at your back to school shopping list. Make
sure you include all items (clothing, electronics, school
supplies, etc).
• Go to http://www.target.com/ or the website of the store
you bought your supplies to find the prices.
• Go to http://taxfoundation.org/article/state-and-local-
sales-tax-rates-2016 to see the sales tax rate in your
state.
• Calculate the Total Price and the Total Cost.
14. What are the savings?
• How much more money did you spend in total
with taxes compared to without taxes?
• What do you notice about how much you pay
in sales tax as the price of an item increases?