Reply to Discussions D1: navya A bank failure is the ending of an insolvent bank by a state or federal regulator. So the only power that closes the national banks is the comptroller who has a higher power in maintaining the currency. It mainly happens when a bank fails where it is assumed by the federal deposit insurance corporation in the insures of deposits. They find a different bank to take it over because various customers will specifically like the continuation using their debit cards, online banking tools, and accounts. So bank failures are mainly often to predict because the federal deposit insurance commission will not announce a particular bank to set go under the profits. Then bank diversification is the procedure that allocates the capital in a specific way because it reduces the exposure to a particular asset or risk. Therefore, the main reason for this bank diversification is to decrease the volatility or risk by investing in various assets (Goetz, 2012). So considering both of those banking systems can easily relate to the country's economic health by determining the better quality of the loan book of different individual books. Then for maintaining the better quality of advance bank portfolio, there is only one crucial tool where it is credit monitoring. Credit monitoring plays a vital role in protecting the bank's exposures, but it also ensures the various funds that are channeled by maintaining the right purpose. It mainly acts as the guardrail for ensuring the health of banks and countries economically to stay in the right trajectory. Then various technology solutions will be readily available in the market for helping the automated process of credit monitoring to a large extent. They can ensure the functions of credit monitoring to keep the process and objective in the method oriented (Brownbridge, 2002). References Brownbridge, M. (2002). Resolving Bank Failures in Uganda: Policy Lessons from Recent Bank Failures. Development Policy Review, 20(3), 279-291. doi: 10.1111/1467-7679.00171 Goetz, M. (2012). Bank Diversification, Market Structure and Bank Risk Taking: Theory and Evidence from U.S. Commercial Banks. SSRN Electronic Journal. doi: 10.2139/ssrn.2651161 Reply: D2: pavani Diversification helps individual institutions and makes them be benefited. But Wagner says that the systematic risk increases by the degree of diversification. Raffestin also said something about the diversification that diversification can cause risks and any number of failures also. By the above words, we can know the negative aspects or negative effects of diversification. Systematic risks are very broad and complex term. This diversification process has some of the diversification measures. The indicator of diversification is calculated from the bank’s profitability. There are various methods of diversification. Commonly Alas et al proposed method is used (Mirzaei & Kutan, 2016). And also the weight average diversification of banks ( AWDI.

1. Reply to Discussions
D1: navya
A bank failure is the ending of an insolvent bank by a state or
federal regulator. So the only power that closes the national
banks is the comptroller who has a higher power in maintaining
the currency. It mainly happens when a bank fails where it is
assumed by the federal deposit insurance corporation in the
insures of deposits. They find a different bank to take it over
because various customers will specifically like the
continuation using their debit cards, online banking tools, and
accounts. So bank failures are mainly often to predict because
the federal deposit insurance commission will not announce a
particular bank to set go under the profits. Then bank
diversification is the procedure that allocates the capital in a
specific way because it reduces the exposure to a particular
asset or risk. Therefore, the main reason for this bank
diversification is to decrease the volatility or risk by investing
in various assets (Goetz, 2012).
So considering both of those banking systems can easily relate
to the country's economic health by determining the better
quality of the loan book of different individual books. Then for
maintaining the better quality of advance bank portfolio, there
is only one crucial tool where it is credit monitoring. Credit
monitoring plays a vital role in protecting the bank's exposures,
but it also ensures the various funds that are channeled by
maintaining the right purpose. It mainly acts as the guardrail for
ensuring the health of banks and countries economically to stay
in the right trajectory. Then various technology solutions will
be readily available in the market for helping the automated
process of credit monitoring to a large extent. They can ensure
the functions of credit monitoring to keep the process and
objective in the method oriented (Brownbridge, 2002).
References

2. Brownbridge, M. (2002). Resolving Bank Failures in Uganda:
Policy Lessons from Recent Bank Failures. Development Policy
Review, 20(3), 279-291. doi: 10.1111/1467-7679.00171
Goetz, M. (2012). Bank Diversification, Market Structure and
Bank Risk Taking: Theory and Evidence from U.S. Commercial
Banks. SSRN Electronic Journal. doi: 10.2139/ssrn.2651161
Reply:
D2: pavani
Diversification helps individual institutions and makes them be
benefited. But Wagner says that the systematic risk increases by
the degree of diversification. Raffestin also said something
about the diversification that diversification can cause risks and
any number of failures also. By the above words, we can know
the negative aspects or negative effects of diversification.
Systematic risks are very broad and complex term. This
diversification process has some of the diversification
measures. The indicator of diversification is calculated from the
bank’s profitability. There are various methods of
diversification. Commonly Alas et al proposed method is used
(Mirzaei & Kutan, 2016).
And also the weight average diversification of banks ( AWDIV)
and unweighted average diversification of banks ( ADIV) is
used in order to measure the diversification. Systematic risks
also have some of the measures. And we measure the systematic
risks on the basis of CCA ( Contingent claims of analysis). In
this analysis, the combination of balance sheet information and
market based is used to obtain the indicators of financial risks.
Based on the aggregated distance to default series or DD series
we adopt the analysis like CCA analysis which means
Contingent Claims of Analysis. So by adopting Contingent
Claims Analysis or CCA analysis we have to use an unweighted
average diversification of banks (ADIV) and also the weighted
average diversification of banks ( AWDIV). To measure the

3. banking systematic risk. In the CCA process or the Contingent
Claims Analysis gives the causal relationship between the
banking systematic risk and the diversification of banking
(Subramanian & Yadav, 2013).
References
Mirzaei, A., & Kutan, A. (2016). Does Bank Diversification
Improve Output Growth? Evidence from the Recent Global
Crisis. International Review Of Finance, 16(3), 467-481. doi:
10.1111/irfi.12078
Subramanian, K., & Yadav, A. (2013). Deregulation of Bank
Entry and Bank Failures. SSRN Electronic Journal. doi:
10.2139/ssrn.2242451
Reply:
D:3 sandhya
Bank failures and bank diversification are some of the most
crucial subjects to review in order to understand the economy
od a country. Bank diversification refers to successfully
investing in a diverse variety of assets and maintaining their
long term return in order to reduce exposure to any kind of bank
failure risk. On the other hand, bank failure refers to the point
when the value of the banks asset falls below the market value
of bank’s liabilities which leads to closure of the bank. The
bank holds investments of creditors and depositors, so it has an
obligation to creditors and depositors to return that investment
to them with a return of interest. But if the bank takes too much
loses on its investments then this can lead to foreclosure of the
bank and FDIC steps in to collect and sell all the assets of the
bank in order to settle its debts. In order to understand this we
look at the following two journal articles. In the first article
Explaining Bank Failures: Deposit Insurance, Regulation and

4. Efficiency by David C. Wheelock and Paul W. Wilson the
authors study the relationships between deposit insurance,
regulation & efficiency and how this impacts the bank’s rate of
success or failure. The article uses historical data to examine
the causes of bank failures and also employs some hazard
frameworks to smoothen out the inconsistencies in the data. The
authors conclude that the deposit insurance system membership
increased the probability of the failure (Wheelock DC, Wilson
PW, 1995 ). And along with that the the authors also found that
the technically non efficient banks were much more susceptible
to failure than the ones who had latest up to date technology
helping them being more efficient in their processes.
The next journal article we study for understanding the bank
failure and economic recession is Great recession versus great
depression: monetary fiscal and bank policies. This article is
written by Cinzia Alcidi and Daniel Gros. In this article the
authors explore the monetary policy, fiscal policy and systemic
stability of the banks. The authors use statistical economic
analysis to study the relationships. The authors conclude that
when making a monetary policy deflation and bank failures
must be avoided at all costs (Alcidi C, Gros D, 2011). The
fiscal policy was not able to be determined properly as its use
during the great depression was not widespread. Lastly, the
analysis showed that even during the worst years of recession
the commercial banks were surprisingly resilient and remained
profitable (Alcidi C, Gros D, 2011).
References
Alcidi, C., & Gros, D. (2011). Great recession versus great
depression: monetary, fiscal and banking policies. Journal of
Economic Studies.
Wheelock, D. C., & Wilson, P. W. (1995). Explaining bank
failures: Deposit insurance, regulation, and efficiency. The
review of economics and statistics, 689-700.
Reply:

5. D: 4 Rathna
Advantage Cost-Volume Relationship
CVP is a procedure that used to choose the impact that various
degrees of volume and costs have on the progressive advantage.
CVP assessment is consistently used by associations to
"conclude how may units of a thing ought to be offered to deal
with the significant number of costs of creation and achieve a
perfect net income" (Iseni, 2018).
Centrality of CVP Analysis
This thought is critical in masterminding since it makes chiefs
"choose insightful and sagacious decisions" concerning the
association's advantage. It enables a business to choose whether
to fabricate the expenses of their units or abatement the variable
costs in order to be progressively gainful. The executive will
understand the proportion of things to sell so as to deal with for
the costs spent in progress (Ihemeje et al., 2015). For instance,
in case the association sells things worth $400,000 and variable
costs are $200,000, by then duty edge is $200,000. In case the
units sold are 40,000;
Arrangements per unit =$400,000/40,000= $10
VC per unit =$200,000/40,000=$5
This infers the dedication edge =$10-$5=$5
To manufacture the advantages, the association executive can
either cut down the variable costs or addition the cost for every
unit sold.
Variable Costing

6. This is a strategy in accounting that hopes to disallow fixed
costs of creation from the general costs spent in conveying
things. Variable costing in a procedure that is exceptionally
astounding from osmosis costing which fixed amassing costs are
added to conclusive outcomes conveyed. Under the variable
costing, the going with goes to the general cost of the thing:
direct work, direct rough materials, and variable costs
(Dyhdalewicz, 2015).
Essentialness of Variable Costing
This makes chairmen choose decisions as for costs of explicit
things and whether to recognize orders certain solicitations for
the thing or not (Hasan, 2015).
For example, an executive in phones cases conveying
association can use variable costing approach in a circumstance
underneath:
The association produces 1 million cases and at complete cost
of $600,000. Along these lines, the cost per unit is
$600,000/1,000,000 =$0.6 per each case. In case the association
got a solicitation to sell those 1 million cases at $400,000, the
association likely won't be anxious to sell since that doesn't
meet the creation cost. Regardless, as an accountant, fathom
that the fundamental cost of creation included fixed expenses,
for instance, building, equipment, insurance, and utilities. By
ousting these fixed costs, it is reasonable to recognize the
solicitation since the cost of creation would have gone down –
inferring that the solicitation put gives the association some
advantage.
References
Dyhdalewicz, A. (2015). The Implementation of Variable

7. Costing in The Management of Profitability of Sales in Trade
Countries. e-Finanse” 2015, vol. 11 / nr 3.
Hasan, S. (2015). Variable Costing and Its Applications in
Manufacturing Company. International Scholar Journal of
Accounting and Finance, 1(1), 2015, 1-10.
Ihemeje, J. C., Okereafor, G., & Ogungbangbe, B. M. (2015).
Cost-volume-profit analysis and decision making in the
manufacturing industries of Nigeria. Journal of International
Business Research and Marketing, 1(1), 7-15.
Iseni, E. (2018). Role of Analysis CVP (Cost-Volume-Profit) as
Important Indicator for Planning and Making Decisions in the
Business Environment. International Advisory Board, 343.
Reply:
D:5. mahitha
Generally, break-even analysis is beneficial to understand the
relationship between cost, volume, and profit. It is relevant to
understand some of the tenets of cost volume profit analysis to
understand the cost volume relationship. Moreover, CVP is
mainly used to calculate the break-even point of the company.
Initially, managers would calculate the contribution margin
before calculating the break-even point. By focusing on the
fixed costs of the company with the contribution gives the
break-even point.
Further, replacing the contribution margin with the contribution
margin per unit conveys the break-even points in units sold. The
margin of safety is about expressing the percentage of sales.
Like the break-even, to calculate the margin of safety, the
break-even point in sales dollars should be calculated initially.

8. Furthermore, by subtracting the break-even point from actual
sales in dollars result in a margin of safety (Ghandour, 2017).
Accordingly, add the target profit to the company's total fixed
cost, then, after dividing it by the contribution margin, gives the
output of the target profit. One of the immediate calculations In
the CVP analysis is the contribution margin analysis.
Contribution margin analysis includes the contribution margin
ratio, contribution margin divided by sales, and covering the
fixed expenses until it reaches the break-even point. It is
beneficial for the managers to assess the financial implications
of product mix, pricing, and product. Moreover, it facilitates the
sensitivity of the profitability of the product to the variations.
CVP analysis provides the trade-offs in profitability and risks
from alternative product design; it might be useful for the
manager while planning. The cost of capital of the operating
profit generates the profit measures to its economic income.
Moreover, the relationship between the discounted economic
income of the product and its sales incorporates the cost of
capital by CVP analysis. Managers use this analysis along with
the sophisticated approaches while planning financially. Social
and economic factors related to the competition affect supply
and demand (Tse, 1962).
Variable costing is related to managerial and costs accounting.
In other words, variable costing is about allocating the
production costs to the current product. Moreover, the product
cost of production excludes the foxes manufacturing overhead.
Besides, financial reporting prohibits the use of variable
costing. Direct material, direct labor, and variable
manufacturing overhead are the costs under the variable costing.
However, variable costing poorly upholds the matching
principle. Hence it is not permitted in external reporting. Since
the cost of inventory must include all fees to prepare a list, it
does not apply to financial reporting. There exits failure in sales
in that particular year due to poor matching between the
revenue and expenses on the income statement. It is generally
beneficial in managerial accounting and for internal decision

9. making. In this method, product cost is defined as the
production cost that varies directly with the output.
Accordingly, while selling and administrative expenses, it
would charge against revenue in the period; hence it is treated
as a period cost. In this costing, product cost is based on the
variable manufacturing cost. One of the significant
characteristics of the variable costing is excluding the fixed
factory overhead.
Additionally, production has no impact on the variable costing
operating income; rather, it depends on sales. As a manager, it
is crucial to use variable costing while making managerial
decisions. It enables the managers to analyze the data based on
the actual cost of production. As it simplifies the estimation of
the product and customer profitability, it might be helpful for
the managers to attain the loss of control. Based on the sales
fluctuations, the managers must make appropriate decisions.
Consequently, variable costing in that particular case plays a
crucial role, as it provides irregular sales patterns more
accurately. It also enables the managers to make the decisions
approximately for future costs of production (Dyhdalewicz,
2015).
References
Ghandour, D. (2017). The Relationship between Cost-Volume
Profit Management and Profitability in Private
Organizations. International Journal Of Advanced Engineering
Research And Science, 4(4), 281-288.
https://doi.org/10.22161/ijaers.4.4.43
Tse, J. (1962). Profit Planning Through Volume-Cost
Analysis. Economica, 29(114), 227.
https://doi.org/10.2307/2551577
Dyhdalewicz, A. (2015). The Implementation of Variable
Costing in the Management of Profitability of Sales in trade
Companies. E-Finanse, 11(3), 116-127.
https://doi.org/10.1515/fiqf-2016-0123

10. Reply:
D:6
A. The profit-cost-volume analysis is useful to determine the
changes in the cost and the volume that affects the organization
income and the net income. The assumptions made in this
analysis are the sales price per unit is kept constant, total fixed
costs are kept constant, the variable cost per unit are kept
constant, everything produced is to be sold and the costs will be
affected only when the activity changes. It requires all the
organization cost including the manufacture, administrative cost
and selling.
B. The managers use the CVP to determine the sales which
allows the organization to get the profits known as targeted
income. Managers can display CVP using a chart, graph or any
equation. Forming a graph allows the managers to easily give
the information. Managers should also conduct a full pledged
analysis that seems to be better because it turns the business
into simplified environment.
C. The variable costing is the managerial accounting type of
concept. This is a costing method which includes the variable
manufacturing cost such as the direct materials and the direct
labor, the variable manufacturing overhead is the unit product
price. To control the costs two types of costing should be used
mainly the standard costing and the flexible budgeting. It
provides an understanding on the effect of the fixed cost on the
profits.
D. Variable costing method allows the managers to analyze the
data based on cost of production. Managers will be able to
understand the difference between the actual and the budgeted
amounts. The company’s do not produce the same number of
units every time because the sales differ; managers have the
chances to make poor decisions based on the data.
For example, sales may increase during the winter and reduce

11. during the summer. Managers use variable costing method to
estimate the future cost of production.
References
Ijiri, Y., & Itami, H. (1973). Quadratic Cost-Volume
Relationship and Timing of Demand Information. Accounting
Review, 48(4), 724–737.
Stoenoiu Carmen-Elena. (2018). Sensitivity of indicators used
in cost-volume-profit analysis. MATEC Web of
Conferences, 184, 04003.
https://doi.org/10.1051/matecconf/201818404003
Reply: