Advanced management accounting Assignment Example | Topics and Well Written Essays - 1000 words

Advanced focusing accounting - Assignment ExampleThe lettuce lay out value method is usually used to expect the economic viability of a suffer and it is used to determine if the project is economically viable or it is not. The reinforcement of using the NPV criteria in the valuation of a project is the fact that the method has a clear decisiveness making growth. In evaluating a project or product, if the net present value is positive, then the project should be accepted by the management because the product or project would benefit the company (Cadenhead, 1970, 80).If the net present value is a negative, then the project or product should be rejected. If the net present value is equal t zero, then the management would be at a break scour and any decision taken would not be harmful to the profitability of the company (Barton, 1999, 234). In example the management of Smart electronics decides to talk up the proposed investment, it would be costly for the company because the co mpany would be data track at a loss as a sequel of the many costs that ar associated with the product. The all thing that would warrant the acceptance of the product would be the reduction of costs to the company. The many costs that are associated with the product are making it hard for the company to gain any profits (Bastable, 1995, 133). C) Return on investment is a tramp of return that accrues to shareholders of a company as a result of commit in the company. The rate of investment would be the main determinant for an investor before making any decision. The rate of return is however determined by the risk factor that is associated with a project or company. A company that has a high rate of risk is usually associated with high returns while companies that have down(p) risk levels are associated with low returns. In the case of Smart electronics, the return on investment go out be viewed on the rate of return that will accrue to the company as a result of investing in t he new product. The investment in a new product should be operable in the sense that the returns should be positive and that the returns would be in such a manner as to work in the favor of the company in terms of profitability. Profitability of a company will increase if the company gets high returns from the products that it sells. For smart electronic to maximize on its rate of return, it should try to shrink on costs that are associated with a product and the level of ability should be improved so as to ensure that running costs are as low as possible. The level of cleverness is usually determined by the machinery that is in the company. That should be done in a manner that the process of a company are efficient and the people working in the various departments are as well efficient enough. Efficiency of processes is done by the company improving on the machinery that is been used in a company and the company improving the level of technology that is required to make the pr oduction process easier and simpler (Anthony, 1997, 225). The efficiency can