Ebook Economics of hotel management: Part 2
➤ Gửi thông báo lỗi ⚠️ Báo cáo tài liệu vi phạmNội dung chi tiết: Ebook Economics of hotel management: Part 2
Ebook Economics of hotel management: Part 2
6Cost of Production6.1.MEANINGProduction decisions are not possible without their respective cost considerations. Since resources are scarce and these Ebook Economics of hotel management: Part 2 e have alternative uses, the use of these resources need sacrifice and hence cost. The firms will have to analyse these sacrifices whenever it decides to use the resources, and profits of the firm cannot be ascertained with analysing the cost involved in production.Thus the cost analysis plays a key Ebook Economics of hotel management: Part 2 role in every business decisions. Though the hotel industry' is a service sector, it works for profit, whether it provides hospitality in the form ofEbook Economics of hotel management: Part 2
providing food, accommodation or otherwise. Hence in providing these sen ices it also has incur a certain amount of expenditure, which is simple word6Cost of Production6.1.MEANINGProduction decisions are not possible without their respective cost considerations. Since resources are scarce and these Ebook Economics of hotel management: Part 2 rial is converted into a finished product. For example, to provide an evening dinner to guests in a restaurant, various raw materials in the form of cereals, vegetables, fruits, and other items to prepare the final output that is the food, the various types of costs involved in producing this food i Ebook Economics of hotel management: Part 2 tem is known as the cost of production.6.2.COST CONCEPTS RELATING TO PRODUCTIONFUNCTIONMoney cost: During the process of production, the producer usesEbook Economics of hotel management: Part 2
various factors like land, labour, capital, raw material and organization to produce the final output. He does own the factor inputs, but has to obta6Cost of Production6.1.MEANINGProduction decisions are not possible without their respective cost considerations. Since resources are scarce and these Ebook Economics of hotel management: Part 2 he amount of money spent together on these factor inputs is known as the explicit cost or the money cost of production.Opportunity cost: Opportunity cost is cost resulting from alternative opportunity that has been forsaken. It can be measured in terms of profits from the next best alternative ventu Ebook Economics of hotel management: Part 2 re that is forsaken by the firm by using the available resources. The main aim of production is not only the strain involved in producing a commodity,Ebook Economics of hotel management: Part 2
but the one which depends on the sacrifice of alternative product that could have been produced. Opportunity cost may also be defined as the 'cost of6Cost of Production6.1.MEANINGProduction decisions are not possible without their respective cost considerations. Since resources are scarce and these Ebook Economics of hotel management: Part 2 of a product may also be used in the manufacture of other products. This means, factors of production are non-specific in nature and the producer can use them to suit his decisions. The opportunity cost of the production of a car can also used to manufacture a machine. For instance, if the farmer ha Ebook Economics of hotel management: Part 2 s a piece of agricultural land, he can use it to cultivate paddy or he can use to cultivate sugarcane also. The same land can also be used to construcEbook Economics of hotel management: Part 2
t a house, which he desires to rent out.The concept of opportunity cost has great economic significance:•The concept is based on the fundamental fact,6Cost of Production6.1.MEANINGProduction decisions are not possible without their respective cost considerations. Since resources are scarce and these Ebook Economics of hotel management: Part 2 of another.•It is also used to explain the relative prices of different goods. For instance if the common input is used to produce two commodities, then the price of one output should be more or less appropriate to the price of another commodity. For example, on a piece of land 50 bags of paddy can Ebook Economics of hotel management: Part 2 be reaped, the same piece of land if used to produce sugarcane should be able to reap a crop which is equivalent to that of the value of 50 bags of pEbook Economics of hotel management: Part 2
addy.•The subject matter of economics speaks of scarcity or resources and alternative choices to be made. If the produc-122Economics 0Í Hotel Manageme6Cost of Production6.1.MEANINGProduction decisions are not possible without their respective cost considerations. Since resources are scarce and these Ebook Economics of hotel management: Part 2 loyed, then more of one good could be produced at the cost of producing less of the other.•The concept of opportunity cost is essential for rational decision making by the producer. It senes as useful economic tool in analysing optimum resource allocation and rational decision making.Explicit and Im Ebook Economics of hotel management: Part 2 plicit cost• Explicit costs are those expenses, which are actually paid by the firm. Also known as paid out cost, these costs appear in the accountingEbook Economics of hotel management: Part 2
records of the firm. Il is referred to the direct contractual monetary payments inclined through market transactions. They include—•Cost of raw mater6Cost of Production6.1.MEANINGProduction decisions are not possible without their respective cost considerations. Since resources are scarce and these Ebook Economics of hotel management: Part 2 ing marketing and advertising expenses.Implicit cost also called book cost, refers to the opportunity costs of the use of factors, which a firm does not buy, or hire but which it already owns. Implicit costs are payments which are not directly or actually paid out by the firm. In fact they arise whe Ebook Economics of hotel management: Part 2 n the firm or entrepreneur supplies certain factors owned by himself. For instance the producer may use his own land for a restaurant rather renting oEbook Economics of hotel management: Part 2
ne, for which rent is to be paid.The explicit costs are important for the calculation of profit and loss account, but from the business point of view,6Cost of Production6.1.MEANINGProduction decisions are not possible without their respective cost considerations. Since resources are scarce and these Ebook Economics of hotel management: Part 2 he material currently prevalent in the market. Historical cost refers to original price incurred by the firm when it bought its raw materials. Example-, if the price of a baking oven in 1998 was Rs. 3000, the present price for the same oven isCost of Production123Rs. 4500. then the historical cost i Ebook Economics of hotel management: Part 2 s Rs 3000 and the replacement cost is Rs. 4500.Incremental and Sunk cost: Incremental costs refers to The additional cost incurred due to a change inEbook Economics of hotel management: Part 2
the level or nature of production, for instance, adding a new product, a new machinery, etc. it measures the differences between old and new total cos6Cost of Production6.1.MEANINGProduction decisions are not possible without their respective cost considerations. Since resources are scarce and these Ebook Economics of hotel management: Part 2 tire investment is sunk' cost.Shut down cost and abandonment cost: Cost which would be incurred in the event of suspension of the plant operation and which would be saved if production continued is referred to as the shut down cost. Example, lay-off expenses, employment and training of workers, if t Ebook Economics of hotel management: Part 2 he production is restarted. Abandonment cost refers to cost involved in disposing a plant, which may not required in the future. Example-, ad-hoc manuEbook Economics of hotel management: Part 2
facture of certain war equipments, whose production may not be needed in peace.6Cost of Production6.1.MEANINGProduction decisions are not possible without their respective cost considerations. Since resources are scarce and these6Cost of Production6.1.MEANINGProduction decisions are not possible without their respective cost considerations. Since resources are scarce and theseGọi ngay
Chat zalo
Facebook