PPT-Lesson 5-3: Cost, Revenue, & Profit Maximization

The costs that an organization incurs even when there is little or no activity are fixed costs or overhead Finding Marginal Cost Variable costs are usually associated with labor and raw materials and change with the businesss rate of operation or output. Machine Learning. Last Time. Expectation Maximization. Gaussian Mixture Models. Today. EM Proof. Jensen’s Inequality. Clustering sequential data. EM over . HMMs. EM in any Graphical Model. Gibbs Sampling. A business needs to keep track of all their income - . REVENUE. and EXPENSES.. Any money coming in to a business is recorded as revenue.. Any money going out of a business is known as an expense.. For a business to be profitable their revenue must be greater than their expenses.. maximization. Economic profit = total revenue - all economic costs. Economic costs include accounting cost. (. explicit. . costs. ). and opportunity costs (implicit. . costs. ).. Profit maximization. Profit Maximizing Assumptions. Firm: Technical unit that produces goods or services.. Entrepreneur (owner and manager) . Gains the firm’s profits and suffers losses and has the goal of maximizing profit.. How do businesses decide what price to charge and how much to produce?. It depends on the . character of its industry. .. Classroom Concerns. Attendance Issues* 15 Limit. Tardiness. Uniform. Assignment Completion. 1. Revenue recognition. Expense recognition. Revenue recognition by critical event. Revenue recognition by effort expended. The percentage-of-completion method. Long-term contract losses. The instalment method. RyanAir. Melissa Chen, David . Gruen. ,. How-Chin Liu,. John . Masline. RyanAir. Launch Strategy. Revenue Assumptions:. An average of 70% capacity. Runs 365 days in a year. Price is I. ₤. 98 per passenger. Marginals. for linear functions. Break Even points. Supply and Demand Equilibrium. Applications with Linear Functions. Cost, Revenue, Profit, . Marginals. Cost: C(x) = variable costs + fixed costs. Revenue: R(x) = (price)(# sold). Winter 2012. Daniel Weld. Slides adapted from Carlos . Guestrin. , Dan Klein & Luke . Zettlemoyer. Machine Learning. 2. Supervised Learning. Parametric. Reinforcement Learning. Unsupervised Learning. Prepared by. ANINDITA CHAKRAVARTY. INTRODUCTION. An extreme form of collusion is found when the member firms agree to surrender completely their rights of price and output determination to a . ‘Central Administrative Agency’ . Mr. Henry. AP Economics. AP Review . Questions from Yesterday. A requirement of perfect competition is that. Many firms sell an identical product to many buyers. There are no restrictions on entry into (or exit from) the market, and established firms have no advantage over new firms. Behind the Supply Curve. Profit . Profit = Total Revenue – Total Cost. Primary goal of a firm is to maximize profit. Can be done in two ways. Increase revenue. Reduce costs. What types of costs exist?. CHAPTER OBJECTIVES. Meaning of Cost-volume-profit analysis. . Objectives . of Cost-volume-profit . analysis. Assumptions of Cost-volume-profit analysis . T. echniques . or elements of Cost-volume-profit analysis.. Based on the books: . Building Lean Supply Chains with the Theory . of . Constraints . M. anaging . Business Process Flow . Throughput Profit Multiplier (TPM). A large fraction of the operating costs are fixed .