Part 2	Product Costing and Capital Budgeting
	by Ulf E. Olsson, Rune Lönnqvist and Bengt Öström

Economic models for the calculation of products and investments to support decision-making in business activities.

Profit planning

• cost-volume-profit charts
• variable and fixed costs
• differential and common costs
• opportunity costs

Calculation according to the absorption costing concept

• direct and indirect production costs
• average cost calculation
• calculation with overhead allocations
• activity-based costing

Calculation according to the variable costing concept

• contribution margin, contribution margin ratio
• calculation with relevant costs in situations with idle capacity or bottleneck problems

Product pricing

• target-return pricing
• influence from competitors and customers on pricing
• price elasticity of demand
• prices and inflation

Capital budgeting

• evaluation of capital expenditures
• different methods of evaluation, e.g. the present value method and the payback method
• capital budgeting and inflation

Course material:

• Textbook (163 pp.)
• Fifty-two exercises with solutions
• Six cassette tapes with approx. 6.5 hours of comments on the exercises.