Investment Risk

Jun 21st, 2015
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A fair return on investment is defined as one that compensates the investor for the risk incurred in making the investment – neither more nor less. Conversely, an excess return is one that over-compensates the investor for the risk incurred.

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Table of Contents1)Explain what is mean by cost drivers?22)Describe the procedures used in an Activity Based Costing system.23)Compare and contrast the traditional product costing system used with Activity Based Costing system.84)Quote the list of references used in your assignment using the Harvard style of referencing.111) Explain what is mean by cost drivers?Acost driveris a factor that directly causes a change in thecostof an activity, and which is generally based on varying levels of activity. The term is used inactivity-based costinganalysis,[ CITATION Acc14 \l 1033 ]. Ideally, a cost driver is an activity that is the root cause of why a cost occurs. In the past century, the root cause of indirect manufacturing costs has changed from a single cost driver such asdirect labourhours to several cost drivers. Due to sophisticated manufacturing and increased demands from customers, direct labour is no longer the main cost driver of indirect manufacturing overhead.In addition to direct labour, today's drivers of indirect manufacturing costs include the number of machine setups required, the number of engineering change orders, the demands from customers for special inspections, handling and storage, the number of components in the units produced, and the number of production machine hours. Manufacturers that want to know the true costs of their products need to know what is driving their indirect manufacturing costs. For these comp

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