Managerial Uses of Production Function

MANAGERIAL USES OF PRODUCTION FUNCTION:

A detailed study of cost analysis is very useful for managerial decisions. It helps the management

1.  To find the most profitable rate of operation of the firm.

2.     To determine the optimum quantity of output to be produced and supplied.

3.     To determine in advance the cost of business operations.

4.     To locate weak points in production management to minimize costs.

5.     To fix the price of the product.

6.     To decide what sales channel to use.

7.     To have a clear understanding of alternative plans and the right costs involved in them.

8.     To have clarity about the various cost concepts.

9.     To decide and determine the very existence of a firm in the production field.

10.                        To regulate the number of firms engaged in production.

11.                        To decide about the method of cost estimation or calculations.

12.                        To find out decision making costs by reclassifications of elements, reprising of input factors etc, so as to fit the relevant costs into management planning, choice etc.