28 mins, 2011
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Key Topics
- Investment Appraisal
- Payback
- Decision-making
- Contribution
- Costs
- Special Orders
CLIP 1: WHAT IS INVESTMENT APPRAISAL? (7 mins) 
Among the most critical decisions companies have to make are investment decisions - whether buying new machinery or taking over another company. This clip examines the different investment appraisal techniques companies use to help them make those decisions. Payback, profit, and opportunity cost are all important factors companies consider - but the figures rarely tell the whole story.
CLIP 2: INVESTMENT DECISIONS AT ACME WHISTLES (5 mins)
British manufacturer Acme Whistles prides itself on a cautious approach to spending and borrows as little money as possible. So how does it decide on whether investing in a new piece of machinery is worth it? It's not enough for the machine to work more efficiently - how will it benefit the business?
CLIP 3: CONTRIBUTION: WHAT DOES IT MEAN? (10 mins)
A business may make a wide range of products. But how does it work out which products are making the biggest (or smallest) contribution to its profits? This process involves calculating variable and fixed costs - and this can be used to work out the contribution of individual shops and departments, too. But in the real world these calculations are never easy
CLIP 4: CASE STUDIES IN CONTRIBUTION (6 mins)
How does calculating contribution help decision-making in a business? The clip presents the examples - the viewer is invited to consider the pros and cons. A print shop has to decide whether a job is worth taking on even though it's below its normal rates. Should a computer business axe its internet café because it isn't making a profit - or keep the café going because of its knock-on benefits to the rest of the business?
Relevant financial documents included on DVD
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