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Politics : Formerly About Advanced Micro Devices
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To: FJB who wrote (36765)9/7/1998 2:01:00 AM
From: nihil   of 1581513
 
RE: Lower cost

Unit cost is an arbitrary accounting convention. What unit are we talking about -- the average or the marginal or one in between? Should cost include depreciation? Should it include an allowance for unavoidable taxes? Should it allow for unforfeitable subsidies (such as tax refunds?. Should cost include an allocation of overhead expense like the CEO's Mercedes? Suppose one product has a component (L2 cache?) that makes it superior (sell at a higher price). Is the cost of adding that part a production cost or a selling cost? Therefore to say Co. A produces product a at a lower cost than Co. B produces product b is sort of meaningless unless the two products are in every significant respect identical. They seldom are.
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