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The Age of Gym Timeless Errors

In:

Submitted By teamkimbo
Words 2418
Pages 10
1)
2)

Variable Cost:
Fixed Cost:
Mixed Cost: with Variable and Fixed: cell phone bill which is $50 a month and additional 20 cents per message.

Chapter 6: Cost Behavior: Analysis and Use

LOOK AT CHAPTER 6 SLIDES

Budget project: How many units do you need to break even. Also a cost volume profit graph.

ON EXAM
Mixed Costs

Total Cost= Total fixed cost + Variable per unit * units

ON EXAM: High-Low Method
Ex: High hours of maintenance – Low hours / High Total Maintenance cost – Low Total Maintenance cost

Predict Costs:
1) Account Analysis
2) High-Low Method

Contribution Margin:

Sales
-Variable Costs
= Contribution Margin
-Fixed Costs
=Net Operating Income

Used for external reporting Used by management

Sensitivity analysis: if sales are down 10% or If sales are up by 10% what’s your income. Can be checked by CM

Contribution Margin Ratio: Total CM/ Total Sales

In terms of Units: CM Ratio: Unit CM/ Unit SP

Break even point in Units Sold: FC/ CM per Unit
Break even point in total sales dollars: FC / CM Ratio

Operating Leverage:
Degree of Operating Leverage = Contribution Margin/ Net Operating Income

1)
2)

Variable Cost:
Fixed Cost:
Mixed Cost: with Variable and Fixed: cell phone bill which is $50 a month and additional 20 cents per message.

Chapter 6: Cost Behavior: Analysis and Use

LOOK AT CHAPTER 6 SLIDES

Budget project: How many units do you need to break even. Also a cost volume profit graph.

ON EXAM
Mixed Costs

Total Cost= Total fixed cost + Variable per unit * units

ON EXAM: High-Low Method
Ex: High hours of maintenance – Low hours / High Total Maintenance cost – Low Total Maintenance cost

Predict Costs:
1) Account Analysis
2) High-Low Method

Contribution Margin:

Sales
-Variable Costs
= Contribution Margin

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