Index Cost Classification…………………………………………………………………2 Cost Volume Profit analysis……………………………………………………….2 Contribution Margin……………………………………………………………….2 Gross Margin and Contribution Margin…………………………………………...3 CVP Relationship in Graphic Form……………………………………………….3 CM Ratio. …………………………………………………………………………3 Application of CVP Concepts……………………………………………………..4 Importance of CM…………………………………………………………………4 Break-even Analysis………………………………………………………………4 Target Profit Analysis…………………………………………………………….5
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5-7: 1) Break-even point in unit sales using equation method: SP (Q) – VC (Q) – FC = P 8Q-6Q – 5,500 = P 2Q – 5,500 = P 2Q = 5,500 Q = 2,750 In order to break even they need to sell 2,750 units 2) Break-even point in sales dollars using the equation method and the CM ratio: Profit = CM ratio * sales – fixed expenses Target profit = CM ratio * sales – fixed expenses CM ratio * sales = target profit + fixed expenses Sales = (target profit + fixed expenses ) / CM ratio Sales =
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ACCT6001 Semester 1 2015 Week 8 Construction contracts Self Study Questions Solutions HP 15th edition P21.6 Clayton Construction Company Since the outcome of the contract can be reliably estimated, the percentage-ofcompletion method is to be applied for a fixed-price contract (AASB 111). The cost basis is used as per company policy. Schedule of profit recognition 2015 2016 2017 $ $ $ (a) Total contract price 4 500 000 4 500 000 4 500 000 (b) Costs incurred for year 600 000 1 750
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4-1 Traditional cost accounting systems assign operating expenses to products with a two-stage procedure: 1. expenses are assigned to production departments; 2. production department expenses are assigned to the products Departmental structure influences the first stage allocation process. Production Departments refer to departments that have direct responsibility for converting raw materials into finished products. Service departments perform activities that support production such
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Activity-Based Costing is also known as ‘ABC’ costing has a simple concept. In contrast to traditional costing system, Activity-Based Costing system first accumulates overheads costs for each organizational activity, and then assigns the costs of the activities to the products, services, or customers. Let’s take a look back in time, during the 1970’s and 1980’s, the boundaries of absorption costing system were felt with firmness which meant they were not as complex. Companies needed something different
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Question 1 - (20 marks) Deciding where to produce. Pam Engines Company produces the same power generators in two plants, a newly renovated, automated plant in Polly, and an older, less automated plant in Maddy. The following data are available for the two plants: | Polly | | Maddy | Selling price | | $150.00 | | | $150.00 | Variable Manufacturing Cost per unit | $72.00 | | | $88.00 | | Fixed Manufacturing Cost per unit | $30.00 | | | $15.00 | | Variable Marketing and distribution
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look at five barbers working for him. He will look at the rent and other fixed expenses and calculate all expenses to have a overhead amount and how to come to monthly and annually cost for hair shampoo used on all clients. . Managerial Accounting Contribution margin is the quantity of profits per merchandise that is accessible to “contribute” which goes towards the fixed expenses and/or the revenue of the business. In view of the facts that for digital item for consumption, the variable
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Week 2 Quiz Managerial Accounting Grading Summary | | Grade Details | Page: | 1 2 | 1. | Question : | (TCO F) For which situation(s) below would an organization be more likely to use a job-order costing system of accumulating product costs rather than a process costing system? | | | Student Answer: | | a steel factory that processes iron ore into steel bars | | | | a factory that processes sugar and other ingredients into black licorice | | | | a
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Fundamentals Pilot Paper – Knowledge Module Management Accounting Pilot Paper from December 2011 onwards Time allowed: 2 hours ALL 50 questions are compulsory and MUST be attempted. Formulae Sheet, Present Value and Annuity Tables are on pages 16, 17 and 18 Do NOT open this paper until instructed by the supervisor. This question paper must not be removed from the examination hall. The Association of Chartered Certified Accountants Paper F2 ALL 50 questions are compulsory and MUST
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Case 1. Overhead Assignment: Actual and Normal Activity Compared Reynolds Printing Company specializes in wedding announcements. Reynolds uses an actual Job-order costing system. An actual overhead rate is calculated at the end of each month using Actual direct labor hours and overhead for the month. Once the actual cost of a job is determined, The customer is billed at actual cost plus 50. During April, Mrs. Lucky, a good friend of owner Jane Reynolds, ordered three sets of wedding announcements
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