Question 1 For an activity base to be useful in cost behavior analysis, A. the activity should always be stated in dollars. B. the activity level should be constant over a period of time. C. the activity should always be stated in terms of units. D. there should be a correlation between changes in the level of activity and changes in costs. 0.5 points Question 2 A variable cost is a cost that A. varies in total in
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1. What are the assumptions implicit in Bill French's determination of his company's break-even point? Assumptions Sales volume will be maintained. No planned changes in volume next year Only one, aggregate break-even point is utilized in the analysis. Sales mix will remain constant. Linearity will be exhibited by both total revenues and expenses over the relevant range. No capital investments that will increase fixed costs. Constant dividends are paid out to the company's stockholders. Labor
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A Case Method Approach to Teaching Cost-Volume-Profit Analysis Susan Machuga University of Hartford This paper presents a Multi-Disciplinary Case-Method approach to teaching Cost-Volume-Profit (CVP) Analysis allowing students to use their own assumptions to simulate a real-life business startup analysis. The proposed business venture is one of starting a milkshake shack in the island of Hawaii. Students will learn to distinguish between fixed and variable costs, apply some of their own assumptions
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Introduction This is a case of outsourcing where contribution analysis is carried out. Outsourcing is the ordering of goods or labour from the outside the vendors manufacturing plant. In this case the company is intending to outsource the production of 30,000 Alpha Phones from Original Equipment Manufacturers rather then producing in-house. Apart from the quantitative analysis’s qualitative factors will also be considered as necessary (Horngren, Datar and foster, 2003 p. 378). Alternative solution
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proportionately. variable costs, such as direct materials, will change proportionately. Question 5.5. (TCO B) The break-even point is (Points : 6) fixed costs divided by contribution margin per unit. the sum of fixed and variable costs divided by contribution margin per unit. contribution margin per unit divided by revenue per unit. total costs divided by variable costs per unit. Question 6.6. (TCO B) Answer the following question using the information below
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level. For purposes of CVP analysis, mixed costs must beclassified into their fixed and variable elements. One method that management may use isthe high-low method.4. List the five components of cost-volume-profit analysis. The five components of CVPanalysis are (a) volume or level of activity, (b) unit selling prices, (c) variable cost per unit,(d) total fixed costs, and (e) sales mix.5. Indicate what contribution margin is and how it can be expressed. Contribution marginis the amount of revenue
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next year. In light of these changes, the managers of Elder Services are trying to decide how to balance the budget. 1 Consulting Brief Your consulting firm, HBC110 Consulting, has been employed by Elder Services to assist with a financial analysis of its operations. The objective of the anlaysis is to provide guidance to management on
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Cost-Volume Profit Analysis Cost-Volume-Profit (“CVP”) analysis is essential for any company to be able to determine break-even points, and determining short term decisions. Arguably, for small businesses, nothing could be more important, as CVP provides the minimum volume of a product needed to sell in order to experience neither a gain nor loss. For entrepreneurs it is important to be effective and efficient when utilizing CVP accounting processes. This provides the framework
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32-34, variable costs will change with changes in production volume Points Received: 6 of 6 Comments: 5. Question : (TCO B) The break-even point is Student Answer: total costs divided by variable costs per unit. contribution margin per unit divided by revenue per unit.
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accounting , CVP. TOPICS TO COVER: ABSTRACT INTRODUCTION PROBLEM ASSUMPTION UNDERLYING CVP ANALYSISI THE CONTRIBUTION MARGIN. CONTRIBUTION MARGIN INCOME STATEMENT DEFINE THE BREAKEVEN POINT WHAT IS THE C.M RATIO. THE IMPORTANCE of UNIT CONTRIBUTION MARGINE DETERMINATI SOME APPLICATIONS OF CM “WHAT IF “ANALYSIS ON OF TARGET INCOME AND TAXES MOS- MARGINE OF SAFETY CHOOSING THE COST STRUCTURE TO DECREASE COST ULTIMATELY DEGREE OF OPERATING LEVERAGE DEGREE OF
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