nights Contribution margin from question 1 or Average Revenue – Variable Cost per Unit = = $20.94 - $2.54 = $18.4 Loss: 80 – 72 = 8 rooms x 34 weekend nights x $18.4 = $5,005 Profit: 72 rooms x 34 weekend nights x $5 increase in rates = $12,240 Difference = $12,240 - $5,005 = $7,235 (number if positive; therefore, we have a profit and we should add it to profit before taxes) Therefore, revised profit before taxed would be equal to $22,390 + $7,235 = $29,625 Question 3. Contribution Margin = Average
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CVP And Break-Even Analysis Paper CVP And Break-Even Analysis Paper Looking into opening a small business can be a daunting task but, with various opportunities for buying into a franchise, becoming a small business owner seems to be a reality for some. Each franchise provides various information pieces about their franchise to attract new owners. When someone is looking to invest in a franchise, doing your own analysis to validate the information provided by the franchise is critical in
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Strategic Marketing Problems Cases and Comments V11. Chapter 2 1a) Contribution per CD unit = Unit Selling Price – Unit Variable Cost = $9.00 – ($1.25 + $0.35 + $1.00) = $6.40 b) Break-even volume in CD units Total Fixed Costs = $275,000 + $250,000 = $525,000 Unit Break-even Volume = Total Fixed Costs/Contribution per unit = $525,000 - $6.40 = 82,031.25units Break-even volume in dollars Contribution Margin = (Unit selling price – unit variable cost) / unit selling price = ($9.00 – $2
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quantity move in the same direction. 1b. TR= 50*10,000 = 500,000 TC= 15*10,000 = 150,000 1c.TR= 55 x 10300= 566500 CM= 55-35= 20 TC= 20 x 10300= 206,000 Yes we would recommend the increase in price because contribution margin increased by $56,000 1d. % Profit B/E (50-55)/$15+(50-55) =.5 or 50% 1e. Quantity demanded would have to increase by at least 50% for the price change to be profitable. 1f. The two metrics offer different views. The elasticity metric
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James Whittle Salem Telephone Company Case Study 9/29/2014 1.) The variable costs in Exhibit 2 are Power and Hourly Personnel Wages as the costs fluctuate from month to month and are driven by the revenue hours for the company. The fixed costs in Exhibit 2 are Rent, Custodial Services, Computer Equipment Leases, Computer Maintenance, Computer Depreciation, Office Equipment and Fixtures Depreciation, Salaried Staff Wages, Systems Development and Maintenance, Administrative Wages, Sales Wages
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MODULE 2, ASSIGNMENT 4 October 22, 2013 Topic: Standard Costing, Variance Analysis and Budgets Overview The main topics for Assignment 4 are standard costing, variance analysis, and budget creation. Accountants of all management levels often have to analyze variance reports in order to help in the decision-making process. Through the differentiation of costs into fixed and variable classifications, managers are better able to construct break-even charts and other decision-making and control
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per Unit 4.50 7.50 3.75 1.50 Total Variable Cost 6,750,000 4,500,000 1,500,000 750,000 Fixed Costs 2,970,000 960,000 1,560,000 450,000 Profit 1,080,000 540,000 540,000 0 Ratios: Variable cost to sales 0.625 0.75 0.42 0.625 Unit contribution to sales 0.375 0.25 0.58 0.375 Utilization of capacity 75% 30% 20% 25% 2. On the basis of French's revised information, what does next year look like: a. What is the break-even point? Breakeven Point (Reallocated Sales) Aggregate A
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31 (for the next year) to reflect a Contribution Income Statement format. The reason for this application is to separate the Variable and Fixed costs associated in selling telecommunications equipment to derive pertinent data needed to determine break even sales. The restructuring of each Income Statement may be found in Appendix A of this report. Reformatting the Income Statement allows us to determine first, the Contribution Margin. The Contribution Margin is significant in determining Break-even
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Question 1 In this case the managerial accountant is faced with an ethical dilemma. It involves integrity and objectivity. The managerial accountant cannot request an immediate meeting with the Board of Directors. The appropriate way to deal with this problem is presenting the situation to the next higher managerial level firstly. According to CIMA code of ethics for professional accountants, a distinguish mark of the accountancy profession is its acceptance of the responsibility to act in
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Contribution margin analysis is another tool managers use for decision making, expenses are categorized as either fixed or variable. The variable costs are deducted from sales to obtain the contribution margin. Fixed costs are then subtracted from contribution margin to obtain net income. This information helps the manager to (1) decide whether to drop or push a product line, (2) evaluate alternatives arising from production, special advertising, and so on, (3) decide on pricing strategy and products
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