purchase 50 packets, the supplier will charge us $35.50 ($25 for the product and $10.50 for the shipping), which makes the cost to be $0.71 per packet. So, $1.50 may be an ideal price that we charge for our customers. By using this price, our contribution margin will be $0.79 per bar ($1.50 per bar – $0.71 per bar), and we need to sell 1,137 packets ($898.00 / $0.79 per packet) to cover the price of the vending machine. After covering the initial investment, our monthly break-even point will be 254
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Managing Internal Cost and Controlling Finances JET Task #2 Competition Bikes, Inc. Budget Process Budgets are used for forecasting future business growth and outcomes. Providing a comparison between a forecasted budget with previous year’s actual results allows leadership to strategize and plan for the company’s future on past performance. Producing a master budget roadmap for future operations may be done in two ways--by using fixed budget or flexible budgeting processes. There are
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:managerial accounting , cost 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
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Cost-Volume-Profit Relationships Solutions to Questions 6-1 The contribution margin (CM) ratio is the ratio of the total contribution margin to total sales revenue. It can be used in a variety of ways. For example, the change in total contribution margin from a given change in total sales revenue can be estimated by multiplying the change in total sales revenue by the CM ratio. If fixed costs do not change, then a dollar increase in contribution margin will result in a dollar increase in net operating income
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MODULE 2, ASSIGNMENT 4 December 12, 2011 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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produce 67 million promotional expenses 6.7 million advertising overhead charge 61.12 million distribution fee 6 million in interest The film actually had a negative net income of 61.82 million 2. Contribution Margin = Price Per Unit – Variable Cost The Variable Costs include the $15.3 million paid to the stars, $14.6 million in production overhead because it varies based on size of production cost, $6.7 million in advertising overhead because it varies
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Costs=Salaries+Advertising+Administrative Expenses+Rent+Depreciation+Miscellaneous expenses Breakeven=Fixed Costs/Contribution Margin 2003-3230000/377.03=8,566.96 units 2004-3333000/357.68=9,318.39 units 2006-4921000/352.52=13,959.49 units Breakeven$=Breakeven Units*Unit Price 2003-8566.96*845=$7,239,079.12 2004-9318.39*812=$7,566,532.68 2006-13959.49*819=$11,432,822.31 Margin of Safety=Sales-Breakeven Sales 2003=8583000-7239079.12=1343920.88=15.66% 2004=8102000-7566532.68=535467.32=6.61%
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differences in the contribution margins of the three products, this has lead to a lower total contribution margin than stated in the projected income statement. Nevertheless we’ve reached our sales of $500,000 we didn’t reach our projected operating income of $36,400. Unfortunately we’ve made a operating loss of $8,600. This is due to the fact that our projected income statement was not accurate enough regarding our total contribution margin. Instead of our projected contribution margin of 52% our real
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* MATERIAL BUDGT * LABOR BUDGT * OH BUDGET * BUDGETED I/S * CASH FLOW BUDGET | E19, E20, E21, E22, E23, E24, E25, E26, E27, E28, E29, E35, E36 | CHAPTER | TOPIC | PRACTICE QUESTIONS | CHAPTER 9:C-V-P ANALYSIS | * BREAK-EVEN * MARGIN OF SAFETY * SOLVING FOR ONEUNKNOWN * MULTIPRODUCT * WHAT-IF ANALYSIS | E11, E12, E14, E15, E16, E17, E18, E19, E20, E22, E23, E24, E25, E26, E31, P38, P41, P42 | CHAPTER 10:DECISION MAKING | * MAKE V/S BUY * PRODUCT MIX UNDERCONSTRAINT
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expenses Contribution Margin Fixed Expenses Net operating income $ 20,000.00 $ 12,000.00 $ 8,000.00 $ 6,000.00 $ 2,000.00 per unit $ 100% $ 20.00 60% $ 12.00 40% $ 8.00 1. Total contribution margin Total units sold Contribution margin per unit $ $ 8,000.00 1,000 units 8.00 per unit 2. Total contribution margin Total sales Contribution margin ratio $ 8,000.00 $ 20,000.00 40% 3 Total variable expenses Total sales Variable expense ratio $ 12,000.00 $ 20,000.00 60.00% 4 Contribution margin per
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