manufacturing overhead costs to Butyl is $700 per tonne ($44,625,000/ 85,000 *9/12). Because fixed costs were allocated to production based on a plant’s “demonstrated capacity” using the following formula (standard fixed cost per ton = estimated annual total fixed cost ÷ annual demonstrated plant capacity). The components of transferring to FG inventory, to EROW are already closed out into “Cost Adjustments”, “ Spending Variance,” and “ Volume Variance” in Exhibit 2. The Volume Variance (5250) is calculated
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Management Control: Budgeting and Variance Analysis TJ Wicker TJ Wicker Kaplan University Chapter 8 Question 8.1 Why are planning and budgeting so important to an organization’s success? Planning and budgeting both play a critical role in the finance functions of all healthcare service organizations. In fact, on could argue (and usually win the argument) the planning and budgeting are the most importnat of all finance related tasks. Planning encompasses the overall process of preparing for
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CHAPTER 7: COST-VOLUME-PROFIT ANALYSIS QUESTIONS 7-1 The underlying relationship in cost-volume-profit analysis is that costs, revenues, and profits all change in a predictable way as the volume of activity changes. 7-2 It is more practical to find the breakeven point in sales dollars for companies having thousands of individual items. Finding the breakeven point for each item would be laborious and meaningless. 7-3 The contribution margin ratio is: price - variable costs
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reputation is based, must not be compromised. The Jot brand name is known for quality toys but it is important that its products appeal to cost - conscious retailers and price sensitive customers. Jot can use the cost - leadership strategy, using Porter’s generic strategy framework, to select the minimum cost in its choice of manufacturers for products YY and ZZ. 2.0 Terms of reference I am
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Inc This case is comprised of various situations that deal with behavioral costs in order to maximize profits. The use of break-even analysis and opportunity cost is used along with recognizing and using the fixed and variable cost. The Hospital Supply, Inc. case is where they manufacture hydraulic hoists and have a normal volume of 3,000 units per month. Using a break-even analysis the determination of the sales volume and prices will reveal what the company will need to profitably sell its product
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Activity-Based Systems: Measuring the Costs of Resource Usage Robin Cooper and Robert S. Kaplan Robin Cooper is a Professor at the Claremont Graduate School and Robert S. Kaplan is a Professor at the Harvard Business School. This paper describes the conceptual basis for the design and use of newly emerging activity-based cost (ABC) systems. TVaditional cost systems use volume-driven allocation bases, such as direct labor dollars, machine hours, and sales dollars, to assign organizational expenses
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direct costs in 2007. These costs must be allocated to Ruger’s three revenue-producing patient services departments using the direct method. Two cost drivers are under consideration: patient services revenue and hours of housekeeping services used. The patient services departments generated $5million in total revenues in 2007, and to support these clinical activities, they used 5,000 hours of housekeeping services. 1 What is the value of the cost pool? The allocated amount of the cost pool
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government strongly supports initiative linked with efficient usage of wasted materials, as currently used construction material (clay) damages soil fertility. Taking into consideration initial set up costs, we as a team, gave recommendations concerning about cost revise structure in case of higher production volume and made some conclusions regarding current financial estimations. In order to manage proper analysis we should begin with expenses structure and their classification for the Indian company.
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CHAPTER 19 ALTERNATE PROBLEMS Problem 19.1A Using Cost-Volume Profit Formulas Jumble writes and manufactures spelling games that it sells to retail stores. The following is per-unit information relating to the manufacture and sale of this product: Unit sale price $ 30 Variable cost per unit 6 Fixed costs per year 280,000 Instructions Determine the following, showing as part of your answer the formula that you used in your computation. For example
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Solutions - Zeus Opticals a. Price Variable cost Unit contribution margin Allocated overhead Profit margin Eyepieces $53.00 30.00 23.00 25.50 $(2.50) Binoculars $ 78.00 45.00 33.00 32.30 $ 0.70 Camera Lens $160.00 118.00 42.00 35.70 $ 6.30 In this computation, notice that Zeus’s overhead rate is $17 per labor hour. We first compute the total number of hours as [(16,000 eyepieces × 1.5 hours/unit) + (20,000 binoculars × 1.9 hours/unit) + (3,000 lens× 2.1 hours/unit)]
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