Zinser Cost = $8.05 mil + $200,000 (installation costs) = $8.25 mil Life expectancy = 10 years with straight line depreciation No value after ten years, but option of sale on open market for $100,000. Sunk costs = $15,000 (marketing research) + $5,000 (engineering tests) Note: Price of Zinser goes up 5% a year. Ring-spinning process is more expensive and slower (3 to 5 times), but makes better quality yarn. Training cost = $50,000 during installation year Reduces power and maintenance costs savings
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Topics/Case Descriptions Measuring Product Costs Case: Seligram, Inc.: Electronic Testing Operations Case Description: Explores the obsolescence of a cost system when technology changes. In particular, it asks students to increase the number of cost centers and allocation bases. The firm moves from a one-center, direct labor-hour system to a three-center, direct labor-hour and machine-hour systems. In addition, the case demonstrates how cost systems can induce subtle and not so subtle shifts
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Topics/Case Descriptions Measuring Product Costs Case: Seligram, Inc.: Electronic Testing Operations Case Description: Explores the obsolescence of a cost system when technology changes. In particular, it asks students to increase the number of cost centers and allocation bases. The firm moves from a one-center, direct labor-hour system to a three-center, direct labor-hour and machine-hour systems. In addition, the case demonstrates how cost systems can induce subtle and not so subtle shifts
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TULSA MEMORIAL HOSPITAL Break-Even Analysis 1. Using the historical data as a guide, construct a pro forma (forecasted) profit and loss statement for the clinic's average month for all of 2014 assuming the status quo. With no change in volume (utilization), is the clinic projected to make a profit? -No, the clinic is projected to experience a loss. Pro Forma Average Month: | | | | | | | | Number of visits | | 1,350 | | | | | Net revenue | | $54,888 |
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Cost Analysis 1st August – 12th August 2011 Syllabus FINC 327 - Cost Analysis 2011 Assessment: An unseen, two hour closed book examination: Part A Compulsory, Part B & C, A choice of ONE of TWO questions THREE questions in total Recommended Textbook Colin Drury, Cost and Management Accounting, an introduction, Pub. Thomson, 7th Edition WWW.thomsonlearning.co.uk ISBN 0-412-58780-7 Lecturer: Prof. Melvin Ch. Williams E-mail: mcwilliams23942@btinternet.com Prof. M C Williams, Cardiff
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services industries Funding: sources eg retained profits, loans, banks, investors, small business schemes, franchise, hire purchase, sponsorship, lease schemes, creditors, debt factoring Income generation: methods eg sales, commission, sub-letting, sponsorship, grants, tracking mechanisms LO2 Understand business in terms of the elements of cost Elements of cost sales; materials; consumables; labour; overheads; capital; gross and net profits; discount costing Selling prices: product and service
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Cost Volume Profit and Break-Even Analysis Break-Even Analysis-Volume-Analysis is a systematic method of examining the relationship between changes in volume (that is output) and changes in Sales Revenue, Express and Net Profit. As a model of these relationships, Break-Even Analysis simplifies the real-world conditions which a firm will face. The objective of Break-Even Analysis is to establish what will happen to the financial results if a specified level of activity or volume fluctuates
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CHAPTER 9 Break-Even Point and Cost-Volume-Profit Analysis QUESTIONS 1. The variable costing income statement classifies costs by the way they behave. Variable costs are deducted from revenues to determine contribution margin and then fixed costs are deducted from contribution margin to determine operating profit. Break-even analysis involves a study of fixed costs, variable costs and revenues to determine the volume at which total costs equal total revenues. Hence, variable costing
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ISSUES COST-VOLUME-PROFIT (CVP) ANALYSIS 1. Definition of cvp 2. Objectives of cvp 3. The importance of cvp to the management: 4. Describe the situation of increasing return to scale 5. Describe the situation of decreasing return to scale 6. Distinguish between economist’s and accountant’s approach to cvp analysis 7. Define the term of “profit volume ratio”. 8. Definition of cost behavior 9. Types and examples for each of the cost behaviour
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amount of material should have cost if bought at standard price/unit. | * Wrong standard cost/unit of material * The price of material changed since the standard was set * Exchange rate movements affecting the price of imported material * Poor/excellent buying decisions and negotiation | Material usage variance:Amount of material actually used compared to the standard amount that should be used for the actual output achieved, evaluated at the standard cost | * Wrong standard usage/unit
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