selling a personal computer accessory. Projections based on recent experience are: Sales (units) . . . . . . . . . . . . . . . . . . . 20,000 per year Selling price . . . . . . . . . . . . . . . . . . . PhP 60 per unit Purchase cost . . . . . . . . . . . . . . . . . PhP 36 per unit Advertising expense . . . . . . . . . . . . PhP 60,000 per year Delivery expense . . . . . . . . . . . . . . . PhP 6 per unit Sales salaries and commissions . . . PhP 40,000
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is the company’s sales, production, and cost information for last year: Cello Standard Custom Sales and production volume in units 900 100 Unit Selling Price $600.00 $900.00 Unit costs: Direct materials $150.00 $375.00 Direct labor $180.00 $240.00 Manufacturing overhead* $135.00 $135.00 Total unit costs $465.00 $750.00 Unit Gross Profit $135.00 $150.00 Direct Labor Hours
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leverage occurs any time a firm has fixed cost that must be met regardless of volume. operating leverage is the technique of magnifying the EBIT by using fixed costs that must be met regardless of volume in the capital structure. An entrepreneur generally employ assets with a fixed cost in the hope that volume will produce revenues more than sufficient to cover all fixed and variable costs. For example in an airline industry, a large portion of total cost are fixed. Beyond the break-even point each
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000 in 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 $5 million 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 value of cost pool is 100,000
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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? The below pro forma profit and loss statement states that the clinic is currently operating at a loss of $3,173 per month, considering that subtraction of fixed and variable costs. The contribution margin per month totals $48,138 or divided out equals
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be measured based on 3 categories: i. Product line (on-highway axles, off-highway axles, and brakes), ii. Product families, and iii. Product model. The Pontiac plant operates two product lines. It manufactures the low volume product families that include parts for new products and replacement parts for all old products to support its past customers. Based on the corporate strategy, it had been decided that as the demand for a new product being manufactured at Pontiac
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Absorption Costing Absorption costing is a costing system in which the direct labor, direct materials, and fixed and variable manufacturing overhead costs are traced to every finished product. Thus, in the absorption costing system, all costs are product costs regardless of their classification of variable or fixed. Because of its characteristic of no cost discrimination, absorption costing is also known as full costing or as full absorption method (¨Absorption¨ 1). The absorption costing is the only
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Pavilion Case: Strategy and CVP Analysis Edward Blocher and Kung H. Chen ABSTRACT: The ALLTEL Pavilion case is intended for the undergraduate management accounting or cost accounting course and the M.B.A. management accounting course. It provides an excellent context in which to examine strategic issues in using cost volume profit (CVP) in a service business. Based on an actual entertainment pavilion, the case develops many factors unique to a service business and illustrates how pavilion management
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side is that their operating cost is high. BCHUS has a strong financial cap that is their strength; however, the lack of profit they generate is their weakness. BCUHS operates on a fee-for-services procedure but with the implementation of the ACA, 13.2% of the population is uninsured. With that, BCUHS needs to plan out the budgeting strategy and cut down on expenses that are unnecessary and use the money to upgrade their technologies and things that will generate profit. Different organizations and
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in regards to their four basic paper product lines. It will show the cost and price data for the next fiscal quarter, plus showing the contribution margins per unit and the revisions. The paper will include the break-even point for sales mix along with the margin of safety for the estimated sales volume of the original estimates and the revised estimates as well. Lastly, it will address Herbert’s concern about the variable cost of the place mats. Original Estimated Contribution Margins – (1) Computer
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