40, while barber compensation is a fixed cost. Contribution margin per head Hair cut price – Shampoo expense $12 - $.40 = $ 11.60 per head When planning a company’s future, management must plan to predict the volume of activity, the cost incurred sales to be made, and profits to be received. An important tool to accomplish this is cost-volume-profit (CVP) analysis. This simply involves computing
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budget variance=$6228F Flexible budget variance=$3172U Sales volume variance=$9400F proof: $6228F=$3172U+9400F In my opinion, flexible budget variance and sales volume variance are both controllable as they can be managed by the manager. For example, sales volume variance can be improved if the manager improves the work efficiency and flexible budget variance can be improved if he controls the sales price and variable cost. Jatin, do we need to calculate fixed expense variance? I can't
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routine types of accounting work, but he would like to become more involved in cost control and in analyses to help the managers make decisions. Recently, he performed a cost-volume-profit analysis of the company’s three products, as shown below. The analysis was based on data from last year’s accounting records. Prior Year Data Aggregate Motor 15 Motor 10 Motor 5 Sales at capacity (units) 300,000 Actual volume (units) 250,000 120,000 80,000 50,000 Price per unit $113.60 $140.00 $120.00
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approached by a competitor and may want to negotiate a lower price for its product purchases. During a meeting held to address the situation Johnson’s accountant Jim Thomas presented a compiled report on customers profitability and profit margin where customer service costs are allocated to customers as a percentage of revenue. This analysis brought Johnson to the conclusion that Saver Superstore is not a very profitable customer compared to other client retailers ,that it is one of their lowest-margin
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intended strategy is named as: Product Lifecycle Management with Lower Cost. It can be simply explained as making full use of the transformation of the product lifecycle to make the product cost lowest. Since the foundations of all groups are same at start, if we want to obtain the advantages of competition, we have to be proactive. Firstly, the most important point is that our firm needs to have plenty of funds and the ability to profit. So we should consider to start with the most lucrative segment from
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Case Study #6 MHA 634 Managerial Accounting #1 With no change in volume (utilization), is the clinic projected to make a profit? Currently the clinic sees about 45 patients per day and they have capacity to handle 85. If they continue how they are operating the clinic is looking at a loss of $3,173. At this rate the clinic will not be able to make a profit in spite of inflation over the next couple years. #2 How many additional daily visits must be generated to break even? There is an
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|UNIVERSITY OF KARACHI | |MANAGERIAL ACCOUNTING | |Applications of CVP concept | |
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financial statement The application of the cost-volume-profit analysis concept After Studying This Chapter, You’ll Be Able To ▲ ▲ ▲ ▲ ▲ ▲ Distinguish the three categories of ratio analysis Compare and contrast financial statements from different companies Examine the link between asset investment and sales growth Apply the major components of Du Pont analysis Analyze the quality of financial reports Use analysis methods to evaluate profit levels Goals and Outcomes ▲ ▲ ▲ ▲
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Table of contents List of figures...................................................................................................... III List of abbreviations ........................................................................................... IV 1 Purpose of this paper .................................................................................... 1 2 Company profile of Red Bull.......................................................................... 1 2.1 2.2 2.3 3.1 3.2 3.3 Company
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This is a framework for understanding an industry or an organisation’s position with respect to the forces operating in the microenvironment • It can be used to explain the performance of competitors in a market • From the analysis a number of generic competitive strategies can be derived • Cost leadership • Differentiation • Focus The five forces • The ability of firms to earn an good return depends on five forces: namely the… • Threat of new entrants‐ the ability of new competitors to enter the industry • Bargaining power of suppliers
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