14/05/2014 Mixed Costs Total Mixed Cost VC Per Unit (Slope) Purpose of Mixed Cost Analysis To predict cost at an activity level with no historical record: Total mixed cost line can be expressed as: 2N Y Total Utility Cost Fixed Cost (Intercept) Level of Activity If your fixed monthly utility charge is $40, your variable cost is $0.03 per kilowatt hour, can you predict the utility of next month when you plan to use 2,000 kilowatt hours? Y = a + bX Variable Cost per KW
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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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D. Total costs and revenues can be depicted with a straight line. 2. If production does not equal sales, A. it must adjust the CVP formulas for that fact if it wishes to use CVP. B. it cannot use CVP, as an assumption is violated. C. a CVP analysis will always indicate a breakeven point that cannot be reached. D. the conclusions it draws from a CVP analysis will not be as sound as they would be if production equaled sales. 3. Profit is indicated on a cost-volume-profit graph by A. the
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cost driver? Sol) Allocation rate = Cost pool/hours of housekeeping services = $100,000/5000 = $20 per hour consumed for housekeeping services. 3) What is a cost-volume-profit (CVP) analysis and why is it useful to health services managers? Sol) Profit analysis is an analytical technique typically used to analyze the effects of volume changes on profit. The same procedures can be used to assess the effects of volume changes on costs, so this type
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BWIP x (100%- %completion of BWIP) Cost per Equiv. Unit = Cost added during the period Equiv. units of production CHAPTER 3 COST BEHAVIOR: ANALYSIS & USE Mixed Cost = total fixed cost + (variable cost per unit of activity)(level of activity) Y = a + bx High Low Method B = Y2-Y1 X2 – X1 CHAPTER 4 COST-VOLUME-PROFIT (CVP) RELATIONSHIPS CVP Relationships in Equation Form Profit = (Sales – Variable Expenses (VE)) –
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Strategic cost analysis & management: Case Study Bill French Accountant Takeaways Bill French, aggregated BEP basic Sales volume Unit sales price (+) Sales revenue Unit var. cost (-) Total VC (=) Contribution margin (-) Fixed cost (=) Operating profit (-) Taxes (=) Net Profit after taxes Dividends (=) Net Profit 1 076 406 1,159 1 247 400 0,56 607 401 640 000 640 000 0 0 0 0 0 basic+ dividend 1 328 688 1,159 1 539 760 0,56 749 760 790 000 640 000 150 000 75 000 75 000 75 000 0 basic+ union 1
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Cost-Volume-Profit Analysis Southern New Hampshire University Cost –Volume-Profit (CVP) analysis is a technique that managers can use to predict the effects of sales and product costs of a business. It deals with how operating profit is affected by changes in variable costs, fixed costs, selling price per unit and the sales mix of two or more different products. There are assumptions that this technique has which include: 1) All costs can be categorized as variable or fixed 2) Sales
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University of the Philippines Diliman Extension Program in Pampanga Claro M. Recto Highway, CSEZ, Angeles City, Pampanga BILL FRENCH CASE ANALYSIS Calamiong, Yna Marie Espejo, Jean Macabuhay, Minorka Salenga, Darlene Samia, Mark Valloyas, Hazel Marie BACKGROUND OF THE STUDY Bill French is a staff accountant at Duo Products Corporation. He has been doing routine types of analytical work and is reporting to his boss, Wes Davidson; a controller of the said company. French was a business
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amount spent on producing a given amount of good. The components of total costs include total fixed costs and total variable costs. Fixed cost is the part of the budget that stays the same regardless of whether you produce a lot, a little bit, or even if you produce zero. Variable cost is the rest of total cost, the part
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Orol FROM: DATE: September 12, 2011 SUBJECT: Foxy Originals Expansion into U.S. Market Introduction This memorandum compares two approaches Foxy Originals can take to expand their Canada-based operations into U.S. markets. Specifically, CVP analyses will be conducted to figure out the financial implications of each method. Finally, recommendations will be made about how Foxy Originals should proceed in its expansion. Mission of Foxy Originals Jen Kluger and Suzie Orol built Foxy Originals
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