Prestige Data Services. Mr. Rowe believes it is possible the accounting reports do not reveal the contribution the Data Service has provided and also the accounting for separate activities may obscure the costs and benefits provided. Therefore we have used the exhibits provided to analyze and come to a conclusion whether Prestige Data services should be shut down or allowed more time to show its contribution. Analysis 1) The first thing we noticed is that fixed and variable costs are included in the
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3 Cost-Volume-Profit Analysis Learning Objectives 1. Explain the features of cost-volumeprofit (CVP) analysis 2. Determine the breakeven point and output level needed to achieve a target operating income 3. Understand how income taxes affect CVP analysis 4. Explain how managers use CVP analysis in decision making 5. Explain how sensitivity analysis helps managers cope with uncertainty 6. Use CVP analysis to plan variable and fixed costs 7. Apply CVP analysis to a company producing multiple
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Net profit=Sales revenue –Total costs - Break-even point (BEP) is the point of sales volume where the firm is not attaining any profit or loss. * Contribution approach - Contribution margin is the excess of total revenues over total variable costs. Unit contribution marginUCM=Selling price-Unit variable costs * Contribution can be also be expressed as a ratio to
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MERTON TRUCK COMPANY 1) No. of Model 101= x‚ no. of model 102=y.Unit contribution/model= S.P – (Variable costs + Fixed cost).For Model 101‚ variable cost=36000 /unit‚For Model 102‚ variable cost=33000/unit.Fixed cost for both the model= 8600000 Therefore‚ total contribution z=39000x+38000y-36000x-33000y-8600000Z=3000x+5000y-8600000 The Constraints are:Engine assembly: x + 2y <= 4000Metal stamping: 2x + 2y <=6000Model 101 assembly: 2x <=5000Model 102 assembly: 3y <= 4500x‚y>=0.Solving
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Accounting II Final Exam Review Chapter 18 Direct and Indirect Costs -Cost – a payment of cash or a commitment to pay cash in the future for the purpose of generating revenues. A. Cost object – costs that are often classified by their relationship to a segment of operations. Ex. Product‚ sales territory‚ a department‚ or an activity‚ such as research and development 1. Direct Cost = identified with and can be traced to a cost object Ex. The wood for a guitar is a direct cost of the
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Horngren‚ C.T.‚ Datar‚ S.M. and Foster‚ G. (2003) Cost Accounting - A Managerial Emphasis‚ Pearson Education‚ Inc.‚ New Jersey‚ Eleventh Edition CHAPTER 11 DECISION MAKING AND RELEVANT INFORMATION 11-1 The five steps in the decision process outlined in Exhibit 11-1 of the text are: 1. 2. 3. 4. 5. Obtain information Make predictions about future costs Choose an alternative Implement the decision Evaluate performance to provide feedback 11-2 Relevant costs are expected future costs that differ
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Foxy Originals 1. Discuss the pros and cons to launching the Foxy brand in the U.S. Pros: Kluger and Orol had established strong Foxy jewelry market in Canada but it is getting saturated. By expanding into the United States Foxy would be able to avoid oversaturation of the Canadian market. The U.S. jewelry market was almost 10 times larger than the Canadian market which offers great opportunity for their product exposure. With this expansion‚ Kluger and Orol could expand their production as
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000 200 3‚480 Contribution Margin $ 236 $ 3‚000 $ 180 $ 3‚132 *in thousands of dollars *$400 x 95%= $380 *$380 x 17‚500 u= $6‚612 Air Comfort Division should institute the 5% price reduction on its air-conditioner units since the effect of this reduction would increase an additional of $132‚000 ($3‚132‚000-$3‚000‚000) to its Income before tax. The additional profit is caused by a sale increase of $432‚000 ($180 x 2‚400) in the contribution margin and a loss in contribution margin on original
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Question 1 The following is Addison Corporation’s contribution format income statement for last month: The company has no beginning or ending inventories. A total of 20‚000 units were produced and sold last month. What is the company’s margin of safety in dollars? Answer $400‚000 $600‚000 $120‚000 $880‚000 . 10 points Question 2 The following is Addison Corporation’s contribution format income statement for last month: The company has
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Textbook Ex. 20.1 Listed below are nine technical accounting terms introduced in this chapter: Variable costs Relevant range Contribution margin Break-even point Fixed costs Semivariable costs Economies of scale Sales mix Unit contribution margin Each of the following statements may (or may not) describe one of these technical terms. For each statement‚ indicate the accounting term described‚ or answer "None"
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