Managerial Accounting Mid-Term 1.) a.) Snack-Foods division president may want to play the end-of-year games because there may be a bonus for the division president if they get certain earnings for the year. Not only a bonus for the division president; but there may be a bonus for the division itself. With that being said he could use that for the other employees to help participate in the year-end games. If corporate has seen them fallen behind‚ then these year-end games maybe able to apply
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level of activity 3. per unit variable costs 4. total fixed costs 5. mix of products sold Because CVP analysis helps managers understand the interrelationships among cost‚ volume‚ and profit‚ it is vital tool in many business decisions. These decisions include‚ for example; a. what products to manufacture or sell b. what pricing policy to follow c. what marketing strategy to employ‚ and d. what type of productive facilities to acquire B. Marginal and absorption costing:
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hotel to break even? Variable Costs: Cleaning Supplies $1‚920 Linen Service $13‚920 ½ Misc Expenses $3‚657 $19‚497 (Total Variable Cost) Variable Cost per Occupied Room Night: = =$2.54. Contribution Margin: Average Revenue = = $20.94 Contribution Margin = Revenue – Variable Cost = $20.94 – $2.54 = 18.40. Fixed Costs: = Total Costs – Variable Costs = $138‚410 - $19‚497 = $118‚913. Break Even: =. Per night: = = 54 rooms. 54 rooms on average (or 67
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QUESTION a). Name five assumptions that underline the use of break – even analysis. It is essential that anyone preparing or interpreting CVP information is aware of the underlying assumptions on which the information has been prepared. If these assumptions are not recognized‚ serious errors may result and incorrect conclusions may be drawn from the analysis.(Drury‚ 2004). Breakeven analysis (cost-volume-profit analysis) is an approach to profit planning that requires derivation of various relationships
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000 Formula : Revenue = Units Sold * Unit price Contribution Margin = Revenue – All Variable Cost Contribution Margin Ratio = Contribution Margin/Selling Price Break Even Points in Units = (Total Fixed Costs + Target Profit )/Contribution Margin Break Even Points in Sales = (Total Fixed Costs + Target Profit )/Contribution Margin Ratio Margin of Safety = Revenue - Break Even Points in Sales Degree of Operating Leverage = Contribution Margin/Net Income Net Income = Revenue – Total Variable
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BBUS502 Semester 2‚ 2013/14 Integrative Case Study: Part 1 In your groups you should try working through this case study to help develop your abilities to apply some of the decision approaches and techniques covered in the first five weeks of the module. The case study should be treated as a formative exercise; the topics covered will be assessed as part of the in-class multiple choice test that will be held in Week 12‚ details of which are available elsewhere on Blackboard. You will each be permitted
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administrative expenses‚ rent‚ depreciation‚ and miscellaneous expenses. Assuming all questions are answered independently: 1. Income statement using the contribution approach: | 2004 | 2005 | 2007 | Sales | $8‚583‚000 | $8‚102‚000 | $10‚711‚000 | Less: Variable Costs | $4‚669‚000 | $4‚456‚000 | $5‚998‚000 | Contribution Margin | $3‚914‚000 | $3‚646‚000 | $4‚713‚000 | Less: Fixed Costs | $3‚180‚000 | $3‚283‚000 | $4‚971‚000 | Net Income | $734‚000 | $363‚000
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thousands of individual items. Finding the breakeven point for each item would be laborious and meaningless. 7-3 The contribution margin ratio is: price - variable costs price The contribution margin ratio (CMR) represents the net contribution per sales dollar. The CMR tells us the change in profit associated with a given change in sales dollars. It is a useful measure of the relative contribution to profit of different products‚ divisions‚ or sales units. The use of this ratio can give a retail store a good
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Chapter 2 Questions 2-1. I agree with this statement. I would also like to add that cost behavior is also identifying the key resources that are performed‚ resources used in performing these activities‚ costs of the resources‚ and what the cost is driven from. 2-2. Two rules of thumb when analyzing cost behavior are to manage what the company manufactures‚ sells‚ and to give advice as to where costs can be reduced. 2-3. Three examples of a variable cost are a 12% increase in the production of
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manufactures but selectively introduces the cheaper plastic rings in areas where it faced with the ‘plastic’ competition. Hans Thorborg may open many alternatives decisions as the following: Stay out of plastic rings. However‚ continue to sell steel rings and do not manufacture/sell plastic rings do not seem like a feasible decision because for its survival PWI will have to plan strategically and keep with competition. It is just an issue of time‚ when to sell plastic ring. Stop selling steel
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