Homework # 8 Chapter 10 1. List and discuss 5 problems that can lead to differences between actual cost and standard cost for an operating period‚ pointing out how each increases potential savings. Any number of problems can develop in day-to-day operations that will lead to differences between standard and actual costs. These include overpurchasing‚ overproduction‚ pilferage‚ spoilage‚ improper portioning‚ and failure to follow standard recipes‚ among many others. There are two
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volume or level of activity 3. per unit variable costs 4. total fixed costs 5. mix of products sold Unit Contribution Margin: p – v Total Contribution Margin: (p - v) *Q Contribution Margin Ratio: (p-v) /p Breakeven Point: The point at which revenues equal total cost‚ and the profit is zero. * Equation Method: p*Q = f + v*Q * Contribution Margin Method Breakeven in Units: Q = f / (p-v) (Fixed expenses / CM per unit) Breakeven in Dollars: Y = p*Q = p*f / (p-v)
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FREQUENTLY USED FORMULAS FOR MANAGING OPERATIONS CHAPTER 1—MANAGING REVENUE AND EXPENSE Revenue – Expenses = Profit Revenue – Desired Profit = Ideal Expense Part Whole = Percent Expense Revenue = Expense % Profit Revenue = Profit % Desired Profit Revenue = Desired Profit % Revenue – (Food and Beverage Cost + Labor Cost + Other Expense) = Profit Food and Beverage Cost Revenue = Food and Beverage Cost % Labor Cost Revenue
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sales manager is right‚ what will be the effect on the company’s monthly net operating income or loss? (Use the incremental approach in preparing your answer.) Requirement 2 (continued) Incremental method Variable expense ($14 per unit) Contribution Margin $340‚000 Sales increased 238‚000 VE increased 102‚000 CM increased Fixed Expenses 98‚000 Net Operating Income $4‚000 Sales (17000 units x 20) $70‚000/20 = 3500 units $189‚000/13500 = $14 per unit $90‚000 + 8‚000= $98‚000 $70‚000 49‚000
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Case 7-2 Five Star Tools This report provides an analysis and evaluation of constraints in the production process for the Model C210 and the Model D400 of the Five Star Tools product line. The significant growth the company has experienced in recent years has led to a strain on the firm’s production capacity. This report seeks to determine how to loosen constraints on production and identify the most profitable product line given current production limitations. Incremental analysis is used to
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whether to introduce a new product or service line‚ to determine the appropriate sale price and the consequent market position for the firm’s product. Question 1) “Contribution” represents the portion of sales revenue that is not consumed by variable costs and so contributes to the coverage of fixed costs. To compute profit contribution that can be earned by carrying 1 ton of tapioca from Balik Papan to Singapore‚ dock to dock‚ and 1 ton of general merchandise goods from Singapore to Balik Papan only
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CRU Computer Rental Case Solutions Solution 1 TABLE 1: CRU FLOWS | Customer | Receiving | Status 24 | Status 40 | Stored Orders | Orders at Suppliers | Status 41 | Status 42 | Status 20 | | | | | | | | | | | Throughput(Units/Week) | 1000 | 1000 | 1000*.70=700 | 1000*.30+ .15*700= 405 | 405 | 405 | 405 | 405 | 1000 | | | | | | | | | | | Inventory(Units) | 8000= 8*1000 | 500 | 1500 | 1000 | 500 | 405= 405*1 | 500+405 = 905 | 500 | 2000=2*1000 | | | | | |
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1) What is the break-even volume in units‚ and in sales dollars? Total Fixed Costs | 4‚290‚000.00 | Total Variable Costs per unit | 2‚070.00 | Contribution Margin per unit | 2‚280.00 | Contribution Margin Ratio | 0.52 | Break-even Point in Units | 1‚882 | Break-even Point in Sales Dollars | $8‚184‚868.42 | 2) Market research estimates that monthly
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District Branch James McGaran was manager of the most important of the 31 branches in the Los Angeles area. Located in Los Angeles’s financial district‚ James’s branch had a staff of 15 people‚ revenues of $6 million‚ and $4.3 million in profit margin. The customer base was very diverse. Individual customers ranged from people who worked in the financial district with sophisticated retail banking needs to less informed individuals banking for convenience. Business customers were sophisticated
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Target Profit; Margin of Safety; CM Ratio 1. What is the monthly break-even point in units sold and in sales dollars? Break-even point in units sold = Fixed expenses Unit Contribution Margin $ 150‚000 $ 12 per unit = = 12‚ 500 units Break-even point in total sales dollars = Fixed expenses Contribution Margin Ratio $ 150‚000 30% = = $ 500‚000 2. Without resorting to computations‚ what is the total contribution margin at the break-even
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