Blocher‚Stout‚Cokins‚Chen:Cost Management‚ 4e 7-1 ©The McGraw-Hill Companies‚ Inc.‚ 2008 CHAPTER 7: COST-VOLUME-PROFIT ANALYSIS QUESTIONS 7-1 The underlying relationship in cost-volume-profit analysis is that costs‚ revenues‚ and profits all change in a predictable way as the volume of activity changes. 7-2 It is more practical to find the breakeven point in sales dollars for companies having thousands of individual items. Finding the breakeven point for each item would be laborious and meaningless
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CHAPTER 8 Cost-Volume-Profit Analysis ANSWERS TO REVIEW QUESTIONS 8-1 a. In the contribution-margin approach‚ the break-even point in units is calculated using the following formula: Break-even point = fixed expenses unit contribution margin b. In the equation approach‚ the following profit equation is used: sales volume ⎞ ⎛ unit variable sales volume ⎞ ⎛ unit fixed ⎜ ⎟ −⎜ ⎟ − ⎜ sales price × ⎟ ⎜ expense × ⎟ expenses = 0 in units ⎠ ⎝ in units ⎠ ⎝ This equation is solved for the sales volume in units
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exactly what the three key financial keys are: the rearview mirror. The income statement‚ the balance sheet‚ and the statement of cash flows all combine to show exactly what happened in the past. The income statement is a report generated to show the profitability of the company. It shows sales less expenses during a specified period of time. It is prepared in such a way that the profit after each expense can be determined easily. For example‚ on page 27 of our book is the Income Statement for
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Cost-Volume-Profit and Break-Even Analysis Your Name ACC/561 October 12‚ 2011 Andrea Dixon Cost-Volume-Profit and Break-Even Analysis Snap Fitness Owning a business is an expensive and risky venture‚ but buying a franchise is one way to lower the risk and build confidence in the success of that new business. As a ‘no-frills’ type of fitness center‚ Snap Fitness offers its customers convenient‚ 24-hour access‚ hassle-free work outs without an annual contract. The company offers assistance
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order to make the best of its resource. An operation strategy is point out the guidelines and plans for utilizing the organization resource for supporting the business strategy of a company (Reid & Sanders‚ 2007). According to Davis et al. (2002) that operation strategy indicates wide questions about how to utilize the major resource of a company. These questions include: How large do we make our facilities? What type of process do we install to make the products or provide service? What will our
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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 dresses
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WHAT ARE COSTS AND PROFITS? HUNGRY HELEN’S COOKIE FACTORY • Helen‚ the owner of the cookie factory‚ buys flour‚ sugar‚ flavorings‚ and other cookie ingredients. • She also buys the mixers and the ovens and hires workers to run the equipment. • She then sells the resulting cookies to consumers. 2 TOTAL REVENUE‚ TOTAL COST‚ AND PROFIT • The amount that Helen receives for the sale of its output (cookies) is its total revenue. • The amount that the firm pays to buy inputs (flour‚ sugar‚ workers
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15‚ 2013 The Cost of the Decisions We Make For every course of action that one takes in life‚ there is a cost associated. This cost may be large or small but one can weigh this cost with the alternative before he or she makes any decision. In the essay‚ “The Price of Crossing Borders” written by Eduardo Porter‚ the concept of understanding that there is a price for everything is conveyed. There is no decision that is made or path that is taken that comes without some sort of cost to us personally
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How a bank makes profit-an interesting primer by vinayak date. ‘Trust’ bank has opened 10 branches and has become operational on 1/4/2009.on 31/3/2010 it has total deposits of rs 1000 crores. Equity capital of rs. 100 crores divided in 10 crore shares of rs. 10 each. Given this basic data let us try working out basic parameters of banks business ‚ with certain assumptions‚ to keep things simple. Cost of funds----- Analysis of Deposit mix-4o% casa deposits. Of which 25%savings deposits
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4-1 4 Income Statement Usefulness Predicting future performance. 4-2 Evaluate past performance. Help assess the risk or uncertainty of achieving future cash flows. Income Statement Limitations Companies omit items that cannot be measured reliably. 4-3 Income is affected by the accounting methods employed. Income measurement involves judgment. Income Statement Quality of Earnings Companies have incentives to manage income to meet or
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