breakeven point. The cost-volume-profit evaluation and the traditional vs activity based costing method overhead analysis were used for the review and analysis. Traditional Based Costing vs Activity Based Costing Traditional Based Costing Method (TBC). TBC uses one rate‚ the overall cost of production‚ to estimate costs based on the revenue production created. Unlike ABC‚ manufacturing costs in TBC are only assigned to sold merchandises and do not account for nonmanufacturing costs such as administrative
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difficult. The cost to access the Internet was very high; the average hourly rate for the local service was $90. There was no café that was serving as Internet Café in Jamaica yet. Even though there were other cafes turning them to an Internet café was not easy and expensive proposition. Financials: David has to consider three categories of costs: Start up costs required to be invested in the business‚ fixed monthly costs that are to be bore as result of operations and variable costs‚ that result
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Selected HW Module 15 Q15-1. Cost-volume-profit analysis is a technique used to examine the relationships among the total volume of some independent variable‚ total costs‚ total revenues‚ and profits during a time period. It is particularly useful in the early stages of planning when it provides a framework for discussing planning issues. Q15-4. In a contribution income statement‚ costs are classified according to behavior as variable or fixed‚ and the contribution margin (the difference between
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the best definition of product costs? 1 Product costs are the costs associated with unsold products retained in stock. 2 Product costs are those costs associated with goods or services purchased or produced for sale to customers. 3 Product costs are those costs that change with changes in the level of product activity‚ over a defined period of time. 4 Product costs are overhead costs that are allocated over a number of products of the business for which costs are to be determined. 2 Which of
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$20 per 10 gallon bottle and the company currently sells 2‚000 bottles per day. Following is a summary of the company’s income and costs on a daily basis. Sales Revenue $40‚000 Incremental Variable Costs $16‚000 Nonincremental Fixed Costs $20‚000 Note: You can assume that variable costs are constant so that the average of them is the variable cost relevant for a change in sales. One can calculate the change in sales volume necessary for the price change to be profitable by using
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exception. Question 3 1.5 out of 1.5 points Which of the following costs does not change when the level of business activity changes? Selected Answer: total fixed costs Correct Answer: total fixed costs Question 4 1.5 out of 1.5 points Which of the following is not likely to be a fixed cost? Selected Answer: direct materials Correct Answer: direct materials Question 5 1.5 out of 1.5 points A sunk cost is a cost Selected Answer: incurred in the past which is not relevant to
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Exercise 10-3 Cost Category | Product / GS&A | Asset / Expense | Research and development costs | GS&A | Expense | Cost to set up manufacturing facility | Product | Asset | Utilities used in factory | Product | Asset | Cars for sales staff | GS&A | Asset | Distributions to stockholders | Neither | Neither | General office supplies | GS&A | Asset | Raw materials used in the manufacturing process | Product | Asset | Costs to rent office equipment
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Sales $8‚583 $8‚102 $10‚711 Variable Costs Cost of Goods Sold $4‚326 $4‚132 $5‚570 Commissions $429 $405 $536 Total Variable Costs $4‚755 $4‚537 $6‚106 Fixed Cost Salaries $2‚021 $2‚081 $3‚215 Advertising $254 $250 $257 Administrative Expenses $418 $425 $435 Rent $420 $420 $840 Depreciation $84 $84 $142 Miscellaneous Expenses $53 $93 $122 Total Fixed Cost $3‚250 $3‚353 $5‚011 Breakeven point in number of sales tickets Breakeven Point = Total Fixed Cost / (Contribution Margin/ Units) 2003 =
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have very different market and very different taste‚ so creating jewelry line that will be successful in both countries will be very difficult. Establishing new business in new country with new marketing ideas and sales will result in large upfront cost. 2. Assess each distribution strategy from a qualitative point of view. US Trade shows: Since the retailers personally get to meet the designers and see their products in the booths‚ it creates confidence in the product and its quality thereby
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REVIEW QUESTIONS CHP 2‚3 CHAPTER 2 True/False ____ 1. The cost management information system is primarily concerned with producing outputs for internal users using inputs and processes needed to satisfy management objectives. ____ 2. Cost assignment is one of the key processes of the cost accounting system. ____ 3. The three methods of cost assignment are direct tracing‚ driver tracing‚ and allocation. ____ 4. Intangible products are goods produced by converting raw material into finished products
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