160 Average variable cost per passenger $ 70 Fixed operating cost per month $3‚150‚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
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the red. In order to do this‚ we need to explain variable and fixed costs‚ period and product costs‚ and rewrite Grear Rafting’s income statement. Grear Rafting’s income statements is provided below. Grear Rafting Company Income Statement For the Year Ended December 31‚ 2008 Revenue $1‚048‚000 Rental Cost of Rafts and Camping Equipment (208‚600)
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Cost-Volume-Profit Analysis From Wikipedia‚ the free encyclopedia Jump to: navigation‚ search Cost-Volume-Profit Analysis (CVP)‚ in managerial economics is a form of cost accounting. It is a simplified model‚ useful for elementary instruction and for short-run decisions. Cost-volume-profit (CVP) analysis expands the use of information provided by breakeven analysis. A critical part of CVP analysis is the point where total revenues equal total costs (both fixed and variable costs). At this breakeven
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Variable and Fixed Costs There are different types of costs associated with the running of Grear Rafting. In order to develop a plan for Grear Rafting to make a profit‚ it is necessary to identify those costs that can be changed‚ and those that cannot be changed. 1. Variable Cost: A variable cost is a cost that increases in total as output increases and decreases in total as output decreases. (Rich et al‚ 2010). For example‚ cotton used in making cotton shirts is a variable cost. As a company
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there are costs incurred due to the consumption of resources. Presented in Exhibit 1 are the costs of manufacturing and marketing hydraulic hoists at the company’s normal volume of 3‚000 units per month: Exhibit 1 – Cost per Unit for Hydraulic Hoists. Cost per Unit for Hydraulic Hoists. Unit manufacturing cost: Variable materials $550 Variable labor $825 Variable overhead $420 Fixed overhead $660 Total unit manufacturing cost $2455
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160‚000 Variable Costs: Direct Materials $ 6.50 Direct Labor $10.00 Variable Overhead $ 5.80 Mktg‚ Distrib‚ & Admin $ 1.70 Total Variable Costs: $24.00 $1‚440‚000 Contribution Margin $12.00 $ 720‚000 Fixed Costs: Manufacturing Overhead $ 5.00 Mktg & Admin $ 4.50 Total Fixed Costs: $ 9.50 $ 570‚000 Operating Income: $ 150‚000 (2) Waverly’s Breakeven Point in Units Sale Price per Unit: $36 Variable Costs per Unit: $24 Contribution
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Job U12 Cost Sheet $ Direct Materials: Plain t-shirts 4‚800 Paints 1‚400 Design & making of silk-screen 2‚000 Direct Labour: 600 t-shirts1 4‚200 Factory Overhead2 840 Additional Costs: Correction of silk-screen 100 White paint 20 20 t-shirts replaced3 160 Labour on 60 t-shirts4 200 Overhead on 60 t-shirts5 40 Cost incurred on reworked t-shirts6 20 Sale of reworked t-shirts7 -200 Job transfer to U26 -160 Total Costs 13
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Introduction Break-even analysis is a technique widely used by production management and management accountants. It is based on categorising production costs between those which are "variable" (costs that change when the production output changes) and those that are "fixed" (costs not directly related to the volume of production). Total variable and fixed costs are compared with sales revenue in order to determine the level of sales volume‚ sales value or production at which the business makes neither a
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hour and works a 40-hour week and a 50-week year‚ regardless of the number of haircuts. Rent and other fixed expenses are $1‚750 per month. Hair shampoo used on all clients is .40 per client. Assume that the only service performed is the giving of haircuts (including shampoo)‚ the unit price of which is $12. Based on the information provided‚ Andre wants you to find the contribution margin cost per haircut. The calculations are as followed. There are 5 barbers and they are paid $9.90 per hour. They
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repair machinery‚ and computer systems. Write a two-page report addressing the following topics: 1. Identify several of the variable‚ mixed‚ and fixed costs that the Polaris services department is likely to incur in carrying out its services. 2. Assume that Polaris’s services revenues are expected to grow by 25% in the next year. How do you expect the costs identified in part 1 to change‚ if at all? 3. Based on your answer to part 2‚ can Polaris use the contribution margin ratio to predict how income
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