unit × 410‚000 units) $27‚880‚000 Variable costs ($60 per unit × 410‚000 units) 24‚600‚000 Contribution margin $ 3‚280‚000 1b. Contribution margin (from above) $3‚280‚000 Fixed costs 1‚640‚000 Operating income $1‚640‚000 2a. Sales (from above) $27‚880‚000 Variable costs ($54 per unit × 410‚000 units) 22‚140‚000 Contribution margin $ 5‚740‚000 2b. Contribution margin $5‚740‚000 Fixed costs 5‚330‚000 Operating income $ 410‚000 3 Operating income is expected
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of how all of these contribute to the CVP analysis will help in seeing how the process works and how it will be useful to a company. In the first example we will see how an increase in unit selling prices will affect the contribution margin. The contribution margin is the amount of revenue remaining after deducting variable costs. Say that XYZ auto parts store sells a particular part for 100 dollars. The variable costs would be say 50 dollars. Both of these are per unit. Take the variable
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------------------------------------------------- Chapter 9—Break-Even Point and Cost-Volume-Profit Analysis MULTIPLE CHOICE 1. CVP analysis requires costs to be categorized as a. | either fixed or variable. | b. | direct or indirect. | c. | product or period. | d. | standard or actual. | ANS: A PTS: 1 DIF: Easy OBJ: 9-1 NAT: AACSB: Reflective Thinking LOC: AICPA Functional Competencies: Decision Modeling 2. With respect to fixed costs‚ CVP analysis
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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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Dateesha Blakely PROC 5830 22 April 2011 Wk 7 Case 2 Case of the Pricing Predicament Case Assignment Calibrated manufacturing makes an electronic component that is in great demand. The component sells for $20 each. Calibrated’s current capacity is 10‚000 units per week. For the last few months‚ however‚ the company has been receiving new orders at a rate of 14‚000 units per week‚ and now has a substantial backlog. The company expects this order rate to continue‚ if it maintains price
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$836 $81 3. Use the data you collected in Requirement 2 to calculate each segment’s sales margin. Interpret your results. Sales Margin = Operating Income / Sales Painting Stores Group: Sales Margin= 862 / 5410 = 15.9% Consumer Group: Sales Margin = 217 / 1322 = 16.4% Global Finishes Group: Sales Margin = 147 / 1961 = 7.5% Latin America Coatings Group: Sales Margin = 81 / 836 = 9.7% 4. Use the data you collected in Question 2 to calculate each segment’s capital turnover
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the contribution margin per haircut. Assume that the barbers’ compensation is a fixed cost. Show calculations to support your answer. Contribution margin is the marginal income per unit sold. The formula is the per unit sales price minus the variable cost per unit. For Andre‚ with a sales price of $12.00 and a variable cost of $0.40 per cut‚ his Contribution Margin (income per cut) is $11.60: unit sales price $ 12.00 - variable cost $ 0.40 shampoo = cont margin $
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FIVE STAR TOOLS Five Star Tools is a small family-owned firm that manufactures diamond-coated cutting tools (chisels and saws) used by jewelers. Production involves three major processes. First‚ steel “blanks” (tools without the diamond coating) are cut to size. Second‚ the blanks are sent to a chemical bath that prepares the tools for the coating process. In the third major process‚ the blanks are coated with diamond chips in a proprietary process that simultaneously coats and sharpens the blade
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method Prepare a contribution format income statement Prepare a traditional format income statement Schedule of cost of goods sold Compute the company’s predetermined overhead rate. Unit product costs Prepare a Schedule of Cost of Goods Manufactured Prepare a Schedule of Cost of Goods Sold Weighted Average method Construct a cost reconciliation Compute the following items: a. Unit contribution margin. b. Contribution margin ratio. c. Break-even in dollar sales. d. Margin of safety percentage
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SP: Selling price VCU: Variable cost per unit CMU: Contribution margin per unit FC: Fixed costs TOI: Target operating income 3-16 (10 min.) CVP computations. | | |Variable |Fixed |Total |Operating |Contribution |Contribution | | |Revenues |Costs |Costs |Costs |Income |Margin |Margin % | |a. |$2‚000 |$ 500
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