behavior is vital to the manager’s decision-making role‚ because one of the main goals of management accounting is controlling costs. 15 Cost-Volume-Profit Analysis 1. 2. 3. 4. 5. 6. The Profit Equation Breakeven Point Margin of Safety Contribution Margin Contribution Margin Ratio What-if Analysis The Profit Equation Profit = SP(x) –VC(x) – TFC X = Quantity of units produced and sold SP = Selling price per unit VC = Variable cost per unit TFC = Total fixed cost Break-Even Point The break-even
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“The Praise of Folly” Desiderius Erasmus In Erasmus’ work “The Praise of Folly”‚ the narrator delivers a speech praising Folly with the following: "And to whom is it generally agreed life owes its beginning if not to me? For it certainly isn’t the spear of mighty-fathered’ Pallas or the shield of cloud-gathering’ Jupiter which fathers and propagates the human race‚"1[2496]. Here the narrator‚ who is Folly herself‚ tries to put herself above everyone else‚ even the Gods on Olympus. She says
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income statement for last month: Sales $1‚000‚000 Less: Variable Expenses $ 700‚000 Contribution Margin $ 300‚000 Less: Fixed Expenses $ 180‚000 Operating Income $ 120‚000 The company has no beginning or ending inventories. A total of 20‚000 units were produced and sold last month. What is the company’s margin of safety in dollars? $400 000 10 points Question 2 1. The following is Addison Corporation’s contribution
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2. The contribution margin per chair for the Colonial model is: A) $51. B) $16. C) $35. D) $25. The answer is b. CM = P-V = $60 - $35 - $9 = $16. Page 1 3. If the sales mix and sales units are as expected‚ the break-even in sales dollars is closest to: A) $132‚000. B) $148‚500. C) $143‚000. D) $139‚764. Price: Variable Costs: Contribution Margin: Contribution Margin Ratio: The answer is c. Colonial to Early American Sales Mix: 3:1 Weighted Average Contribution Margin Ratio: .75(.2667) +.25(
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used? Will trends in these ratios always move in the same direction? All the three bases are used to find the return earned with respective to sales as well as investment made. When the profit is compared with sales‚ it is called as the net profit margin. When the profit is compared with assets‚ it is called as return earned on total investment and when profit is compared with stockholders’ equity‚ it is called as return on equity. All these are profitability ratios and help to analyze the profitability
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Being Wrong: Adventures in the Margin of Error Being wrong and having someone tell you that your wrong isn’t a good feeling. Many people feel like they can never be wrong and in my opinion that’s a very ignorant way to think. No one was made perfect and I say that to say this‚ being wrong is imbedded in our human DNA. That’s why in mathematics and science they have formulas that have human error or margin of error as variables in their calculations. I remember one day I was arguing with a friend
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Name: ________________________________________________ Date: _____________ WHAP – Chapter 13 Big Picture & Margin Review Big Picture: 1. Assume for the moment that the Chinese had not ended their maritime voyages in 1433. How might the subsequent development of world history have been different? Is there value in asking this kind of “what if” or counterfactual question? Or is it an irrelevant waste of time? 2. How does this chapter distinguish among the various kinds of societies that comprised
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and nearby Euro countries. 2. Mission’s price for the coupling in questions (PT40) is $1.26‚ FOB‚ Los Angeles. The target gross margin for exports is 30% FOB $1.26 (location Los Angeles) COGS $ .88 (Fixed) GTM $0.38 CIF $1.3627= $1.36 FOB (1.05) (1.03)= 1.0815 Pricing FOB $1.33- $.88= $.45 $1.54- $.88=$.66 Target (Gross Margin for exports 30%) 3. Mission has a reputation for high prices in the US‚ and running the factory below capacity limits will raise
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In the long-awaited 184-page environmental treatise‚ titled Laudato Si’‚ or Praise Be to You‚ published by Vatican Press in June 2015‚ Pope Francis described how apathy and the reckless pursuit of profits‚ excessive faith in technology and political shortsightedness‚ along with the relentless exploitation and destruction of the environment‚ are to blame. Encyclicals are letters to the clergy and laity of the church that are considered authoritative. The document was sent to the world’s 5‚000 Catholic
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expenses for this product to be 35% of sales‚ and wanted a net profit of 5% of sales. The retailer expected no markdowns. What retail selling price should be set for each hammer? [Hint: The way to handle this problem is to say that the Gross Profit Margin has to cover the 35% of expenses applicable to the product plus the 5% of net profit wanted. And once you know the GPM%‚ you know the Cost percentage of the Selling Price. ] 2. Competition in a line of sporting goods limits the selling price
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