Motors Division to break even? Answer Q1: Breakeven Fixed costs $260‚000.00 = ---------------------------------- = ---------------------- = 13‚326 units number of units Unit contribution margin $19.51 UCM (Unit Contribution margin) = USP (Unit Selling Price) † UVC (Unit Variable Costs) = = $48.00 - $28.49 = $19.51 USP = Sales / Units sold = $864‚000.00/18‚000 = $48.00 UVC = Total variable costs / Units produced = $512‚800.00/18‚000 =$28.49 Conclusion: The
Premium Variable cost Fixed cost Costs
revenue covers total costs so it is to show how much output you will have to produce to cover your total costs‚ within a business. Break even is usually shown in the form of a graph. To work out the break even point of a business you need 3 important components which are: 1. Fixed costs‚ which are not usually associated with production- these are costs that are at a set price and will not change if income is high or low e.g. Rent and insurance. 2. Variable costs- these are costs that change depending
Premium Marketing Costs Variable cost
that the accounting department rejected both offers because the rate fell short of the total cost per room per day for the hotel. Assuming an occupancy rate of 40% and Master-Budget Capacity Utilization costing‚ the budgeted total room cost per day was €111 (€86 fixed cost + €25 variable cost). Capacity Concept | Fixed Costs | Capacity Level | Fixed Cost per Room | Variable Cost per Room | Total Cost per Room | Theoretical Capacity | 2‚500‚000 | 200 | 34 | 25 | 59 | Practical Capacity | 2
Premium Costs Variable cost Cost
| | | Variable cost adjustment | | | 54 | Variable efficiency variance | | | 241 | Fixed cost adjustment | | | 88 | Fixed spending variance | | | 498 | Production volume variance | | | -5250 | Interest | | | 25 | Period costs | | | -17 | Total | 4579 | | -2881 | As we can see from the above table‚ NASA achieved a favorable variance in sales‚ but not in profits. Therefore‚ one might start wondering if NASA experienced a problem in cost control. Among all the
Premium Costs Management accounting Cost
Chapter 4 Problems 1. Growth and financing (LO4) Philip Morris is excited because sales for his clothing company are expected to double from $500‚000 to $1‚000‚000 next year. Philip notes that net assets (Assets Liabilities) will remain at 50 percent of Sales. His clothing firm will enjoy a 9 percent return on total sales. He will start the year with $100‚000 in the bank and is already bragging about the two Mercedes he will buy and the European vacation he will take. Does his optimistic outlook
Premium Variable cost Fixed cost Costs
Recommendation I recommend that proposal 2 should be chosen‚ because it has maximum profit. It also has the best margin of safety and contribution/sales ratio. In proposal 2‚ an additional product W is added to the mix. So the fixed cost is increased. Although the fixed cost is increased‚ the profit increases sharply. What is noteworthy is that breakeven point is the largest in the 3 situations. It means that the company should take longer time to reach the breakeven point. So the company many have
Premium Costs Variable cost Fixed cost
of lectures. PRODUCTION COSTS ANALYSIS The model used in calculating and estimating the Net Farm Income can be represented using the equation below: NFI = ΣPyi Yi ˗ ΣPxi Xj + ΣFk i=1 j=1 k=1 Where: NFI = Net Farm Income Yi = Enterprise’s product(s) (where i=1‚2‚3‚……n products) Pyi = Unit price of the product(s) Xj = Quantity of the variable input (where j=1‚2‚3‚…… m variable inputs) Pxj = Price/ unit of variable input Fk = Cost of fixed inputs (where k= 1‚2‚3‚…….k fixed inputs) Σ = Summation/addition
Premium Costs Variable cost Fixed cost
in different ways. The objective of week two’s topics discusses the connection between the amount of inputs and the law of diminishing marginal productivity. Moreover‚ it consists of production and cost analysis. Each individual are required to analyze the relationship between productivity and the cost of production. Furthermore‚ the objective analyzed the effect of changes in the supply of and demand for factors of production on the price of inputs. Through this weeks objective‚ each member were
Premium Marginal cost Costs Fixed cost
Hallstead Jewelers (Case Study1) Accounting 2301 Managerial Accounting Professor May Spring 2013 By: Madhur Mittal‚ Ishaq Rehman‚ Ying Wang and Bohan Li Question 1 Breakeven is a point at which a company covers all its costs and its profit is zero. After reviewing Hallstead Jewelers Income Statement‚ operational statistics‚ and table 2 and 3‚ for fiscal years 2003‚ 2004‚ and 2006‚ we can see a slight change in the breakeven unit and dollar amounts between the fiscal year
Premium Variable cost Costs Fixed cost
sales potential at the cost of minor reductions in margins. During the year it took to complete the Hallstead’s renovation the industry started showing major changes toward internet based jewellery sales. Tiffany & Company‚ a business with an origin much like Hallstead Jewelers‚ grew into an international powerhouse. At the same time‚ a start-up internet seller‚ Blue Nile‚ became the second largest diamond seller in the U.S. While Hallstead’s was growing their fixed costs by doubling their rent
Premium Variable cost Contribution margin Management accounting