What is contribution margin? In cost-volume-profit analysis of managerial accounting contribution margin is a very concept. The evaluation of contribution margin for any product is quite easy yet its usage is wide and when applied with various other metrics of CVP analysis such as PV Ratio‚ Break Even Point‚ variable cost‚ fixed cost‚ etc it helps to take major production decisions relating to volume of production and sales‚ and profitability of such levels of sales or production. Step 1:
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business. This means sales have reached sufficient volume to cover the variable and fixed costs of producing and distributing your product. [Type the document subtitle] KOMAL BHILARE ROLL NO: 85 2013 DEFINITION Break Even is: •the sales point at which the Company neither makes profit nor suffers loss‚ or •sales level where fixed cost are fully absorbed by or •the level where contribution margin equals the fixed cost. Breakeven analysis provides data for • profit planning • policy
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Week 2: Assignment from the Textbook Ex. 20.1 Listed below are nine technical accounting terms introduced in this chapter: Variable costs Relevant range Contribution margin Break-even point Fixed costs Semivariable costs Economies of scale Sales mix Unit contribution margin Each of the following statements may (or may not) describe one of these technical terms. For each statement‚ indicate the accounting
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Choice 1 | Conversion cost consists of which of the following?a. Manufacturing overhead cost.b. Direct materials and direct labor cost.c. Direct labor cost.d. Direct labor and manufacturing overhead cost. | 2. | Transportation costs incurred by a manufacturing company to ship its product to its customers would be classified as which of the following?a. Product costb. Manufacturing overheadc. Period costd. Administrative cost | 3. | The salary of the president of a manufacturing
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method to derive a cost formula that can be used to predict cost of an activity for a month‚ a quarter and a year. In preparing cost formula using least squares method‚ intercept represents fixed cost and slope represents the variable cost rate. Important Formula: Cost formula = Fixed cost + Variable rate * Level of activity Part 1 Step 1 Prepare a cost formula using the least squares method. x = $3‚212 + $15.15 * Number of orders received Part 2 Step 1 Use the cost formula to predict
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Chapter 5: Cost Behavior: Analysis and Use As we shall see in later chapters‚ the ability to predict how costs respond to changes in activity is critical for making decisions‚ controlling operations‚ and evaluating performance. Three major classifications of costs were discussed in this chapter—variable‚ fixed‚ and mixed. Mixed costs consist of variable and fixed elements and can be expressed in equation form as Y = a + bX‚ where X is the activity‚ Y is the cost‚ a is the fixed cost element‚ and
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Description / Instructions: Complete the Week 1 WileyPLUS Practice Quiz. Multiple Choice Question 41 The proprietorship form of business organization generally receives favorable tax treatment relative to a corporation. combines the records of the business with the personal records of the owner. is classified as a separate legal entity. must have at least two owners in most states. Multiple Choice Question 45
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steps to build its cost point. Traditional costing uses one rate where first‚ activity based costing must identify each activity and estimate its total and indirect cost. Second for activity based costing is that the cost driver for each activity must be estimated along with the total quantity of each driver’s allocation base. Third the cost allocation for each activity must be computed. Fourth costs to cost object are allocated. Activity-based costing focuses on activities. The costs of those activities
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ANSWER: 1.5 POINTS EACH QUESTION. 1. A responsibility centre that incurs costs (and expenses) and generates revenues is classified as a(n) a. cost centre. b. revenue centre. c. profit centre. d. investment centre. e. none of the above 2. The most useful measure for evaluating a manager’s performance in controlling revenues and costs in a profit centre is a. contribution margin. b. contribution net
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$2‚480 Cost of goods sold: Variable costs 225 612 270 360 1‚467 Contribution margin $195 $228 $270 $320 $1‚013 Unit revenue and costs information: Computer Place Poster Paper Napkins Mats Board Selling price $14.00 $ 7.00 $12.00 $ 8.50 Materials $ 6.00 $ 4.50 $ 3.60 $ 2.50 Variable factory overhead 1.50 .60 2.40 2.00 Unit variable cost $ 7.50 $ 5.10 $ 6
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