Complies with Securities and Exchange Commission rules and regulations. Uses cost-benefit analysis to determine the amount of detail presented. Prepares general-purpose reports for people outside an organization. Presents summary historical data in compliance with generally accepted accounting principles. Correct Feedback Uses cost-benefit analysis to determine the amount of detail presented. Incorrect Feedback Uses cost-benefit analysis to determine the amount of detail presented. Add Question
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all costs of production as product costs‚ regardless weather they are variable or fixed. The cost of a unit of product under absorption costing method consists of direct materials‚direct laborand both variable and fixed overhead. Variable costing is a costing system under which those costs of production that vary with output are treated as product costs. This would usually include direct materials‚direct laborand variable portion of manufacturing overhead. 6-2 Variable costing treats variable and
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Managerial Accounting and Cost Concepts Solutions to Questions 1-1 The three major elements of product costs in a manufacturing company are direct materials‚ direct labor‚ and manufacturing overhead. 1-2 a. Direct materials are an integral part of a finished product and their costs can be conveniently traced to it. b. Indirect materials are generally small items of material such as glue and nails. They may be an integral part of a finished product but their costs can be traced to the
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1-1 The total manufacturing cost per unit increases as total production volume increases. 1-2 Total variable costs change in response to changes in the volume of production. 1-3 The mixed cost per unit is constant throughout the relevant range of activity. 1-4 Fixed costs per unit decrease as production levels decrease. 1-5 A method used to separate mixed costs into fixed and variable components is called the high-low method. 1-6 The variable cost per unit is assumed to be constant
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Explanation: Sales were above the company’s break-even sales and yet the company sustained a loss. The apparent contradiction is explained by the fact that the CVP analysis is based on variable costing‚ whereas the income reported to shareholders is prepared using absorption costing. Because sales were above the breakeven‚ the variable costing net operating income would have been positive. However‚ the absorption costing net operating income was negative. Ordinarily‚ this would only happen if inventories decreased
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Direct and Indirect Costs -Cost – a payment of cash or a commitment to pay cash in the future for the purpose of generating revenues. A. Cost object – costs that are often classified by their relationship to a segment of operations. Ex. Product‚ sales territory‚ a department‚ or an activity‚ such as research and development 1. Direct Cost = identified with and can be traced to a cost object Ex. The wood for a guitar is a direct cost of the guitar 2. Indirect Costs = cannot be identified
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Thermostats Storm Windows Total Sales Volume 800 220 500 1520 Sales Price 10 80 100 Sales Revenue 8000 17600 50000 75600 Variable Cost 8 70 95 Variable cost to Sales 6400 15400 47500 69300 Unit Contribution to Sales 2 10 5 Utilization of Capacity Total Variable Cost 6400 15400 47500 69300 Fixed Cost 27040 6760 16900 50700 Profit -25440 -4560 -14400 -44400 BEP (unit) 13520 676 3380 17576 CM ratio 0.2 0.125 0.05 BEP ($)
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Problem 1 a. CD Contribution Profit Selling Price to CD Distributor Less: Variable Cost $9.00 $1.25 $0.35 $1.00 $2.60 CD Package and disk Songwriter’s royalties Recording artists’ royalties Total Variable Cost Contribution per CD unit $6.40 Chapter 2 Problem 1 b. Break-Even Analysis – Units and Dollars Total Fixed Cost Advertising and Promotion $275‚000 Studio Recording’s Overhead $250‚000 Total Fixed Cost $525‚000 BEVU = $525‚000 / $6.40 = 82‚031.25 units BEV $ = 82‚031.25
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exception. Question 3 1.5 out of 1.5 points Which of the following costs does not change when the level of business activity changes? Selected Answer: total fixed costs Correct Answer: total fixed costs Question 4 1.5 out of 1.5 points Which of the following is not likely to be a fixed cost? Selected Answer: direct materials Correct Answer: direct materials Question 5 1.5 out of 1.5 points A sunk cost is a cost Selected Answer: incurred in the past which is not relevant to
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BU 122 Assignment 6 BYP 22-2 TBoillard (a) The variable costs per unit are: Cost of goods sold ($600‚000 ÷ 200‚000) = $3.00 Selling expenses ($140‚000 ÷ 200‚000) = .70 Administrative expenses ($40‚000 ÷ 200‚000) = .20 Total
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