Problem Set #1 - CVP Deadline: November 26‚ 2011 A. The break-even point in units can be computed as Fixed Costs divided by the contribution margin per unit. On the other hand‚ the break-even point in pesos can be computed as Fixed Costs divided by the contribution margin ratio. Using the profit equation π = TR – TC; where π = operating profit‚ TR = Total Revenue and TC = Total Cost‚ derive the break-even formulas. B. From the profit equation π = TR – TC‚ derive the formula for the following:
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(per unit) | 4‚350 | Costs per Unit for Hydraulic Hoists | | | Unit Manufacturing Costs: | | | Variable Materials | 550 | | Variable Labor | 825 | | Variable Overhead | 420 | | Fixed Overhead | 660 | | Total Unit Manufacturing Costs | | $2‚455 | | | | Unit Marketing Costs: | | | Variable | 275 | | Fixed | 770 | | Total Unit Marketing Costs | | 1‚045 | | | | Total Unit Costs | | $3‚500 |
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Keeping activities on track‚ are they being met‚ how to get back on track Types of Costs Product- all costs to purchase or manufacture Merchandiser: all costs for getting goods ready to sell Manufacturer: same as above + direct materials‚ direct labor‚ mnf. Overhead Period costs- arise from the passage of time‚ expensed as incurred ex. Salaries outside of product manufacturing. Manufacturing costs Direct or raw materials‚ indirect materials: denim vs. thread in making jeans Direct
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through a cost-benefit analysis which shows that it may have overestimated the costs of maintenance‚ and overlooked the benefits of this important department. The budget committee overestimated the unit cost due to missing revenue‚ improper cost structure‚ and underestimated capacity. First‚ based on the cost schedule‚ the committee overlooked the revenue that the donations department made from its bi-annual book sales. Secondly‚ they did not separate the fixed cost and the variable cost of books
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fixed and variable costs. Fixed costs are those costs or expenses that are expected to remain fairly constant over a reasonable period of time. These costs are relatively unaffected by changes in output or sales up to the point where the level of operation reaches the capacity of the existing facilities. At that point‚ major changes would have to be made‚ such as the expansion of existing plant and equipment or the construction of new facilities. Such actions would increase the fixed costs. However
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Overhead+ Over-(Under-) Applied Overhead Actual Overhead= $86‚000 + $6‚500 Actual Overhead= $92‚500 2. Computations using a job order system General Corporation employs a job order cost system. On May 1 the following balances were extracted from the general ledger; Work in process $ 35‚200 Finished goods 86‚900 Cost of goods sold 128‚700 Work in
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exhibit1for budget‚ is as under. Total sales (TS) =$864‚000 Total Units (TU) = 18‚000 Total variable costs (TVC) = $512‚800 Total Fixed costs (TFC) = $260‚000 Let the number of motors required to be sold to breakeven = Q Then Q = Total Fixed Costs (TFC) / Contribution Margin per unit (CMU) (Equation 1) CMU = Selling price per unit (SPU) – Variable cost per unit (VCU) (Equation 2) SPU = TS/TU = 864‚000/18‚000 = $48
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Paper Ltd. with a request to make 20‚000 units of a special paper product. The following information is available regarding the BADM4280 Paper division: Selling price of regular paper per unit $80 Variable cost of regular paper per unit 45 Additional variable cost of special paper per unit 25 The textbook division can purchase the special paper from an outside source for $75 per unit‚ plus shipping. The shipping equals $2 per unit. Required: A) Calculate the transfer
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COST BEHAVIOUR AND CONTROL: THE TRADITIONAL AND STICKY COST PHENOMENON Abstract Cost behavior and control is of utmost importance to managers in order to decisions. In this study‚ we took a look at the traditional cost behavior models such as variable cost (which changes in line with activity)‚ fixed cost (which is not proportionate with the level of activity)‚ and semi- variable cost which is also known as mixed cost (which have both features of the variable and fixed cost). Furthermore‚ cost estimation
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specially designed kitchen tables‚ using select hardwoods. The division’s monthly costs are shown in the schedule below (Solution and marking guide‚ based on Problem 8.12‚ 6 marks): Manufacturing costs: Variable costs per unit: Direct materials $170 Variable manufacturing overhead $ 18 Fixed manufacturing overhead costs (total) $400‚000 Selling and administrative costs: Variable 18 % of sales Fixed (total) $110‚000 I-way Inc. regards all
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