CheckPoint Cost‚ Volume‚ and Profit Questions 7. How should mixed costs be classified in CVP analysis? What approach is used to effect the appropriate classification? The mixed costs must be broken down into fixed and variable elements. After that is done then one needs to gather the information of the activity of the variable element in order to show the high end use and the low end use. It is important to separate these costs because the fixed cost will never change but the variable cost will always
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Quiz 1.) The cost of goods manufactured for a period is the amount transferred from work in process inventory to finished goods inventory during the period? (TRUE) 2.) Differential costs can only be variable costs? (FALSE) can be fixed or variable 3.) The cost of napkins put on each person’s tray at a fast food restaurant is a fixed cost? (FALSE) 4.) A fixed cost is a constant per unit of product? (FALSE) variable would be true 5.) In a manufacturing firm all costs are product costs? (FALSE) 6.)
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1. Conversion cost is the sum of direct labor cost and direct materials cost. F 2. Depreciation on office equipment would be included in product costs. F 3. When the predetermined overhead rate is based on direct labor-hours‚ the amount of overhead applied to a job is proportional to the estimated amount of direct labor-hours for the job. F 4. Indirect materials are charged to specific jobs. F 5. When a job is completed‚ the goods are transferred from the production department to the finished goods
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$800‚000 Variable costs (380‚000) Contribution margin $420‚000 Contribution margin ratio = $420‚000/$800‚000 = 0.525 Annual break-even dollar sales volume = $210‚000/0.525 = $400‚000 b. Annual margin of safety in dollars: Sales $800‚000 Break-even sales dollars (400‚000) Margin of safety $400‚000 c. To determine the variable and total costs lines‚ it is necessary
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INTRODUCTION: Hallstead Jewelers is a family owned company that has been around for generations. After the death of their father Gretchen and Michaela resumed ownership of a business that had been very successful for many years. However‚ due to changes in the market related to competition‚ customer demand‚ and demographics‚ business has not been as profitable as the sisters hoped it would be upon taking over of (remove) the company. Michaela and Gretchen are now faced with the tough task of revitalizing
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task I will analyse the reasons why costs need to be controlled to budget. Budget: An estimate of costs‚ revenues‚ and resources over a specified period‚ reflecting a reading of future financial conditions and goals. One of the most important administrative tools‚ a budget serves also as a plan of action for achieving quantified objectives‚ standard for measuring performance‚ and device for coping with foreseeable adverse situations. Variable costs: Variable costs include raw material‚ energy usage
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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 jewelry 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
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This would also help to provide progressively higher levels of customer service. The lease arrangement would consistently be a lower cost option for CBN than purchasing new locomotives. This would help with some of the fixed cost associated with the railways. A variable cost that would be affected by the leasing of the equipment would be labor. Labor cost is the largest single element of variable cost for railroads. Although‚ CBN would be leasing the locomotives they would still be providing their own labor to operate them
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seat in the house‚ beautiful outdoor setting‚ wonderful atmosphere‚ outstanding parking and food concession. Their strategies are to maximize net operating income by reducing the non-artist costs of operating an event. ALLTELL will have to find creative ways to reach a large audience while minimizing all costs unrelated to the talent. The critical success factors for the Pavilion are numerous: the only sheltered outdoor venue in the area‚ availability of parking‚ excellent and clean facilities‚ well
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2 An Introduction to Cost Terms and Purposes Overview This chapter introduces the basic terminology of cost accounting. Communication among managers and management accountants is greatly facilitated by having a common understanding of the meaning of cost terms and concepts. The chapter illustrates a major theme of the textbook: using different costs for different purposes. The chapter also provides a framework to help you understand cost accounting and cost management. Review Points
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