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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net income. c. contribution gross profit. d. controllable margin. e. none of the above 3. Pentecost Corporation desires to earn target net income of $40‚000. If the selling price per unit is $30‚ unit variable cost is $24‚ and total fixed costs are $160‚000‚ the number of units that the company must sell to earn its target net income is a. 13‚333. b. 33‚333. c. 20‚000. d. 26‚667. e. none of the above
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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: Get acquainted with contribution margin calculation Contribution margin is the amount of money generated by selling a product over its variable cost of production. Therefore‚ mathematically it can be said that the revenue earned by a product minus its variable cost gives the contribution
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Chapter 6 Lecture Notes Variable Costing and Segment Reporting: Tools for Management JUST ONE THING - the only thing that is different is the cost classification of FMOH FMOH | |Absorption costing (full cost) | | |Variable costing | | | Sales |Product cost (COGS) | Sales |Product cost
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more accurate costs in their decisions. 2-4 Factors affecting the classification of a cost as direct or indirect include • the materiality of the cost in question‚ • available information-gathering technology‚ • design of operations 2-5 A variable cost changes in total in proportion to changes in the related level of total activity or volume. An example is a sales commission that is a percentage of each sales revenue dollar. A fixed cost remains unchanged in total for a given time period
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Question 1 of 25 | 1.0/ 1.0 Points | Numerical variables can be subdivided into which two types? | | A. Cross-sectional and discrete | | | | B. Diverse and categorical | | | | C. Nominal and progressive | | | | D. Discrete and continuous | | Answer Key: D | Part 2 of 9 - | 2.0/ 2.0 Points | Question 2 of 25 | 1.0/ 1.0 Points | A jar contains four white marbles‚ five red marbles‚ and six black marbles. If a marble is selected at random‚ find the probability that
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Macroeconomic Variables & Its Impact on KSE -100 index MACROECONOMIC VARIABLES & ITS IMPACT ON KSE -100 INDEX BY MUHAMMAD SALMAN KHAN ABSTRACT Stock exchange or secondary market plays pivotal role of an economy. From it one can easily guess the overall economy of the county. From various factors‚ stock market is dependent and the impacts of these factors are clearing i.e. positive or negative. Macroeconomic variables in economy that influence the stock exchange and macroeconomic variables that affect
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Definition and explanation of mixed or semi variable cost: A mixed cost is one that contains both variable and fixed cost elements. Mixed cost is also known as semi variable cost. Examples of mixed costs include electricity and telephone bills. A portion of these expenses are usually consists line rent. Line rent normally is fixed for each month. Variable portion consists units consumed or calls made. The relationship between mixed cost and level of activity can be expressed by the following equation
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Q-1 Selected financial information about Vijay merchant company is given below: Particulars | 2010 (Rs.) | 2009 (Rs.) | Sales | 69‚000 | 43‚000 | Cost of Goods Sold | 57‚000 | 32‚500 | Debtors | 7‚200 | 3‚000 | Inventories | 11‚400 | 5‚500 | Cash | 1‚500 | 800 | Other Current Assets | 4‚000 | 2‚700 | Current Liabilities | 16‚000 | 11‚000 | Compute the current ratio‚ quick ratio‚ and average debt collection period and inventory turnover for 2009 and 2010- State whether there is
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week in revenue (fig.3) was hurting profitability even further. The answer lies in the other half of operations‚ known as costs. Variable costs are expenses that are directly associated with the sale of a good. When variable costs are subtracted from sales what is left is known as the contribution margin which gives an idea of how profitable your sales are. CRU’s variable
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