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Managerial accounting

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Managerial Accounting
The difference ,[object Object],[object Object],[object Object],[object Object]
The difference ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
The difference ,[object Object],[object Object],[object Object],[object Object]
The difference ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
The difference ,[object Object],[object Object],[object Object],[object Object],[object Object]
Decision-making tools ,[object Object],[object Object]
Contribution margin ,[object Object],[object Object],Contribution = Sales – Variable margin costs
Contribution margin ,[object Object],[object Object],[object Object],Contribution = Sales – Variable margin costs
Contribution margin ,[object Object],[object Object],[object Object],Contribution = Sales – Variable margin costs
Contribution margin ratio ,[object Object],[object Object],[object Object]
Calculating contribution margin ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Contribution margin ,[object Object],[object Object],[object Object],Each time you sell a CD at $25, you have $3.25 left over to cover all of your fixed expenses. Or 13% of your sale price contributes to your fixed expenses.
Contribution Margin ,[object Object],[object Object]
Multiple product lines ,[object Object],Sony TV Toshiba TV LG TV Selling price $1400 $1100 $1200 COGS $750 $610 $620 Delivery expense $23 $23 $23 Cont margin 627 467 557 CM ratio 44% 42% 46%
Contribution margin ,[object Object],[object Object]
Break-even analysis Also known as Cost-Volume-Profit (CVP) ,[object Object],[object Object],[object Object],[object Object],[object Object]
Purpose of break-even point ,[object Object],[object Object]
Calculating Break-even-point ,[object Object],[object Object],[object Object]
Spreadsheets ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

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Managerial accounting

Editor's Notes

  1. Contribution Margin = Sales – Variable Costs 25.00 – 21.75 = 3.25 Contribution Margin Ratio = (Sales – Variable Costs) / Sales 3.25/25.00 = 13%
  2. Sales – Variable Costs 50 – 9.30 = 40.70 40.70/50 = 81.4%
  3. EXPECTED RESPONSE Detete line? Add line? Accept contract? 1 Calculate the contribution margin 2 Define the contribution margin and explain its purpose 3 re-state the issue eg: the business is considering deleting a line … 4 Explain result - compare line under consideration with existing lines Make a recommendation and justify; use figures, plus any additional considerations which the manager should keep in mind eg turnover, impact of deleting a line on existing sales