This document contains an excerpt from a chapter on cost-volume-profit relationships from a McGraw-Hill textbook. It provides definitions and examples of key concepts in cost-volume-profit analysis, including contribution margin, break-even point, contribution margin ratio, and using the equation and contribution margin methods to calculate break-even point. Worked examples are provided for various companies, including a bicycle manufacturer called Racing Bicycle Company and a coffee stand called Coffee Klatch, to illustrate how to apply these CVP concepts.
Managerial Accounting Garrison Noreen Brewer Chapter 06Asif Hasan
This document discusses cost-volume-profit analysis and break-even analysis. It provides information on contribution margin, contribution margin ratio, fixed and variable expenses, and how to calculate break-even points using both the equation method and contribution margin method. Specifically, it uses data from a company called Racing Bicycle Company to demonstrate how to calculate their break-even point in both units (400 bikes) and sales dollars ($200,000) using the equation method. It also outlines the two key equations for the contribution margin method of calculating break-even points.
The document discusses cost-volume-profit (CVP) analysis and relationships. It covers several key topics:
1. It explains contribution margin and how it is used to cover fixed expenses and contribute to net operating income.
2. It demonstrates how to construct a CVP graph showing the relationships between sales volume, total costs, and profits.
3. It discusses using the contribution margin ratio to compute changes in contribution margin and net operating income from changes in sales volume.
This document provides an overview of cost-volume-profit (CVP) analysis concepts including:
- Contribution margin is sales revenue minus variable expenses and goes towards covering fixed expenses.
- Break-even analysis can be done graphically, using equations, or the contribution margin method to determine the sales volume needed for profits to equal zero.
- Target profit analysis uses CVP equations or the contribution margin approach to determine the sales volume needed to achieve a desired profit level.
- Margin of safety is the excess of actual or budgeted sales over break-even sales, indicating how much sales can decrease before losses are incurred.
This document provides information about cost-volume-profit (CVP) analysis for Wind Bicycle Co. It includes the company's contribution income statement for the month of June showing sales of 500 bikes for $250,000, variable expenses of $150,000, contribution margin of $100,000, fixed expenses of $80,000 and net income of $20,000. It then discusses various CVP concepts including contribution margin, break-even point, margin of safety, operating leverage and sales mix. Formulas and examples are provided to demonstrate how to calculate items like break-even point in units and dollars, target profit levels, degree of operating leverage and sales mix impact on break-even analysis.
1. The document provides an overview of cost-volume-profit (CVP) analysis and relationships. It explains key CVP concepts like contribution margin, break-even point, target profit analysis, and margin of safety.
2. Specific examples from a company called Wind Bicycle Co. are used to demonstrate how to calculate contribution margin, break-even point using equation and contribution margin methods, and margin of safety.
3. The learning objectives cover explaining how changes in activity affect contribution margin, computing break-even point and target profits using CVP formulas, and preparing and interpreting a CVP graph.
This document discusses cost-volume-profit analysis and break-even analysis. It defines key terms like contribution margin, variable costs, fixed costs, and sales mix. It provides examples of using the equation method and contribution margin method to calculate break-even points. It also discusses how to calculate target profit, margin of safety, operating leverage, and deals with break-even analysis for situations with multiple products or a sales mix.
This document discusses cost-volume-profit (CVP) analysis and break-even point calculations. It contains examples using a bicycle company called Racing Bicycle Company. It explains contribution margin, how to calculate break-even points using the equation method and contribution margin method, and how to determine the sales volume needed to achieve a target profit level. Graphs and calculations are provided to illustrate CVP relationships and the effects of changes in variables such as sales price, costs, sales volume, and fixed expenses.
Managerial Accounting Garrison Noreen Brewer Chapter 06Asif Hasan
This document discusses cost-volume-profit analysis and break-even analysis. It provides information on contribution margin, contribution margin ratio, fixed and variable expenses, and how to calculate break-even points using both the equation method and contribution margin method. Specifically, it uses data from a company called Racing Bicycle Company to demonstrate how to calculate their break-even point in both units (400 bikes) and sales dollars ($200,000) using the equation method. It also outlines the two key equations for the contribution margin method of calculating break-even points.
The document discusses cost-volume-profit (CVP) analysis and relationships. It covers several key topics:
1. It explains contribution margin and how it is used to cover fixed expenses and contribute to net operating income.
2. It demonstrates how to construct a CVP graph showing the relationships between sales volume, total costs, and profits.
3. It discusses using the contribution margin ratio to compute changes in contribution margin and net operating income from changes in sales volume.
This document provides an overview of cost-volume-profit (CVP) analysis concepts including:
- Contribution margin is sales revenue minus variable expenses and goes towards covering fixed expenses.
- Break-even analysis can be done graphically, using equations, or the contribution margin method to determine the sales volume needed for profits to equal zero.
- Target profit analysis uses CVP equations or the contribution margin approach to determine the sales volume needed to achieve a desired profit level.
- Margin of safety is the excess of actual or budgeted sales over break-even sales, indicating how much sales can decrease before losses are incurred.
This document provides information about cost-volume-profit (CVP) analysis for Wind Bicycle Co. It includes the company's contribution income statement for the month of June showing sales of 500 bikes for $250,000, variable expenses of $150,000, contribution margin of $100,000, fixed expenses of $80,000 and net income of $20,000. It then discusses various CVP concepts including contribution margin, break-even point, margin of safety, operating leverage and sales mix. Formulas and examples are provided to demonstrate how to calculate items like break-even point in units and dollars, target profit levels, degree of operating leverage and sales mix impact on break-even analysis.
1. The document provides an overview of cost-volume-profit (CVP) analysis and relationships. It explains key CVP concepts like contribution margin, break-even point, target profit analysis, and margin of safety.
2. Specific examples from a company called Wind Bicycle Co. are used to demonstrate how to calculate contribution margin, break-even point using equation and contribution margin methods, and margin of safety.
3. The learning objectives cover explaining how changes in activity affect contribution margin, computing break-even point and target profits using CVP formulas, and preparing and interpreting a CVP graph.
This document discusses cost-volume-profit analysis and break-even analysis. It defines key terms like contribution margin, variable costs, fixed costs, and sales mix. It provides examples of using the equation method and contribution margin method to calculate break-even points. It also discusses how to calculate target profit, margin of safety, operating leverage, and deals with break-even analysis for situations with multiple products or a sales mix.
This document discusses cost-volume-profit (CVP) analysis and break-even point calculations. It contains examples using a bicycle company called Racing Bicycle Company. It explains contribution margin, how to calculate break-even points using the equation method and contribution margin method, and how to determine the sales volume needed to achieve a target profit level. Graphs and calculations are provided to illustrate CVP relationships and the effects of changes in variables such as sales price, costs, sales volume, and fixed expenses.
This document discusses cost-volume-profit (CVP) analysis and break-even point calculations. It contains examples using a bicycle company called Racing Bicycle Company. It explains contribution margin, how to calculate break-even points using the equation method and contribution margin method, and how to determine the sales volume needed to achieve a target profit level. Graphs and calculations are provided to illustrate CVP relationships and the effects of changes in variables such as sales price, fixed costs, and volume.
This document presents information about cost-volume-profit (CVP) analysis for Racing Bicycle Company. It includes CVP graphs and equations, contribution margin calculations, and analyses of break-even points and margin of safety. Specifically, it shows that Racing Bicycle's break-even point is at 400 units of sales for $200,000 in revenue, and its margin of safety given actual sales of 500 units is $50,000 or 20% of sales.
The document discusses cost-volume-profit (CVP) analysis and relationships using Racing Bicycle Company (RBC) as an example. It includes contribution margin income statements for RBC at different sales volumes, explains how to calculate contribution margin ratio, and shows how changes in variables such as sales volume, variable costs, fixed costs, and selling price impact contribution margin and net operating income. Graphs are used to illustrate the relationships between these factors.
1.CVP, analisi Cost-Volume-Profit, l'approccio di contribuzione e punto di pa...Manager.it
No, the increase in the advertising budget should not be authorized based on the information provided. While sales would increase by 40 units from 500 to 540 bikes, generating an additional $8,000 in contribution margin, the $10,000 increase in the fixed advertising expense would result in a $2,000 decrease in net operating income. The increase in sales does not cover the increase in fixed costs, so profitability would decline.
Operating income = $8,000
Oxco’s contribution margin ratio is 40
percent. If sales are $100,000 and break-
even sales are $80,000, what is operating
income?
What is our Margin of Safety?
Oxco’s contribution margin ratio is 40
percent. If sales are $100,000 and break-
even sales are $80,000, what is operating
income?
Margin of safety = Actual sales - Break-even sales
= $100,000 - $80,000 = $20,000
Operating Margin Contribution
Income of safety margin ratio
= $20,000 × .40
= $8,000
Therefore, the operating income is $8,000.
- Absorption costing allocates both variable and fixed manufacturing costs to inventory, while variable costing allocates only variable manufacturing costs to inventory and expenses fixed manufacturing costs.
- Using variable costing versus absorption costing results in different net operating income when production levels change between periods, even if sales remain the same, because absorption costing shifts fixed costs between periods.
- Variable costing is preferred by managers for decision making and performance evaluation because net operating income is consistent regardless of production changes. However, absorption costing is required for external financial reporting.
The document discusses various pricing strategies and concepts, including:
- Elasticity of demand and how price changes affect sales of elastic vs. inelastic goods.
- Calculating price elasticity of demand using percentage changes in price and sales.
- Determining the profit-maximizing price based on elasticity and using either variable costs or absorption costs.
- Problems that can occur when using absorption costing if sales do not meet forecasts.
- Target costing, which sets a maximum allowable cost during product development based on desired selling price and profit.
This document provides an overview of cost-volume-profit (CVP) analysis concepts including contribution margin, break-even point, CVP graphs, contribution margin ratio, and how changes in variables like sales price, costs, and volume affect profits. It discusses the equation method and contribution margin method for calculating break-even point in units and dollars. Formulas and examples from a sample company called Racing Bicycle are provided to illustrate key CVP terms and calculations.
The contribution margin format is used as an internal planning and decision making tool, including cost-volume-profit analysis, budgeting, and make-or-buy decisions. It emphasizes variable cost behavior and how contribution margin covers fixed costs and provides income. For Racing Bicycle Company, the contribution margin is $200 per unit and $80,000 are fixed costs. The break-even point is 400 units or $200,000 in sales. Operating leverage is a measure of how sensitive net income is to sales changes; for Racing it is 5.
Managerial Accounting Garrison Noreen Brewer Chapter 07Asif Hasan
This document provides an overview and comparison of absorption costing and variable costing methods. It includes examples calculating costs and income for a company under both methods. The key points are:
- Absorption costing includes an allocation of fixed overhead in product costs, while variable costing includes only variable costs in product costs.
- Absorption costing results in higher inventory values and cost of goods sold than variable costing.
- Variable costing produces consistent net operating income regardless of changes in production volume, while absorption costing results are affected by production volume.
- Reconciling the differences in net income between the two methods involves tracking the fixed overhead amounts included in or released from inventory.
This document provides an overview of cost-volume-profit (CVP) analysis for Wind Bicycle Co. It includes:
1) An income statement showing contribution margin of $200 per unit after accounting for $300 in variable costs per unit and total fixed costs of $80,000.
2) Explanations and examples of how contribution margin is used to cover fixed costs and contribute to profit. The break-even point is calculated as 400 units when fixed costs equal contribution margin.
3) Demonstrations of using the contribution margin ratio, equation method, and graphical analysis to calculate break-even points and how sales volume impacts profits.
The document discusses cost-volume-profit (CVP) analysis and relationships. It begins by outlining key assumptions of CVP analysis and then provides examples of CVP relationships using a hypothetical company called Racing Bicycle Company. It shows Racing Bicycle's contribution margin income statement and expresses CVP relationships in equation and graphic forms. Specifically, it demonstrates how to prepare a CVP graph using data from Racing Bicycle's income statements at different sales volumes. The CVP graph illustrates the break-even point and profit/loss areas based on sales volume.
Muhammad Furqan gives a lecture on cost-volume-profit (CVP) analysis. He discusses key CVP concepts like contribution margin, break-even point, and CVP graph. He provides examples using a hypothetical company, Racing Bicycle Company, to demonstrate how to calculate contribution margin, contribution margin ratio, and break-even point using both the equation method and contribution margin method.
The Changing Role of Managerial Accounting in a GLOBAL Business EnvironmentAbdullah Rabaya
This document provides an overview of key concepts in cost-volume-profit (CVP) analysis, including:
- Calculating the break-even point using the contribution margin approach and equation approach.
- Preparing and interpreting CVP graphs to show relationships between sales, costs, and profits.
- Applying CVP analysis to determine the effect of changes in variables such as sales price, volume, and fixed costs.
- Considering assumptions like constant prices and sales mix that underlie CVP analysis.
- Costs can be classified as either variable or fixed based on how they react to changes in business activity
- Variable costs change in proportion to changes in activity, while fixed costs remain unchanged with activity levels
- Understanding cost behavior and classifications is important for cost-volume-profit (CVP) analysis, which analyzes the relationship between costs, sales volume, and profits
This document provides an overview of cost-volume-profit (CVP) analysis concepts from a managerial accounting textbook. It discusses key assumptions of CVP analysis, how to calculate contribution margin, break-even point, and profit using CVP equations and graphs. It also explains how to use the contribution margin ratio to evaluate the effects of changes in sales volume, variable costs, fixed costs, and selling price on contribution margin and net operating income. Examples are provided to illustrate calculating the impacts of such changes.
The document discusses relevant costs for decision making. It defines relevant costs as costs that differ between alternatives. It identifies avoidable costs as relevant costs, as they can be eliminated by choosing one alternative over another. Unavoidable costs like sunk costs and future costs that do not differ between alternatives are never relevant. The document uses examples to illustrate identifying relevant costs and sunk costs. It discusses applying relevant costs to decisions like whether to purchase a new machine or keep an old one, and whether to add or drop a business segment.
3. Analisi del Target Profit e del Margine di SicurezzaManager.it
The document discusses how to calculate the sales volume needed for a company to achieve a target profit level using contribution margin analysis and the CVP equation. It provides an example showing that a bike company needs to sell 900 bikes to earn a profit of $100,000. It also defines margin of safety as the excess of actual or budgeted sales over break-even sales, and gives an example where a company has a margin of safety of 100 bikes or 20% of sales.
This document discusses cost-volume-profit (CVP) analysis and break-even points. It contains several examples and explanations of how to calculate break-even points using both the contribution margin approach and equation approach. It also discusses how to calculate break-even points for companies with multiple products using weighted average contribution margins. Additionally, it explains how to graph CVP relationships using cost-volume-profit and profit-volume graphs and how managers can use these graphs. Key assumptions of CVP analysis and how CVP relationships are reflected in traditional vs contribution format income statements are also summarized.
This document discusses methods for allocating service department costs to operating departments. It describes three allocation methods - direct method, step method, and reciprocal method. The direct method allocates costs directly without considering interactions between service departments. The step method allocates costs sequentially to avoid reallocating amounts. The reciprocal method fully recognizes interdepartmental services. The document also discusses selecting allocation bases, allocating costs by behavior, and the effect of allocations on operating departments.
This document contains information about capital budgeting techniques, specifically the net present value and internal rate of return methods. It provides examples of how to calculate net present value and internal rate of return for potential investment projects. It also discusses how to interpret the results and use them to make accept/reject decisions based on a required rate of return.
This document discusses cost-volume-profit (CVP) analysis and break-even point calculations. It contains examples using a bicycle company called Racing Bicycle Company. It explains contribution margin, how to calculate break-even points using the equation method and contribution margin method, and how to determine the sales volume needed to achieve a target profit level. Graphs and calculations are provided to illustrate CVP relationships and the effects of changes in variables such as sales price, fixed costs, and volume.
This document presents information about cost-volume-profit (CVP) analysis for Racing Bicycle Company. It includes CVP graphs and equations, contribution margin calculations, and analyses of break-even points and margin of safety. Specifically, it shows that Racing Bicycle's break-even point is at 400 units of sales for $200,000 in revenue, and its margin of safety given actual sales of 500 units is $50,000 or 20% of sales.
The document discusses cost-volume-profit (CVP) analysis and relationships using Racing Bicycle Company (RBC) as an example. It includes contribution margin income statements for RBC at different sales volumes, explains how to calculate contribution margin ratio, and shows how changes in variables such as sales volume, variable costs, fixed costs, and selling price impact contribution margin and net operating income. Graphs are used to illustrate the relationships between these factors.
1.CVP, analisi Cost-Volume-Profit, l'approccio di contribuzione e punto di pa...Manager.it
No, the increase in the advertising budget should not be authorized based on the information provided. While sales would increase by 40 units from 500 to 540 bikes, generating an additional $8,000 in contribution margin, the $10,000 increase in the fixed advertising expense would result in a $2,000 decrease in net operating income. The increase in sales does not cover the increase in fixed costs, so profitability would decline.
Operating income = $8,000
Oxco’s contribution margin ratio is 40
percent. If sales are $100,000 and break-
even sales are $80,000, what is operating
income?
What is our Margin of Safety?
Oxco’s contribution margin ratio is 40
percent. If sales are $100,000 and break-
even sales are $80,000, what is operating
income?
Margin of safety = Actual sales - Break-even sales
= $100,000 - $80,000 = $20,000
Operating Margin Contribution
Income of safety margin ratio
= $20,000 × .40
= $8,000
Therefore, the operating income is $8,000.
- Absorption costing allocates both variable and fixed manufacturing costs to inventory, while variable costing allocates only variable manufacturing costs to inventory and expenses fixed manufacturing costs.
- Using variable costing versus absorption costing results in different net operating income when production levels change between periods, even if sales remain the same, because absorption costing shifts fixed costs between periods.
- Variable costing is preferred by managers for decision making and performance evaluation because net operating income is consistent regardless of production changes. However, absorption costing is required for external financial reporting.
The document discusses various pricing strategies and concepts, including:
- Elasticity of demand and how price changes affect sales of elastic vs. inelastic goods.
- Calculating price elasticity of demand using percentage changes in price and sales.
- Determining the profit-maximizing price based on elasticity and using either variable costs or absorption costs.
- Problems that can occur when using absorption costing if sales do not meet forecasts.
- Target costing, which sets a maximum allowable cost during product development based on desired selling price and profit.
This document provides an overview of cost-volume-profit (CVP) analysis concepts including contribution margin, break-even point, CVP graphs, contribution margin ratio, and how changes in variables like sales price, costs, and volume affect profits. It discusses the equation method and contribution margin method for calculating break-even point in units and dollars. Formulas and examples from a sample company called Racing Bicycle are provided to illustrate key CVP terms and calculations.
The contribution margin format is used as an internal planning and decision making tool, including cost-volume-profit analysis, budgeting, and make-or-buy decisions. It emphasizes variable cost behavior and how contribution margin covers fixed costs and provides income. For Racing Bicycle Company, the contribution margin is $200 per unit and $80,000 are fixed costs. The break-even point is 400 units or $200,000 in sales. Operating leverage is a measure of how sensitive net income is to sales changes; for Racing it is 5.
Managerial Accounting Garrison Noreen Brewer Chapter 07Asif Hasan
This document provides an overview and comparison of absorption costing and variable costing methods. It includes examples calculating costs and income for a company under both methods. The key points are:
- Absorption costing includes an allocation of fixed overhead in product costs, while variable costing includes only variable costs in product costs.
- Absorption costing results in higher inventory values and cost of goods sold than variable costing.
- Variable costing produces consistent net operating income regardless of changes in production volume, while absorption costing results are affected by production volume.
- Reconciling the differences in net income between the two methods involves tracking the fixed overhead amounts included in or released from inventory.
This document provides an overview of cost-volume-profit (CVP) analysis for Wind Bicycle Co. It includes:
1) An income statement showing contribution margin of $200 per unit after accounting for $300 in variable costs per unit and total fixed costs of $80,000.
2) Explanations and examples of how contribution margin is used to cover fixed costs and contribute to profit. The break-even point is calculated as 400 units when fixed costs equal contribution margin.
3) Demonstrations of using the contribution margin ratio, equation method, and graphical analysis to calculate break-even points and how sales volume impacts profits.
The document discusses cost-volume-profit (CVP) analysis and relationships. It begins by outlining key assumptions of CVP analysis and then provides examples of CVP relationships using a hypothetical company called Racing Bicycle Company. It shows Racing Bicycle's contribution margin income statement and expresses CVP relationships in equation and graphic forms. Specifically, it demonstrates how to prepare a CVP graph using data from Racing Bicycle's income statements at different sales volumes. The CVP graph illustrates the break-even point and profit/loss areas based on sales volume.
Muhammad Furqan gives a lecture on cost-volume-profit (CVP) analysis. He discusses key CVP concepts like contribution margin, break-even point, and CVP graph. He provides examples using a hypothetical company, Racing Bicycle Company, to demonstrate how to calculate contribution margin, contribution margin ratio, and break-even point using both the equation method and contribution margin method.
The Changing Role of Managerial Accounting in a GLOBAL Business EnvironmentAbdullah Rabaya
This document provides an overview of key concepts in cost-volume-profit (CVP) analysis, including:
- Calculating the break-even point using the contribution margin approach and equation approach.
- Preparing and interpreting CVP graphs to show relationships between sales, costs, and profits.
- Applying CVP analysis to determine the effect of changes in variables such as sales price, volume, and fixed costs.
- Considering assumptions like constant prices and sales mix that underlie CVP analysis.
- Costs can be classified as either variable or fixed based on how they react to changes in business activity
- Variable costs change in proportion to changes in activity, while fixed costs remain unchanged with activity levels
- Understanding cost behavior and classifications is important for cost-volume-profit (CVP) analysis, which analyzes the relationship between costs, sales volume, and profits
This document provides an overview of cost-volume-profit (CVP) analysis concepts from a managerial accounting textbook. It discusses key assumptions of CVP analysis, how to calculate contribution margin, break-even point, and profit using CVP equations and graphs. It also explains how to use the contribution margin ratio to evaluate the effects of changes in sales volume, variable costs, fixed costs, and selling price on contribution margin and net operating income. Examples are provided to illustrate calculating the impacts of such changes.
The document discusses relevant costs for decision making. It defines relevant costs as costs that differ between alternatives. It identifies avoidable costs as relevant costs, as they can be eliminated by choosing one alternative over another. Unavoidable costs like sunk costs and future costs that do not differ between alternatives are never relevant. The document uses examples to illustrate identifying relevant costs and sunk costs. It discusses applying relevant costs to decisions like whether to purchase a new machine or keep an old one, and whether to add or drop a business segment.
3. Analisi del Target Profit e del Margine di SicurezzaManager.it
The document discusses how to calculate the sales volume needed for a company to achieve a target profit level using contribution margin analysis and the CVP equation. It provides an example showing that a bike company needs to sell 900 bikes to earn a profit of $100,000. It also defines margin of safety as the excess of actual or budgeted sales over break-even sales, and gives an example where a company has a margin of safety of 100 bikes or 20% of sales.
This document discusses cost-volume-profit (CVP) analysis and break-even points. It contains several examples and explanations of how to calculate break-even points using both the contribution margin approach and equation approach. It also discusses how to calculate break-even points for companies with multiple products using weighted average contribution margins. Additionally, it explains how to graph CVP relationships using cost-volume-profit and profit-volume graphs and how managers can use these graphs. Key assumptions of CVP analysis and how CVP relationships are reflected in traditional vs contribution format income statements are also summarized.
This document discusses methods for allocating service department costs to operating departments. It describes three allocation methods - direct method, step method, and reciprocal method. The direct method allocates costs directly without considering interactions between service departments. The step method allocates costs sequentially to avoid reallocating amounts. The reciprocal method fully recognizes interdepartmental services. The document also discusses selecting allocation bases, allocating costs by behavior, and the effect of allocations on operating departments.
This document contains information about capital budgeting techniques, specifically the net present value and internal rate of return methods. It provides examples of how to calculate net present value and internal rate of return for potential investment projects. It also discusses how to interpret the results and use them to make accept/reject decisions based on a required rate of return.
The document discusses relevant cost analysis for decision making. It provides examples of identifying relevant costs when deciding whether to drive or take the train to a destination, and when deciding whether to add or drop a business segment. Relevant costs are those that differ between alternatives, such as variable costs. Fixed costs that do not differ between alternatives, such as monthly parking fees, are not relevant. The document demonstrates analyzing decisions using both total costs and differential/relevant costs approaches.
This document provides an overview of flexible budgets and overhead analysis. It begins by explaining the limitations of static budgets when actual activity levels differ from planned levels. It then introduces flexible budgets, which can be prepared for multiple activity levels, allowing for better performance evaluation. An example is provided of preparing a flexible budget for CheeseCo based on machine hours. Variances are calculated by comparing actual results to the flexible budget prepared for the actual level of activity. This reveals variances due to cost control versus those due to differences in activity levels. The document discusses choosing an appropriate activity base and calculating variable overhead variances using both actual and standard hours.
The document discusses standard costs and variance analysis. It provides information on setting standards for direct materials, direct labor, and manufacturing overhead. It also explains how to calculate variances for actual costs compared to standards, including price, quantity, rate, and efficiency variances. Examples are provided to demonstrate calculating variances for direct materials and direct labor.
The document discusses standard costs and variance analysis. It begins by defining standard costs and the types of standards used, including quantity and price standards. It then discusses how variances from standards are analyzed and how that analysis can be used for management decision making. The document provides examples of calculating variances for direct materials and direct labor. It also discusses how to set standards and how variances are used to hold different managers accountable.
The document summarizes key aspects of activity-based costing (ABC), including:
1) ABC assigns both manufacturing and non-manufacturing costs to products, uses more cost pools than traditional costing, and bases the level of activity on capacity rather than applying all overhead costs.
2) ABC implementation involves identifying activities and cost pools, tracing costs to activities, calculating activity rates, and assigning costs to cost objects.
3) ABC provides more accurate product costing and highlights where to target process improvements by identifying inefficient activities.
This document contains excerpts from a chapter on cost behavior analysis. It defines variable costs as costs that vary directly with activity levels and fixed costs as costs that remain constant despite changes in activity. Variable costs per unit remain constant within the relevant range, while total variable costs change proportionally with activity. Fixed costs remain constant in total for a given relevant range, but fixed costs per unit decrease as activity increases. The document provides examples of different types of costs, including mixed costs that have both fixed and variable components.
This document provides an overview of process costing and compares it to job-order costing. It discusses key aspects of process costing including how costs flow through processing departments and accumulate in work-in-process and finished goods inventory. Equivalent units are calculated to determine the total production for a period when units are in partially completed stages. Costs are allocated to departments and inventory based on equivalent units using either a weighted-average or first-in, first-out method. Direct labor costs may be small compared to other conversion costs in process costing systems.
The document discusses job-order costing, including:
1) Job-order costing is used when many different products are produced to customer order, requiring unique cost records for each job.
2) Direct materials and labor costs are traced to each job, while manufacturing overhead is allocated using a predetermined overhead rate.
3) The job cost sheet accumulates actual direct and applied overhead costs for each job.
This document contains excerpts from a textbook chapter on cost accounting. It defines and provides examples of different types of costs including direct materials, direct labor, manufacturing overhead, prime costs, conversion costs, product costs and period costs. It also explains the classification of costs as variable or fixed and how they behave with changes in activity levels. Manufacturing cost flows and inventory valuations are demonstrated through examples of raw materials, work in process, finished goods and cost of goods sold calculations.
The document is from a chapter in a managerial accounting textbook. It discusses key concepts in managerial accounting including the functions of management (planning, controlling, directing and motivating), just-in-time systems, total quality management, process reengineering, the theory of constraints, and codes of ethics for management accountants. It also summarizes the differences between financial and managerial accounting and how the business environment has changed in recent decades.
This document discusses profitability analysis and various profitability metrics used to evaluate business segments and make decisions around resource allocation. It defines absolute and relative profitability, and introduces the profitability index as a key measure to rank segments when resources are constrained. The profitability index is calculated as incremental profit divided by constrained resources required. The document provides examples of using the profitability index to select projects, make volume trade-off decisions, determine sales commissions, and set minimum prices for new products.
Recruiting in the Digital Age: A Social Media MasterclassLuanWise
In this masterclass, presented at the Global HR Summit on 5th June 2024, Luan Wise explored the essential features of social media platforms that support talent acquisition, including LinkedIn, Facebook, Instagram, X (formerly Twitter) and TikTok.
Top mailing list providers in the USA.pptxJeremyPeirce1
Discover the top mailing list providers in the USA, offering targeted lists, segmentation, and analytics to optimize your marketing campaigns and drive engagement.
Anny Serafina Love - Letter of Recommendation by Kellen Harkins, MS.AnnySerafinaLove
This letter, written by Kellen Harkins, Course Director at Full Sail University, commends Anny Love's exemplary performance in the Video Sharing Platforms class. It highlights her dedication, willingness to challenge herself, and exceptional skills in production, editing, and marketing across various video platforms like YouTube, TikTok, and Instagram.
Discover timeless style with the 2022 Vintage Roman Numerals Men's Ring. Crafted from premium stainless steel, this 6mm wide ring embodies elegance and durability. Perfect as a gift, it seamlessly blends classic Roman numeral detailing with modern sophistication, making it an ideal accessory for any occasion.
https://rb.gy/usj1a2
The 10 Most Influential Leaders Guiding Corporate Evolution, 2024.pdfthesiliconleaders
In the recent edition, The 10 Most Influential Leaders Guiding Corporate Evolution, 2024, The Silicon Leaders magazine gladly features Dejan Štancer, President of the Global Chamber of Business Leaders (GCBL), along with other leaders.
Event Report - SAP Sapphire 2024 Orlando - lots of innovation and old challengesHolger Mueller
Holger Mueller of Constellation Research shares his key takeaways from SAP's Sapphire confernece, held in Orlando, June 3rd till 5th 2024, in the Orange Convention Center.
At Techbox Square, in Singapore, we're not just creative web designers and developers, we're the driving force behind your brand identity. Contact us today.
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Building Your Employer Brand with Social MediaLuanWise
Presented at The Global HR Summit, 6th June 2024
In this keynote, Luan Wise will provide invaluable insights to elevate your employer brand on social media platforms including LinkedIn, Facebook, Instagram, X (formerly Twitter) and TikTok. You'll learn how compelling content can authentically showcase your company culture, values, and employee experiences to support your talent acquisition and retention objectives. Additionally, you'll understand the power of employee advocacy to amplify reach and engagement – helping to position your organization as an employer of choice in today's competitive talent landscape.
Storytelling is an incredibly valuable tool to share data and information. To get the most impact from stories there are a number of key ingredients. These are based on science and human nature. Using these elements in a story you can deliver information impactfully, ensure action and drive change.
Zodiac Signs and Food Preferences_ What Your Sign Says About Your Tastemy Pandit
Know what your zodiac sign says about your taste in food! Explore how the 12 zodiac signs influence your culinary preferences with insights from MyPandit. Dive into astrology and flavors!
Best practices for project execution and deliveryCLIVE MINCHIN
A select set of project management best practices to keep your project on-track, on-cost and aligned to scope. Many firms have don't have the necessary skills, diligence, methods and oversight of their projects; this leads to slippage, higher costs and longer timeframes. Often firms have a history of projects that simply failed to move the needle. These best practices will help your firm avoid these pitfalls but they require fortitude to apply.