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The selling price per unit less the variable cost per unit is
The selling price per unit less the variable cost per unit is
Profit - Volume ratio is improved by reducing
Profit - Volume ratio is improved by reducing
If standard cost is lower than the actual cost , the difference is known as
If standard cost is lower than the actual cost , the difference is known as
Which of the following is not a component of prime cost?
Which of the following is not a component of prime cost?
A cost per unit which increases or decreases when volume of output increases or decreases is known as
A cost per unit which increases or decreases when volume of output increases or decreases is known as
Opening stock of finished goods ₹50,000; Closing stock of finished goods is ₹1,00,000 and cost of goods manufactured is ₹2,00,000. What is cost of goods sold
Opening stock of finished goods ₹50,000; Closing stock of finished goods is ₹1,00,000 and cost of goods manufactured is ₹2,00,000. What is cost of goods sold
The difference between the actual quantity and the standard quantity, multiplied by the standard price is the
The difference between the actual quantity and the standard quantity, multiplied by the standard price is the
The contribution to sales ratio of a company is 20% and profit is ₹64,500. If the total sales of the company are ₹7,80,000, the fixed cost is
The contribution to sales ratio of a company is 20% and profit is ₹64,500. If the total sales of the company are ₹7,80,000, the fixed cost is
Margin of safety is expressed as
Margin of safety is expressed as
A company has to pay ₹10,000 per unit royalty to the designer of a product which it manufactures and sells. The royalty charge would be classified as a
A company has to pay ₹10,000 per unit royalty to the designer of a product which it manufactures and sells. The royalty charge would be classified as a
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Study Notes
Cost and Profit Concepts
- The selling price per unit minus the variable cost per unit equals the contribution per unit.
Improving Profit-Volume Ratio
- Reducing variable costs improves the profit-volume ratio.
Cost Variances
- When the standard cost is lower than the actual cost, the difference is known as a favorable variance.
Prime Cost Components
- Selling and administrative expenses are not components of prime cost.
Cost Behavior
- A cost per unit that increases or decreases when the volume of output increases or decreases is known as a variable cost.
Cost of Goods Sold
- Cost of goods sold = Opening stock of finished goods + Cost of goods manufactured - Closing stock of finished goods
- Cost of goods sold = ₹50,000 + ₹2,00,000 - ₹1,00,000 = ₹1,50,000
Standard Costing
- The difference between the actual quantity and the standard quantity, multiplied by the standard price, is the material cost variance.
Break-Even Analysis
- Contribution to sales ratio = (Profit / Total Sales) × 100
- Fixed cost = Total sales - (Contribution to sales ratio × Total sales)
- Fixed cost = ₹7,80,000 - (20% × ₹7,80,000) = ₹6,24,000
Margin of Safety
- Margin of safety is expressed as a percentage or an absolute value.
Royalty Payments
- A royalty payment of ₹10,000 per unit is a variable cost.
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