MA 2 difficile aperto

Predetermined overhead rate = Estimated total manufacturing overhead cost / Estimated total machine-hours

Predetermined overhead rate = Estimated total manufacturing overhead cost / Estimated total direct labor-hours

Overhead applied from both departments to a job = Predetermined overhead rate for each department × Actual machine-hours or direct labor-hours used on the job

<p>Total job cost = Direct materials cost + Direct labor cost + Applied overhead cost</p> Signup and view all the answers

<p>Accurately assigning manufacturing costs to jobs is important because it influences planning and decisions made by managers.</p> Signup and view all the answers

<p>Selling price = Total manufacturing cost × (1 + Markup percentage)</p> Signup and view all the answers

<p>The formula method uses the equation $Q = \frac{Target\ Profit + Fixed\ Costs},{Contribution\ Margin\ per\ Unit}$ to determine the number of units that must be sold to earn a target profit.</p> Signup and view all the answers

<p>The margin of safety is the excess of budgeted or actual sales dollars over the break-even volume of sales dollars. It can be expressed as a percentage of sales or in terms of the number of units sold.</p> Signup and view all the answers

<p>Cost structure refers to the relative proportion of fixed and variable costs in an organization. It is important because it impacts the company's profitability and risk exposure.</p> Signup and view all the answers

<p>Operating leverage measures how sensitive net operating income is to percentage changes in sales. It is useful for predicting changes in net operating income.</p> Signup and view all the answers

<p>Structuring sales commissions based on contribution margin can eliminate conflicts and lead to higher profits by incentivizing sales representatives to focus on selling the most profitable products.</p> Signup and view all the answers

<p>The sales mix, or the relative proportion in which a company's products are sold, affects the break-even point and contribution margin because different products have different cost structures and contribution margins.</p> Signup and view all the answers

<p>The equation for the profit RBC earns if it sells 401 bikes is $200.</p> Signup and view all the answers

<p>The simple profit equation can be expressed in terms of the unit contribution margin (Unit CM) as: Profit = (Unit CM * Q) - Fixed Costs, where Q is the quantity of units sold.</p> Signup and view all the answers

<p>A CVP graph is used to represent the relationships among revenue, cost, profit, and volume.</p> Signup and view all the answers

<p>In a CVP graph, the horizontal (X) axis represents unit volume.</p> Signup and view all the answers

<p>Total fixed expenses are represented by drawing a line parallel to the volume axis in a CVP graph.</p> Signup and view all the answers

<p>The formula to prepare the CVP graph involves representing unit volume on the horizontal (X) axis and dollars on the vertical (Y) axis, and drawing a line parallel to the volume axis to represent total fixed expenses.</p> Signup and view all the answers

<p>Predetermined overhead rates are used to apply overhead to jobs before the period begins, based on estimated data. This allows for the estimation of job costs and the ability to track and assign manufacturing overhead to individual jobs.</p> Signup and view all the answers

<p>The four-step process for computing the predetermined overhead rate involves estimating the total fixed and variable manufacturing overhead costs, selecting an allocation base, estimating the level of activity for the allocation base, and then computing the predetermined overhead rate by dividing the total estimated overhead costs by the estimated level of activity.</p> Signup and view all the answers

<p>Using predetermined overhead rates allows for the estimation of job costs before the period begins, provides a consistent basis for applying overhead to jobs, and helps in avoiding the delay of job cost information until the end of the period.</p> Signup and view all the answers

<p>An allocation base is a cost driver that causes overhead, used to assign manufacturing overhead to individual jobs. Examples of allocation bases include direct labor hours, machine hours, or other measures of activity that are related to the incurring of manufacturing overhead costs.</p> Signup and view all the answers

<p>Manufacturing overhead is allocated to individual jobs by multiplying the predetermined overhead rate by the actual level of the allocation base incurred by each job.</p> Signup and view all the answers

<p>Actual overhead costs may not be known until the end of the period, making it difficult to estimate job costs and inhibiting the ability to track and assign manufacturing overhead to individual jobs accurately.</p> Signup and view all the answers

<p>Contribution margin is the amount remaining from sales revenue after variable expenses have been deducted. It is used to cover fixed expenses and contribute to the profit. The contribution margin ratio is calculated as contribution margin per unit divided by the selling price per unit. It is an important measure for determining the profitability of individual products and making decisions regarding pricing, sales volume, and cost management.</p> Signup and view all the answers

<p>The contribution margin ratio is calculated as contribution margin per unit divided by selling price per unit. It represents the portion of sales revenue that contributes to covering fixed expenses and profit. As sales volume increases, the contribution margin also increases, leading to higher overall profits.</p> Signup and view all the answers

<p>The variable expense ratio is calculated as variable expenses divided by sales. It measures the proportion of sales revenue that is consumed by variable expenses. This ratio is important for analyzing cost structures and understanding the impact of variable expenses on profitability.</p> Signup and view all the answers

<p>The contribution margin ratio is used to assess the impact of changes in sales volume, pricing, and cost structure on net operating income. For example, increasing sales volume can lead to a higher contribution margin and net income, while adjusting pricing or cost structure can also influence profitability. The ratio helps in evaluating different scenarios and making informed business decisions.</p> Signup and view all the answers

<p>Break-even analysis is a technique used to determine the level of sales at which total revenues equal total costs, resulting in a net income of zero. The break-even point can be calculated using the contribution margin formula or the equation method. The formula method provides a shortcut version of the equation method, and both approaches are used to assess the profitability of business operations.</p> Signup and view all the answers

<p>Dollar sales at break-even represent the level of sales revenue required to cover all costs and achieve a net income of zero. Understanding the dollar sales at break-even is crucial for financial planning, budgeting, and setting sales targets. It helps businesses determine the minimum revenue needed to sustain operations and make informed decisions about pricing, expenses, and profitability.</p> Signup and view all the answers