MA 2 facile aperto

The formula for the unit contribution margin (Unit CM) is: $Unit: CM = Selling: Price - Variable: Cost$

The relationships among revenue, cost, profit, and volume can be expressed graphically by preparing a Cost-Volume-Profit (CVP) graph.

The purpose of preparing a CVP graph is to visually represent the relationships among revenue, cost, profit, and volume.

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

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

<p>Racing Bicycle developed contribution margin income statements at 0, 200, 400, and 600 units sold.</p> Signup and view all the answers

<p>The formula to calculate the predetermined overhead rate is: Predetermined Overhead Rate (POR) = Estimated Total Manufacturing Overhead Cost / Estimated Total Units of the Allocation Base</p> Signup and view all the answers

<p>The formula to calculate the amount of overhead applied from both departments to a job is: Overhead Applied = Predetermined Overhead Rate (POR) × Actual Units of the Allocation Base used for the Job</p> Signup and view all the answers

<p>The formula to calculate the total job cost for Job 407 is: Total Job Cost = Direct Materials + Direct Labor + Manufacturing Overhead Applied</p> Signup and view all the answers

<p>The predetermined overhead rate in the Milling Department depends on machine-hours</p> Signup and view all the answers

<p>The predetermined overhead rate in the Assembly Department depends on direct labor-hours</p> Signup and view all the answers

<p>The formula for calculating the predetermined overhead cost for each department is: Predetermined Overhead Cost = Predetermined Overhead Rate × Actual Units of the Allocation Base used for the Department</p> Signup and view all the answers

<p>Job-order costing systems are used for producing multiple products, manufacturing to order, and tracing costs to each job.</p> Signup and view all the answers

<p>Examples of companies using job-order costing include Boeing, Bechtel International, and Walt Disney Studios.</p> Signup and view all the answers

<p>Product costs are related to manufacturing and can be inventoried, while period costs are non-manufacturing and go directly to the P/L.</p> Signup and view all the answers

<p>Manufacturing overhead costs are allocated to individual jobs using an allocation base, such as direct labor hours or machine hours.</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, because actual overhead for the period may not be known until the end, inhibiting the ability to estimate job costs.</p> Signup and view all the answers

<p>The predetermined overhead rate is computed using a four-step process, including estimating total fixed and variable manufacturing overhead costs.</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 calculated as the difference between actual sales and the break-even sales, or 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 significant because different cost structures have advantages and disadvantages, and understanding the cost structure helps in decision-making and financial analysis.</p> Signup and view all the answers

<p>Operating leverage measures how sensitive net operating income is to percentage changes in sales. It can be used to predict changes in net operating income by analyzing the impact of changes in sales on the profitability of the organization.</p> Signup and view all the answers

<p>Structuring sales commissions based on contribution margin rather than selling price alone can eliminate conflicts and lead to higher profits by aligning the incentives of the sales team with the organization's overall profitability.</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. RBC's sales mix is comprised of 45% bikes and 55% carts, and this affects the company's break-even analysis.</p> Signup and view all the answers

<p>The contribution margin ratio (CM ratio) is calculated as the contribution margin per unit divided by the selling price per unit. It represents the portion of each sales dollar available to cover fixed expenses and contribute to net operating income. The formula for calculating the CM ratio is $CM\ ratio = \rac{Contribution\ margin\ per\ unit},{Selling\ price\ per\ unit}$.</p> Signup and view all the answers

<p>The variable expense ratio is calculated as the variable expenses divided by sales. It represents the proportion of each sales dollar that goes towards covering variable expenses. The formula for calculating the variable expense ratio is $Variable\ expense\ ratio = \rac{Variable\ expenses},{Sales}$.</p> Signup and view all the answers

<p>An increase in sales volume will increase the contribution margin. As more units are sold, the total contribution margin will increase, leading to a higher net operating income.</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 expenses, resulting in a net operating income of zero. The formula method involves calculating the break-even point by dividing the total fixed expenses by the contribution margin ratio. The formula for the break-even point using the formula method is $Break-even\ point = \rac{Total\ fixed\ expenses},{Contribution\ margin\ ratio}$.</p> Signup and view all the answers

<p>Dollar sales at break-even represent the level of sales in dollars required to cover all expenses and achieve a net operating income of zero. It is computed using both the equation and formula methods of break-even analysis, providing insights into the financial viability of a business.</p> Signup and view all the answers

<p>Example 1: Increasing unit sales by 40 units with a $10,000 increase in advertising budget decreased net operating income by $2,000.</p> Signup and view all the answers