MA 2 medio aperto

The formula for expressing the simple profit equation in terms of the unit contribution margin is: $Profit = (Unit\ CM \times Volume) - Fixed\ Costs$.

The relationships among revenue, cost, profit, and volume can be expressed graphically by preparing a CVP graph.

The purpose of drawing a line parallel to the volume axis in a CVP graph is to represent total fixed expenses.

<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 profit RBC earns if it sells 401 bikes is expressed as $Profit = (Unit\ CM \times 401) - Fixed\ Costs$.</p> Signup and view all the answers

<p>The answer of $200 mirrors the earlier solution and represents the profit RBC earns if it sells 401 bikes.</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>Boeing, Bechtel International, and Walt Disney Studios are examples of companies that use job-order costing.</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>An allocation base, such as direct labor hours or machine hours, is used to assign manufacturing overhead to individual jobs.</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.</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 for calculating the predetermined overhead rate is: $Predetermined\ overhead\ rate = Estimated\ total\ manufacturing\ overhead\ cost \div Estimated\ total\ amount\ of\ allocation\ base$</p> Signup and view all the answers

<p>It is important to accurately allocate manufacturing overhead costs to jobs because inaccurately assigning manufacturing costs to jobs adversely influences planning and decisions made by managers.</p> Signup and view all the answers

<p>A cost driver is a factor that causes overhead costs. Many companies use a single predetermined plantwide overhead rate to allocate all manufacturing overhead costs to jobs based on their usage of direct-labor hours.</p> Signup and view all the answers

<p>The steps involved in calculating the total job cost for a specific job in a job-order costing system are: 1. Calculate the predetermined overhead cost for each department 2. Calculate the predetermined overhead rate for each department 3. Calculate the amount of overhead applied from both departments to a job 4. Calculate the total job cost for the specific job.</p> Signup and view all the answers

<p>The estimates used to calculate the predetermined overhead rate for each department in Dickson Company are: 1. The predetermined overhead rate in the Milling Department is based on machine-hours 2. The predetermined overhead rate in the Assembly Department is based on direct labor-hours</p> Signup and view all the answers

<p>The formula for calculating the total cost of a job using multiple predetermined overhead rates is: $Total\ cost\ of\ job = Direct\ materials\ + Direct\ labor\ + Manufacturing\ overhead\ applied$</p> Signup and view all the answers

<p>The formula method uses the equation $Q = \rac{F + T},{P - V}$, where Q is the required sales quantity, F is the total fixed costs, T is the target profit, P is the selling price per unit, and V is the variable cost per unit.</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 (or budgeted) 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. A higher proportion of fixed costs leads to higher operating leverage and magnifies the effects of percentage changes in sales on net operating income. This can result in higher profitability at high sales levels but increased risk at low sales levels.</p> Signup and view all the answers

<p>Operating leverage measures how sensitive net operating income is to percentage changes in sales. A higher degree of operating leverage indicates that a small change in sales will result in a larger percentage change in net operating income. This can be used to predict the impact of sales changes on 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 aligning the incentives of the sales team with the overall profitability of the organization.</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 by influencing the overall average selling price and average variable cost per unit. A change in the sales mix can impact the overall break-even point and contribution margin of the company.</p> Signup and view all the answers

<p>Contribution margin is calculated as the selling price per unit minus the variable expenses per unit. It represents the amount available to cover fixed expenses and contribute to net operating income. Understanding contribution margin is crucial for assessing the impact of sales volume changes on profitability.</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 indicates the proportion of each sales dollar available to cover fixed expenses and contribute to profit. The variable expense ratio, calculated as variable expenses divided by sales, reflects the portion of each sales dollar consumed by variable expenses.</p> Signup and view all the answers

<p>An increase in sales volume will typically lead to an increase in contribution margin, as more units sold will contribute more towards covering fixed expenses and generating net operating income.</p> Signup and view all the answers

<p>Break-even analysis involves determining the level of sales at which total revenues equal total expenses, resulting in zero net operating income. This analysis is critical for decision making related to pricing, cost structure, and sales volume targets.</p> Signup and view all the answers

<p>The formula method provides a shortcut for calculating the break-even point by dividing total fixed expenses by the contribution margin per unit. It demonstrates how each unit sold contributes towards covering fixed expenses and reaching the break-even point.</p> Signup and view all the answers

<p>The dollar sales at break-even can be computed using the equation method by solving the break-even equation: $P = \frac{F},{1 - (\frac{V},{P})}$, where P represents the selling price, F represents fixed expenses, and V represents variable expenses per unit. Using the formula method, it can be calculated as: $Break-even , point = \frac{Fixed , expenses},{Contribution , margin , ratio}$.</p> Signup and view all the answers