Chapter 1
Plot data to look for patterns
What is: Descriptive data analytics
Variable costs
Costs that change in total as we produce more quantity, but cost per unit stays the same
A type of cost that includes both a variable and fixed component
Mixed cost
Jannik Sinner
Current #1 men's tennis player
Won US Open in September
Long term foresight for company, usually developed by top management
Mission and vision of strategic plan
Anwar, Inc. incurred the costs listed below for the month of May in manufacturing shoes.
Leather uppers and soles used $190,000 Salespersons' salaries 65,000 Advertising 22,000 Insurance on factory 38,000 Factory labor 115,000 Factory manager salary 12,000 Factory equipment depreciation 43,000
Factory rent 27,000 Office supplies 16,000 Factory utilities 21,000
What are total product costs?
$446,000
leather uppers $190,000
Insurance for factory 38,000
Factory labor 115,000
Factory manager 12,000
Factory depreciation 43,000
Factory rent 27,000
Factory utilities 21,000
Total product costs $446,000
The fixed portion of the cost equation using regression
Event that occurred Wednesday, 9/18 affecting US economy
Fed cut discount rate
Research and development
Design of product
Source product inputs
Production
Marketing and sales
Distribution
Customer service
Steps of value chain
f Johnson Manufacturing has the following information, what is the cost of goods sold?
Direct Materials Used $38,000
Finished Goods Inventory, Beg. 28,000
WIP, Beginning 45,000
Factory Insurance 2,400
Depreciation - Factory Equipment 2,900
Office supplies 1,600
Advertising expenses 5,300
Cost of goods manufactured $44,000
Finished Goods Inventory, End. 38,000
WIP, Ending 38,000
Factory supplies 3,100
Office equipment depreciation 2,400
Sales commissions 7,000
Delivery expenses 4,600
$34,000
Beg Finished goods $28,000
+ COGM 44,000
- Ending FG (38,000)
= Cost of goods sold $34,000
Alpine Sports has introduced a new model of snowboard, of which the first unit produced took 3 hours of production time, but with a 90% learning curve. How many minutes will it take to produce the fourth unit of the new snowboard?
145.80 minutes
180 * .9 = 162 for unit 2
162 * 9 = 145.8 for unit 4
Cats and dogs in Springfield, Ohio
Be very afraid
Integrity
Don't put yourself in situation where you appear to have a conflict of interest, one of the IMAs Standards of Ethics conduct
At a sales level of $300,000, Ben's Burgers' gross margin is $50,000 less than its contribution margin. If its operating income is $75,000, and total SG&A expenses are $30,000, what is the contribution margin of Ben's Burgers?
$155,000
Gross margin income statement:
Sales $300,000
COS 195,000 (300 - 105)
Gross margin 105,000 (30K + 75K)
SGA 30,000
Operating income $75,000
Gross margin GM statement above $105,000
plus: difference 50,000
= Contribution margin $155,000
A regression analysis of production costs produced the following output:
Intercept: 52,137
X-variable 1: 5.384
R Squared: .80732
P-value: .000364Based on these results, what is the estimated cost for a production level of 2,000 units?
$62,905
Total costs = $52,137 + 5.384 (2,000)
Strike!!!!
at Boeing
The 4 quadrants of the balanced scorecard
Financial, Customer, Internal business processes, Learning and growth
Mystique Manufacturing had sales revenue last year of $450,000, variable manufacturing costs of $135,000, and fixed manufacturing costs of $60,000. Mystique's selling, general and administrative costs were $50,000, of which $22,500 were variable and the remainder fixed.
a) If Mystique expects sales revenues to increase by 20% for the upcoming year, with variable manufacturing and variable selling costs maintaining the same percentage relationship to sales revenue as in the previous year, what will the expected operating income (profit) be for Mystique in the upcoming year?
$263,500
New sales $540,000 (450 * 1.2)
Variable mfg 162,000 (540 * .30)
Fixed mfg 60,000
Variable SGA 27,000 (540 * .05)
Fixed SGA 27,500
= Operating income $263,500
The following information is available for Crescent Computer Company for its monthly maintenance costs:
Month Units Produced Maintenance Cost
February 60 $3,600
March 120 5,100
April 150 6,000
May 180 6,950
June 240 8,100
July 210 6,900
August 90 5,450
Using the High-Low method, what are expected maintenance costs to be incurred in September if Crescent produces 230 units?
$7,850
To compute the Variable cost/unit:
8100 - 3600 divided by
240 - 60
This equals $25 per unit VC/U
To compute the Fixed costs:
25 ( 60 ) + X = 3600
X = 2100 Fixed cost
To compute value at production level of 230:
230 (25) + 2100 = $7,850
Ellen Cotten, Kate Tiedemann, Lynn Pippenger
Three women who funded the USF College of Business in St. Pete, on wall. Major donors.