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Product Costs
Cost-Volume Profit
Differential Analysis
Formulas/Equations
MISC.
100
Direct Materials Direct Labor Manufacturing Overhead
What are product costs?
100
The level of sales at which profit is zero
What is the breakeven point?
100
Costs that are avoidable
What are relevant costs?
100
variable expenses / sales
What is variable expense ratio?
100
Sales - V.C. = CM - F.E. = NOI
What is the variable costing income statement?
200
Direct Materials Direct Labor Variable Manufacturing Overhead
What are variable costing product costs?
200
Amount remaining from sales revenue after variable expenses have been deducted
What is contribution margin?
200
Sunk costs, future costs that do not differ between alternatives, and some fixed costs are said to be:
What are irrelevant/unavoidable costs?
200
actual sales - breakeven sales
What is the margin of safety?
200
Breakeven point + fixed expenses
What is contribution margin?
300
Direct Materials Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead
What are absorption costing product costs?
300
(Sales-Variable expenses) / Sales
What is the contribution margin ratio?
300
For add/drop you came up with this answer, you would choose to drop the segment.
What is a positive number?
300
(0 + fixed expenses) / CM%
What is breakeven in dollars?
300
Sales: $93 DL: $18 DM: $21 VMOH: $9 VS&A: $6 FMOH: $43,000 FS&A: $12,000 Compute: 1) variable product cost and 2)CM
What is $48 and $39
400
Find the absorption costing product cost: direct materials: $1.20 direct labor: $1.60 variable MOH: $2.50 variable S&A: $1.45 fixed MOH: $2.30 fixed S&A: $2.10
What is $7.60?
400
selling price: $30 per unit variable expenses: $12 per unit fixed expenses: $57,960 Find breakeven point in units.
3,220 units
400
Compute the effect on the company's overall NOI if the product were dropped: Contribution Margin: $436,500 Fixed Manufacturing: $280,000 Fixed Selling & Administrative: $210,300 **10% of Fixed Manufacturing and 0% of FS&A are irrelevant
What is a $25,800 increase
400
(CM) + avoidable fixed costs = some number, +/-
What is add/drop calculation?
400
If sales increase by 250 units, what is the change in NOI? Sales (1000 units) $20,000 VE $12,000 CM $8000 FE $6000 NOI $2000
Change is $2,000
500
Solve this problem: Y = $45,000 + 55.00X 70% of fixed cost and 80% of variable cost are manufacturing costs. If they sell 15,000 units, what is the unit product cost under variable and absorption?
variable: $44 absorption: $46.10
500
Selling price: $190 per unit Current sales: 29,500 units Breakeven sales: 25,871 units Find margin of safety in dollars.
$689,510
500
Special Order: 1,200 units @ $61 each (no vs&a costs would be incurred and no effect on fixed costs) Currently: produces 12,800 units @ $113 per unit DM: $614,400 DL: $256,000 VS&A: $35,840 Fixed Manufacturing: $294,400 FS&A: $94,720 Should company accept special order?
No, because the cost to make a trophy is $68 and they are only offering $61.
500
Steps to solve for a special order
What is calculate the total revenue generated by the special order, calculate the total incremental costs that will be incurred to produce the special order, take the amount in the first step and subtract from the amount the second step *you want special order price being offered for the product to be more than the price it costs to make the product
500
Explain breakeven. How it is related to CM and Margin of Safety?
When CM = FE, you'll have a breakeven of 0. Where Revenue = Costs Margin of Safety is your cushion from 0, the breakeven.