Rsm222
CH4
Production Report – Weighted-Average
-A quantity schedule showing the flow of units and the computation of equivalent units.
-A computation of cost per equivalent unit.
-Cost Reconciliation section shows the reconciliation of all cost flows into and out of the department during the period.
CH 7
Cost-volume-profit (CVP) analysis is a powerful tool that managers use to help them understand the interrelationship among cost, volume and profit in an organization by focusing on interactions among the following five elements: 1. prices of products 2. volume or level of activity 3. per unit variable costs 4. total fixed costs 5. mix of products sold
Unit Contribution Margin: p – v
Total Contribution Margin: (p - v) *Q
Contribution Margin Ratio: (p-v) /p
Breakeven Point: The point at which revenues equal total cost, and the profit is zero. * Equation Method: p*Q = f + v*Q
* Contribution Margin Method Breakeven in Units: Q = f / (p-v) (Fixed expenses / CM per unit) Breakeven in Dollars: Y = p*Q = p*f / (p-v) = f / [(p-v)/p)] (Fixed expense/CM ratio)
determine the sales volume needed to achieve a target profit：
Sales = variable expenses + fixed expenses + profit
Margin of safety = total sales – break-even sales
Operating leverage: a measure of how sensitive net operating income is to percentage changes in sales
Degree of operating leverage = Contribution margin / net operating income
Sales mix is the relative proportion in which a company’s products are sold.
Assumption in CVP analysis: * Selling price is constant. * Costs are linear and can be accurately divided into variable (constant per unit) and fixed (constant in total) elements. * In multiproduct companies, the sales mix is constant. * In manufacturing companies, inventories do not change (units produced = units
Production Report – Weighted-Average
-A quantity schedule showing the flow of units and the computation of equivalent units.
-A computation of cost per equivalent unit.
-Cost Reconciliation section shows the reconciliation of all cost flows into and out of the department during the period.
CH 7
Cost-volume-profit (CVP) analysis is a powerful tool that managers use to help them understand the interrelationship among cost, volume and profit in an organization by focusing on interactions among the following five elements: 1. prices of products 2. volume or level of activity 3. per unit variable costs 4. total fixed costs 5. mix of products sold
Unit Contribution Margin: p – v
Total Contribution Margin: (p - v) *Q
Contribution Margin Ratio: (p-v) /p
Breakeven Point: The point at which revenues equal total cost, and the profit is zero. * Equation Method: p*Q = f + v*Q
* Contribution Margin Method Breakeven in Units: Q = f / (p-v) (Fixed expenses / CM per unit) Breakeven in Dollars: Y = p*Q = p*f / (p-v) = f / [(p-v)/p)] (Fixed expense/CM ratio)
determine the sales volume needed to achieve a target profit：
Sales = variable expenses + fixed expenses + profit
Margin of safety = total sales – break-even sales
Operating leverage: a measure of how sensitive net operating income is to percentage changes in sales
Degree of operating leverage = Contribution margin / net operating income
Sales mix is the relative proportion in which a company’s products are sold.
Assumption in CVP analysis: * Selling price is constant. * Costs are linear and can be accurately divided into variable (constant per unit) and fixed (constant in total) elements. * In multiproduct companies, the sales mix is constant. * In manufacturing companies, inventories do not change (units produced = units