Explain the relationship between Contribution Margin ratio and Number of Breakeven units.
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- Explain the relationship between Contribution Margin ratio and Number of Breakeven units.
- Explain why it is important to calculate Margin of Safety.
- State TWO examples of fixed cost in relation to the zoo.
- Write a report to Mr Zoo for recommending which pricing plan should be adopted. Your recommendation should include at least ONE piece of financial and ONE piece of non-financial information.
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- Explain why it is important to calculate Margin of Safety. State TWO examples of fixed cost in relation to the zoo. Write a report to Mr Zoo for recommending which pricing plan should be adopted. Your recommendation should include at least ONE piece of financial and ONE piece of non-financial information.Using High-Low to Calculate Fixed Cost, Calculate theVariable Rate, and Construct a Cost FunctionRefer to the information for Speedy Pete’s above. Speedy Pete’s controller wants to calculate thefixed and variable costs associated with its cutting-edge delivery service.Required:Using the high-low method, calculate the fixed cost of deliveries, calculate the variable rate perdelivery, and construct the cost formula for total delivery costCan you provide samples/examples of tasks for developing the costing and profitability model for a new product? Should include the following: o A table showing the list of the parameters used in your model o A breakdown of the expected production costs and profitability o Calculation of the NPV of expected sales/ profitability o A sensitivity analysis that accounts for changes in any three (3) parameters of your model. o At least two trade-off rules you developed for your product development
- Continuous improvement is the governing principle of a lean accounting system. Following are several performance measures. Some of these measures would be associated with a traditional standard-costing accounting system, and some would be associated with a lean accounting system. a. Materials price variances b. Cycle time c. Comparison of actual product costs with target costs d. Materials quantity or efficiency variances e. Comparison of actual product costs over time (trend reports) f. Comparison of actual overhead costs, item by item, with the corresponding budgeted costs g. Comparison of product costs with competitors product costs h. Percentage of on-time deliveries i. First-time through j. Reports of value- and non-value-added costs k. Labor efficiency variances l. Days of inventory m. Downtime n. Manufacturing cycle efficiency (MCE) o. Unused (available) capacity variance p. Labor rate variance q. Using a sister plants best practices as a performance standard Required: 1. Classify each measure as lean or traditional (standard costing). If traditional, discuss the measures limitations for a lean environment. If it is a lean measure, describe how the measure supports the objectives of lean manufacturing. 2. Classify the measures into operational (nonfinancial) and financial categories. Explain why operational measures are better for control at the shop level (production floor) than financial measures. Should any financial measures be used at the operational level? 3. Suggest some additional measures that you would like to see added to the list that would be supportive of lean objectives.you have to create your own product to be sold , list of variable and fixed cost , BEP analysis , Target profit ,sales to achive TP , Operation budgeta) Briefly discuss the similarities and differences between the terms 'overhead absorption rate' and 'cost driver rate'. b) Briefly discuss the meaning of the term 'sensitivity analysis' and how it could be used in variable costing. c) Briefly discuss the characteristics of good information that budgets might be expected to possess. d) Briefly discuss the reasons why payback period is often preferred as an investment appraisal technique, and also its limitations.
- Please define and give formula of the following (if there is any): 1. Absorption costing 2. Activity bases (drivers) 3. Break-even point 4. Contribution margin 5. Contribution margin ratio 6. Cost behavior 7. Cost- volume- profit analysis 8. Cost - volume -profit chart 9. Fixed cost 10. High-low method 11. Margin of safety 12. Mixed costs 13. Operating leverage 14. Profit-volume chart 15. Relevant range 16. Sales mix 17. Unit contribution margin 18. Variable costing 19. Variable costs1.The relevant costing involves making decision to the following, except: Select one: a. overcome limited factors. b. price higher or lower. c. accept or reject a special order. d. keep or drop a segment or product line. 2.Below are the methods to compute the break-even point, except: Select one: a. contribution margin method. b. cost-volume-profit graphic presentation. c. mathematical equation method. d. profit margin method. 3.The financial budget comprises of the following, except: Select one: a. cash budget. b. investment budget. c. budgeted cash flows. d. capital budget.a) Determine the variable cost per unit and the fixed cost using the high-low method.b) What is the equation of the total mixed cost function?c) Prepare the scatter diagram and insert the trendline or line of best-fit. Use a scaleof 2 cm to represent 1,000 units on the x-axis & 2 cm to represent $50,000 on the yaxis.
- Comment on the problems that may follow from a decision to increase the overhead absorption rate in conditions when cost –plus pricing is used and overhead is currently underabsorbed. giving a bold illustration.Discuss the advantages and disadvantages of using a cost planning and control system based on earned value analysis (EVA) as opposed to more traditional cost planning and control approaches.Contribution Margin, Cost-Volume-Profit Analysis and Break-Even Point (Overview) Fixed, Variable and Mixed Costs An appreciation of cost behavior is needed in order for management to understand and predict profitability as the costs of material, labor and other operating expenses and levels of production and sales change. It's important to review the cost behavior of fixed, variable and mixed costs before contribution margins, cost-volume-profit analysis, and break-even points. 1. In the table below, Have-A-Seat Inc. has outlined many of the costs associated with producing office chairs. With respect to the production and sale of office chairs, classify each cost as fixed, mixed, or variable. a. Pressure-molded plastic for chair frames b. Pension cost: $0.50 per employee hour on the job c. Insurance premiums for inventory: $2,100 per month plus $0.01 for each dollar of inventory over $2 million d. Property taxes: $120,000 per year for the factory building and…
