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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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BuyFindarrow_forward

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

Identify activity bases

For a major university, match each cost in the following table with the appropriate activity base. An activity base may only be used more than once.

To determine

Concept Introduction:

Cost Volume Profit (CVP) Analysis:

The Cost Volume Profit analysis is the analysis of the relation between cost, volume, and profit of a product. It analyzes the cost and profits at the different level of production, in order to determine the breakeven point and required the level of sales to earn the desired profit.

Contribution margin means the margin that is left with the company after recovering variable cost out of revenue earned by selling smart phones. The formula for contribution margin is as follows:

Contribution margin = Sales - Variable cost.

Similarly contribution margin ratio = Contribution/sales

To Indicate:

The Correct Activity base for each Cost

Explanation

The Correct Activity base for each Cost is as follows:

    Cost #Activity Base #Explanations
    1aAdmission mailing cost shall be based on number of students enrolled
    2bFinancial aid cost shall be based on number of financial aid applications

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