The Fixed Period

Basics Fixed costs Activ. Based Costing Target Cost. Life-Cycle Costing Cost Benchmarking Prof. Dr. P. Weber-Dreßler Stategic Costing.ppt (p. 1) Strategic Costing Strategic Costing Basics Contents Fixed costs Part 1: Basics to strategic costing 1. Traditional costing vs. strategic costing 2. Specifics of strategic costing 3. Tools of strategic costing Activ. Based Costing Target Cost. Life-Cycle Costing Cost Benchmarking Prof. Dr. P. Weber-Dreßler Stategic

analysis.(Drury, 2004). Breakeven analysis (cost-volume-profit analysis) is an approach to profit planning that requires derivation of various relationships among revenue, fixed costs, and variable costs in order to determine units of production or volume of sales at which firm “breaks even” (where total revenues equal total of fixed and variable costs). The analysis is built on various

efforts required to allocate fixed overhead. Since the variable costing method only uses variable costs when assigning products their costs, allocating fixed overhead to individual products is not necessary. According to the case, cost control can be improved with the adoption of variable costing. Although costs can also be controlled when using absorption costing, it is easier to distinguish on the income statement which costs are variable and which costs are fixed when using the variable costing

Introduction A budget is considered as a standard to facilitate control work activities of the organization. Budgets are planning tools prepared firstly to start the period being budgeted. Valuable information about the performance contains of the difference between the actual results and the planning budgets. Therefore, budgets are both planning tools and performance evaluation. The most common important element in budget is some measure of anticipated output such as the number

Meaning of Cost Accounting Previously, cost accounting was considered to be a technique for the ascertainment of costs of products or services on the basis of historical data. In time, due to the competitive nature of the market, it was realized that ascertaining of cost is not as important as controlling costs. Cost accounting started to be considered more as a technique for cost control as compared to cost ascertainment. Due to the technological developments in all fields, cost reduction has

Section A DAMEO – Finance Element Question 1 A. Breakeven point (BEP) is where the total contribution cost equals to fixed cost. To calculate this out you do fixed cost divided by the contribution per unit. To calculate the contribution per unit you do the selling price minus the variable costs. Racquets - £225 Producing - 6000 units Labour - 27000 hours Materials - £44 X 6000 = £264,000 Labour - £12 X (4.5 hours x 6000) = £324,000 Variable overheads production – 10 x 4.5 = 45 x 6000 = £270

products as complete costs. (Noreen, E.W. Brewer, P.C. Garrison, R.H. (2013). The shortcoming of absorption costing is that it does not always provide the best signal on the strategy to price a product. Moreover, absorption costing assigns both fixed and variable manufacturing costs to products and mix them that makes management to face challenges to distinguish between the two costs. The report provides the benefits of the absorption and variable costing to reveal how the two costing methods

the plant increases, costs decline and as the size of the plant decreases, cost rise. Fixed costs of bigger plant are higher than that of the smaller plant. 3. Prices of input: Higher the prices of inputs, higher will be the costs of production. Even for the manufacturer getting the raw materials at low cost will help the firm to decide the product price. 4. Period under consideration: During short period, costs tend to rise sharply as compared

a sunk cost. The $320,000, on the other hand, is a fixed cost associated with the proposed addition. This cost has not yet been incurred. Because it is necessary to the proposed addition it is an out-of-pocket cost (b) Calculate by how much the proposed addition will either increase or reduce operating income. Show all work. Solution: Computation of the following Operating income = ($750,000 Sales - $450,000 variable costs - $320,000 fixed costs). Operating income = ($750,000 - $450,000 - $320

offsets calculate the real value of accounts receivables and fixed assets. Uncollectible accounts receivables and depreciation reflect the offsets reported on financial statements. In accordance with generally accepted accounting principles (GAAP); two methods compute the uncollectible accounts receivable expense. Just like uncollectible accounts offset the value of accounts receivables; so do depreciation expenses counteract the value of fixed assets. Also called contra accounts, the journal entries