ACCT 2101 Lecture Notes - Lecture 1: Fixed Cost, Variable Cost, Sunk Costs
Document Summary
Chapter 7 incremental analysis: concepts incremental analysis decision processes. Definitions : relevant cost, opportunity cost, sunk cost. Types of decisions how to compute; which to select; income impact; and what would change your mind: accept a special order, make or buy, sell or process further, keep or drop division or equipment, limited resources. = total revenue: collections schedule ( cash receipts) % of revenue x credit sales - (total must = total credit sales don"t forget about uncollectible) Remember to remove any cash collections from total sales immediately: production. + dei of fin goods (desired ending inventory) = to be produced units: dm or purchases budget. = to be produced units x quantity of materials. = raw materials requirements for production (new ceiling) Total raw materials cost: payment schedule ( disbursements) % of payment x credit purchases: direct labor. = total labor cost: overhead and selling and administrative. = total manufacturing overhead and selling and administrative budgets respectively.
