BUS 202 Lecture Notes - Lecture 7: Chardonnay, Contribution Margin, Analytical Technique
Document Summary
University of rhode island bus 202 managerial accounting. Using cost estimates to report profits: contribution reporting (internal reporting) Traditional reporting of profits (gaap) = absorption method (external reporting) Reporting focus: reports revenues, expenses and profits based on functional classification, does not consider cost behaviors. Example: (adapted from an earlier version of the course text) For the three months ended june 30, 2016 x. Determine the cost behavior and the cost function (formula) for each cost based on the above information using units sold as the cost driver. Use the high-low method to determine the cost functions for the mixed costs. Plug i(cid:374) a(cid:272)tual results for (cid:862)(cid:454)(cid:863) a(cid:374)d (cid:862)(cid:455)(cid:863) usi(cid:374)g either the high or lo(cid:449) o(cid:271)ser(cid:448)atio(cid:374) pairs a(cid:374)d the (cid:272)o(cid:373)puted (cid:448)alue of (cid:862)(cid:271)(cid:863) a(cid:374)d solve for a y = a + x. Mixed cost function y = ,000 + x. Related x for high y y = a + bx.
