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BUSI Notes

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Carleton University
BUSI 1002
Jacques Maurice

Chapter 6: Variable/Direct VS Absorption Sales COGS Add opening inventory VC FC Less ending inventory (Amount left over x | op inv + FC + VC |/Amount produced) = Gross margin Op expenses = Op Income Variable/Direct: Sales Less VC (amount sold x VC of operational and production) = CM Less FC (operational and production) = Op Income Chapter 7: Relevant Costing 1. Special Order Variable production cost: xxxx Incremental FC xxxx Commission xxxx CM lost xxxx Advantage to special order xxxx 2. Make or Buy Cost to buy: $xxxx Cost to make: VC: xxxx FC: avoidable xxxx OPP Cost xxxx (xxxx) Advantage to buying: $xxxx What volume does it become indifferent? Cost to buy = Cost to make Then solve. 3. Add or Drop - first find CM’s Loss CM on product C (xxxx) Avoidable FC xxxx Incremental CM of Product A sales rise:xxxx Product B sales fall: (xxxx) xxxx Incremental Income of dropping is: $xxxx 4. Scarce Resources X Y Z CM 100 100 100 DM or DL/hr 1 5 100 CM/(DM or DL hr) 100 20 1 Rank 1 2 3 Market Demand 1000 2000 3000 THEN: Rank Amount of DM or DL left 4000 1 Market demand x DL/DM = 1000 (4000-1000) = 3000 2 3 5. Sell or Process Further If processed further: $xxxx If sold before processing: (xxxx) xxxx Cost of further processing: (xxxx) Incremental income: $xxxx Chapter 8: Budgeting 1. Cash Collection Schedule Jan Feb Mar Total N: # x %3 Amount 3 = D: # x %2 | %3 Amount 2 Amount 3 = J: # x %1
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