AC 212 Study Guide - Quiz Guide: General Ledger, Regression Analysis, Total Absorption Costing

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erincamel819

1 Nov 2016

School

Quinnipiac University

Department

Accounting

Course

AC 212

Professor

Katherine Simione

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Document Summary

Cost equation to express and predict costs. Use account analysis and scatter plots to analyze cost behavior. Use the high-low method to analyze cost behavior. Describe variable costing and prepare a contribution margin income statement. Use cost equation to express and predict costs. Cost behavior: how costs change as volume changes, three common cost behaviors. How costs change as volume changes: variable cost examples (for hotel) Total variable costs change in direct proportion to changes in volume. Variable costs per unit remain constant: total variable cost= variable cost per unit of activity x. Total variable costs always begin at the origin: y=vx. V= variable cost per unit of activity. Costs that do not change in total despite wide changes in volume: examples. Amount of base salary paid to sales staff or rent paid on a factory. The amount remains the same regardless of sales volume. Total fixed costs stay constant over a wide range of volume.

Related Questions

Overview: Classifying a companyâs costs allows for an in-depthanalysis of the impact that changes in output have on revenues,costs, and net income or net loss. A cost-volume-profit (CVP)analysis will be completed in order to determine the breakevenpoint. Relevant costs will be used to prepare a flexible budget.Additionally, an appropriate costing system should be selected andthe choice should be substantiated with reasonable rationale.Finally, a memo should be prepared for management that summarizesthe results of the quantitative analysis and makes recommendationsfor an optimal costing system to be ethically used by key decisionmakers. For Milestone One, you will use the MDE ManufacturingBudget (Table I) to analyze costs, contribution margin, andbreakeven point for the bird feeder division of the company. In Tab1 of your Student Workbook, classify costs as either product orperiod costs. Briefly explain the difference between the types ofcosts. Then, analyze the actual costs and, using Tab 2 of yourStudent Workbook, complete a cost-volume-profit analysis todetermine how many bird feeders must be sold at the current costand sales price level to earn a 10% profit and how much the salesprice would have to increase to earn a 10% profit at the same costand sales volume level. Submit the Student Workbook with Tabs 1 and2 completed with your cost calculations and a 1â2 page Worddocument that explains the implications of your findings andaddresses all of the critical elements in Section I.

I. Salesand Manufacturing Expenses: Budget and Actual (2014)

You will use this table to complete Milestones One and Two.

	Budget ($)	Actual ($)

Sales	1,050,000	991,700

Expenses
Materials â Cedar	225,000	248,160
Materials â Plastic	37,500	37,741
Factory Worker Labor	300,000	332,760
Materials â Indirect	3,000	2,585
Factory Depreciation	78,000	78,000
Factory Utilities	12,000	12,000
Factory Maintenance and Repairs	5,000	4,500
Shipping ($2.25/each)	112,500	105,750
Sales Commissions ($2.00/unitsold)	100,000	94,000
Office Rent	12,000	12,000
Advertising	20,000	20,000
Liability insurance	5,000	5,000
Office Depreciation	1,000	1,000
Office Salaries	48,000	48,000

Total Expenses	959,000	1,001,496

II. Contribution Margin: Static Budget and Actual Results (2014)

You will use this table to complete Milestone Two.

	Actual Results	Static Budget Amount

Units Sold	47,000	50,000
Revenues ($)	991,700	1,050,000
Manufacturing Costs ($)
Variable	621,246	565,500
Fixed	94,500	95,000
Gross Margin	275,954	389,500

Milestone One,Part I




	Product Costs









	Period Costs





		Totals	Totals
		Budget	Actual
Sales Price per Unit

Variable Costs
	Materials - Cedar
	Materials - Plastic
	Factory Worker Labor
	Materials - Indirect
	Shipping ($2.25/ea)
	Sales Commissions ($2/unit sold)

Variable Cost per Unit

Contribution Margin


Fixed Costs
	Factory Depreciation
	Factory Utilities
	Factory Maintenance and Repairs
	Office Rent
	Advertising
	Liability Insurance
	Office Depreciation
	Office Salaries
Total Fixed Costs


Using Budgeted Amounts
Breakeven Point -				Breakeven Point -


Using Actual Amounts				Units at Current Sales Price
+ 10,000 profit

Using actual amounts				New Contribution Margin
+ 10,000 profit				Current Variable Costs
				New Sales Price

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AC 212 Study Guide - Quiz Guide: General Ledger, Regression Analysis, Total Absorption Costing

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