...Cost-Volume-Profit (CVP) Analysis Shanica N. Todd-Higgins ACC/561 - ACCOUNTING Instructor: DAVID DUREN Schedule: 06/29/2015 - 08/03/2015 Campus: COLUMBIA SOUTH CAROLINA CAMPUS Group ID: SCMBA0914 CVP - What If Analysis Through research, according to Diane Wicks (2015), “Cost-volume-profit (CVP) analysis is used to assess the impact of potential changes in costs and volume on a company's operating profit and net profit. CVP analysis is also useful in making decisions regarding pricing of products, selection of product lines and utilization of production equipments. Additionally, CVP is at the heart of methods used for calculating the break-even point and sales levels necessary to attain targeted income levels.” The break-even point according to W.D Adkins (2015) is, “the point at which revenues are just enough to cover expenses so there in no profit and no loss.” For instance Calculating Breaking-Even Analysis There are many steps in finding the break even analysis. According to Zari Ballard of Ehow (2015, ), First, calculate the total fixed costs by adding together each of the company's fixed costs. For example, a small company with annual fixed costs of $7,000 in rental payments, $3,000 in equipment leases and $30,000 in administrative salaries would have TFC of $40,000. Next, calculate the contribution margin per unit by subtracting the variable cost per unit from the sales price per unit. For example, if a small company's product sells for $60 per unit with...
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...ACC 560 WK 6 Quiz 8 - All Possible Questions To Purchase Click Link Below: http://strtutorials.com/ACC-560-WK-6-Quiz-8-All-Possible-Questions-024.htm ACC 560 WK 6 Quiz 8 - All Possible Questions TRUE-FALSE STATEMENTS 1. In most cases, a company sets the price instead of it being set by the competitive market. 2. In a competitive market, a company is forced to act as a price taker and must emphasize minimizing and controlling costs. 3. The difference between the target price and the desired profit is the target cost of the product. 4. In a competitive environment, the company must set a target cost and a target selling price. 5. The cost-plus pricing approach establishes a cost base and adds a markup to this base to determine a target selling price. 6. The cost-plus pricing model gives consideration to the demand side—whether customers will pay the target selling price. 7. Sales volume plays a large role in determining per unit costs in the cost-plus pricing approach. 8. In time-and-material pricing, the material charge is based on the cost of direct materials used and a material loading charge for related overhead costs. 9. The first step for time-and-material pricing is to calculate the material loading charge. 10. The material loading charge is expressed as a percentage of the total estimated cost of materials for the year. 11. Divisions...
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...ACC 560 WK 6 Quiz 8 - All Possible Questions To Purchase Click Link Below: http://strtutorials.com/ACC-560-WK-6-Quiz-8-All-Possible-Questions-024.htm ACC 560 WK 6 Quiz 8 - All Possible Questions TRUE-FALSE STATEMENTS 1. In most cases, a company sets the price instead of it being set by the competitive market. 2. In a competitive market, a company is forced to act as a price taker and must emphasize minimizing and controlling costs. 3. The difference between the target price and the desired profit is the target cost of the product. 4. In a competitive environment, the company must set a target cost and a target selling price. 5. The cost-plus pricing approach establishes a cost base and adds a markup to this base to determine a target selling price. 6. The cost-plus pricing model gives consideration to the demand side—whether customers will pay the target selling price. 7. Sales volume plays a large role in determining per unit costs in the cost-plus pricing approach. 8. In time-and-material pricing, the material charge is based on the cost of direct materials used and a material loading charge for related overhead costs. 9. The first step for time-and-material pricing is to calculate the material loading charge. 10. The material loading charge is expressed as a percentage of the total estimated cost of materials for the year. 11. Divisions...
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...Week 4 Reflection Team A ACC/561 December 3, 2015 Shalil Sharma Week 4 Reflection This week’s topic of Cost-volume-profit is an exceptional valuable to in business. CVP has a lot of upsides for an entrepreneur starting a new business. The single greatest benefit to CVP is in, how it helps to aid management in decision making. CVP can be used to determine a breakeven point for instance and from there, can predict how future financial activities will help or harm a business. Moreover, CVP is an objective analysis of pertinent information businesses use, this by definition takes any and all subjective opinions out of decision making for a business and only focuses on objectively verifiable evidence. Another benefit to CVP is that it provides a tremendous amount of detail as it pertains to a company’s activities. CVP details everything from; production cost to material cost and beyond. Management can then manipulate the baseline data to see how managerial decisions would play out in the future. From there, leadership can choose the best course of action from the analysis of CVP. CVP is very easy to use and has a standardized set of formulas. This allows uses to experiment with many different data set inputs and see what hypothetical results would be. Since CVP is easy to use, it’s also easy to understand. Anyone familiar can quickly asses the data in order to make the right decisions for their business. While CVP has many benefits, it is not without some problems. First...
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...ACCOUNTING METHODS Presentation of the course Introductory course 4 “intensive” days Theory, terminology, practical examples Suggested readings: Elliott, Barry; Elliott, Jamie: "Financial Accounting and Reporting", Prentice Hall 2012, 15th edition. Horngren, Bhimani, Datar and Foster: "Management and Cost Accounting." Prentice Hall, 2007, 4th edition. Info What to expect from this course: An introduction to the discipline to prepare you for the proceedings of your Master To learn the “language” of the Business An overview of the topics in FA, MA and FSA “Course Limitations” Key questions What is the role of accounting? Accounting provides information. It measures business transactions and operations, “translating” them into numbers, in order to provide information. Why do we need to study accounting? Who are the user of this information? Why do we study accounting? To understand the world of business (and its language) To make better investment choices (resource allocation) To become advanced users To become advanced preparers … The “users” of accounting information Primarily “external” oriented Financial Accounting Managerial Accounting Primarily “internal” oriented Tax Accounting Primarily “external” oriented Financial Accounting and Reporting Generally Accepted Accounting Principles (GAAP), International Accounting Standards (IAS), International Financial Reporting Standards (IFRS)...
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... ACC 561 July 23, 2014 Prof. American Corporation Analysis PROFITABILITY RATIOS Note: All numbers are shown in millions except for ratios. 1. Earnings Per Share Ratio | Formula | Purpose | 2013 | 2012 | Earnings Per Share (EPS) | Net Income − Preferred Stock DividendsAverage Common Shares Outstanding | Measures the net income earned on each share of Deere’s common stock. | $9.093,537.3 – 0389.2 | $7.633,064.7 – 0401.5 | Earnings Per Share (EPS) is the gauge of John Deere’s profitability. It is the portion of Deere’s profit allocated to each outstanding share of common stock. In 2013, EPS increase by $1.46 per share. This was two (2) years in a row that Deere’s EPS has increased substantially. 2. Price-Earnings Ratio Ratio | Formula | Purpose | 2013 | 2012 | Price-Earnings Ratio | Stock Price Per ShareEarnings Per Share | Reflects investors’ assessments of Deere’s future earnings. | 9.0081.849.09 | 11.1985.447.63 | This oft-quoted statistic measures the ratio of the market price of each common stock to EPS. Price-earnings ratio (P/E) is how John Deere’s stock is measured amongst investors. Deere’s P/E tells investors what the market is willing to pay for Deere’s earnings. 3. Gross Profit Ratio Ratio | Formula | Purpose | 2013 | 2012 | Gross Profit Ratio | Gross ProfitNet Sales | Determines ability to maintain adequate selling price above its cost of goods sold. | .279,33134,997.9 | .258,49333,500.9 | John Deere’s 2013 gross profit ratio increased...
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...Week 3 Assignment from the textbook Nancy Schwartz ACC/400 February 8, 2016 Lee Kroll Exercise 20.1 Listed below are nine technical accounting terms introduced in this chapter: Variable costs Relevant range Contribution margin Break-even point Fixed costs Semivariable costs Economies of scale Sales mix Unit contribution margin Each of the following statements may (or may not) describe one of these technical terms. For each statement, indicate the accounting term described, or answer “None” if the statement does not correctly describe any of the terms. a. The level of sales at which revenue exactly equals costs and expenses. Break-even point b. Costs that remain unchanged despite changes in sales volume. Fixed costs c. The span over which output is likely to vary and assumptions about cost behavior generally remain valid. Relevant range d. Sales revenue less variable costs and expenses. Contribution margin e. Unit sales price minus variable cost per unit. Unit contribution margin f. The reduction in unit cost achieved from a higher level of output. Economies of scale g. Costs that respond to changes in sales volume by less than a proportionate amount. Semivariable costs h. Operating income less variable costs. None E20.7 MURDER TO GO! writes and manufactures murder mystery parlor games that it sells to retail stores. The following is per-unit information relating to the manufacture and sale of this...
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...ACC 560 WK 3 Quiz 2 - All Possible Questions To Purchase Click Link Below: http://strtutorials.com/ACC-560-WK-3-Quiz-2-All-Possible-Questions-18.htm ACC 560 WK 3 Quiz 2 - All Possible Questions TRUE-FALSE STATEMENTS 1. Cost accounting is primarily concerned with accumulating information about product costs. 2. A job order cost system is most appropriate when a large volume of uniform products are produced. 3. A process cost accounting system is appropriate for similar products that are continuously mass produced. 4. The perpetual inventory method cannot be used in a job order cost system. 5. A job order cost system and a process cost system are two alternative methods for valuing inventories. 6. A job order cost system identifies costs with a particular job rather than with a set time period. 7. A company may use either a job order cost system or a process cost system, but not both. 8. Raw Materials Inventory, Factory Labor, and Manufacturing Overhead are all control accounts in the general ledger when a job order cost accounting system is used. 9. Accumulating and assigning manufacturing costs are two important activities in a job order cost system. 10. Recording the acquisition of raw materials is a part of accumulating manufacturing costs. 11. Manufacturing costs are generally incurred in one period and recorded in a subsequent period. 12. The...
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...Snap Fitness Cost-Volume-Profit and Break-Even Analysis Anne, Bratcher Kim Collins, Heather Davis ACC/561 August 13, 2012 Dr. Sandra Welch Snap Fitness Even though owning a business can be costly, finding one that aligns with an individual’s ability to invest and operate is challenging. Health and fitness continues to be one of the biggest markets today. Snap Fitness is a growing franchise chain of fitness clubs that is a reasonably priced investment with relatively fast turn around on investment. Franchise History Peter Taunton founded this chain of fitness clubs in 2003 in Chanhassen, Minnesota. This fitness operation presents individuals looking for a way to own their own business in the fitness industry by offering affordable franchising opportunities. These franchise opportunities are client-friendly and can be found across the globe. Snap Fitness clubs are open 24 hours daily and seven days a week. Memberships in one of these fitness clubs give clients opportunities to fit a work out in at their convenience. Many fitness organizations require members to enter into annual contracts that can offer savings if purchasing two or more year plan. Another good feature of the fitness club allows the client to work out at any Snap Fitness facility in the United States...
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...Phoenix ACC 561 Accounting Guillermo Navailez had many important decisions to make and a vast amount of information to process before moving forward after the events of the 1990's. The first was to analyze the marketplace and the second was to analyze the Guillermo Furniture Company. After finding his place in the marketplace, Guillermo then needed to make decisions base on data on whether is it was wise to continue. Computing measures of profitability and a break even analysis will determine weather or not this will be a feasible option. If the determination is to continuing operating, the control system will allow Guillermo Furniture to stay on track. Influence of Cost Relationships and Behaviors on Decision Making Prerogatives Properly controlling costs is one of most important activities a company performs. A company has more control of costs then it does of revenues. Many companies have felt the devastating effects of making poor financial decisions regarding costs. Guillermo furniture has watched labor costs rise in recent years because of an influx of people and jobs. A new competitor has emerged competing with a high quality low price product causing profit margins to shrink. These events have made it very important for Guillermo to make decisions regarding costs very carefully. Understanding cost relationships and behaviors has become important as ever to Guillermo’s long term survival. It is necessary for Guillermo to determine relevant cost drivers...
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..."USEFULNESS OF COST VOLUME PROFIT ANALYISI AS AMANGERIAL Concept" By samya Alakhdar , Dr . Moade Shubita , NYIT –AMMAN –JORDAN FALL-2011. Key words :managerial accounting , cost accounting , CVP. o "USEFULNESS OF COST VOLUME PROFIT ANALYISI AS AMANGERIAL CONCEPT" 1 DR.MOADE SHUBITA "USEFULNESS OF COST VOLUME PROFIT ANALYISI AS AMANGERIAL Concept" By samya Alakhdar , Dr . Moade Shubita , NYIT –AMMAN –JORDAN FALL-2011. Key words :managerial accounting , cost accounting , CVP. TOPICS TO COVER: ABSTRACT INTRODUCTION PROBLEM ASSUMPTION UNDERLYING CVP ANALYSISI THE CONTRIBUTION MARGIN. CONTRIBUTION MARGIN INCOME STATEMENT DEFINE THE BREAKEVEN POINT WHAT IS THE C.M RATIO. THE IMPORTANCE of UNIT CONTRIBUTION MARGINE DETERMINATI SOME APPLICATIONS OF CM “WHAT IF “ANALYSIS ON OF TARGET INCOME AND TAXES MOS- MARGINE OF SAFETY CHOOSING THE COST STRUCTURE TO DECREASE COST ULTIMATELY DEGREE OF OPERATING LEVERAGE DEGREE OF OPERATING LEVERAGE IMPORTANCE FOR MANAGERS SALES MIX . CASE TO STUDY. LIMITATION OF CVP CONCLOUSION REFERENCES 2 DR.MOADE SHUBITA "USEFULNESS OF COST VOLUME PROFIT ANALYISI AS AMANGERIAL Concept" By samya Alakhdar , Dr . Moade Shubita , NYIT –AMMAN –JORDAN FALL-2011. Key words :managerial accounting , cost accounting , CVP. ABSTRACT: In order to cope with many planning decisions managers use cost volume profit analysis , They find it an extremely useful measurement in a variety of ways . The present...
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...“N” Day Breakout Model on Commodity Market: An Empirical Investigation Zhenyi Yang 12/12/2012 1. Introduction There are various strategies to make profits on the commodity markets. The “N” day breakout model is one of the easiest model. However, it is a very effective model and used by many traders. The article uses the “N” day breakout model, combined with the “fixed fractional” risk management scheme, to study the return of the commodity market. The article also compares the different outcomes with different data manipulation method and the potential reasons behind the difference. 2. The “N” Day Break Out Model The N day break out model utilizes the method that the futures are longed at N day high and shorted at M day low. The rational explanation of the method is that the futures usually continue to rise after a breakout its long-term high. Also, the futures continue to fall after it breaks its short-term low. To simplify the problem, in this article, it chooses the 100 day high as the buying point and the 10 day low as the selling point. The period of study ranges from Dec 2002 to Dec 2012. Moreover, the article also studies the maximum profit one million account balance would make with this strategy with each commodity does not exceed 1% risk. 3. Data Manipulation Because the commodity future expires after one or two years, for a longer period time, the charts of different futures contracts needs to be connected. Some methods are continuous, which...
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...To find out one value that represents the whole mass of data | |The objective of averaging is to represent a set of individual values in a concise way, so that the researcher can have an | |instant idea about the size of each entity in the group. Averages help the researcher or manager to grasp the characteristics | |of the data group without studying every value in the group. For example, a manager need not look at ages of every trainee of a| |fresh batch if the average age is calculated by dividing the total age of all the trainees by number of trainees. This average | |is a value that enables the manager to have a overall idea about the characteristics of the huge volumes of data. | |2. To enable comparison...
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...To be completed by students (typewritten) MODULE NUMBER | | MODULE TITLE | Managerial Accounting | SEMESTER | Fall 2012/2013 | SESSION | | ASSIGNMENT NUMBER | | SUBMISSION DATE DUE | 13.03.2013 | ASSIGNMENT TITLE | Financial performance evaluation of Henkel | INSTRUCTOR’S NAME | Goran Vasilev | To be completed by the front desk secretary or the course administrator SIGNATURE | DATE SUBMITTED | HOUR SUBMITTED | MATERIAL SUBMITTED | | | | Report Diskette/CD | | To be completed by the instructor SIGNATURE & DATE | MARK * | MARK AFTER ORAL (if applicable) | SUBMISSION | | | | On Time Late | | * fill in the slot in the covered area if blind second marking is required Other comments: STUDENT NAME(s) | Elena Donevska | Declaration: All sentences or passages quoted in this coursework from other people's work have been specifically acknowledged by clear cross referencing to author, work and page(s). I understand that failure to do this amounts to plagiarism and will be considered grounds for failure in this coursework and the module examination as a whole. STUDENT REG. NUMBER(s) | 9654 | To be completed by the 2nd examiner (if applicable) SIGNATURE | MARK | | | AGREED FINAL MARK | | STUDENT SIGNATURE(s) | | To be completed by students (typewritten) MARK | | to be completed by instructors...
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...The Guillermo Furniture Store Decisions Team A Accounting/ACC 561 November 10, 2010 Professor Rios, Angel J. Guillermo Furniture Store Decisions Navallez Guillermo’s quest to remain competitive in the furniture industry comes down to analyzing cost accounting measures. By carefully analyzing balance sheets and income statements, accounting officials can provide management a synopsis of where company strengths and weaknesses are, and then corrective measures can be adjusted to improve company performance. A break even analysis, return on investment, and residual income will be calculated as well as many other issues will be discussed to allow Guillermo to make the best informed decision for his company. In this report, Team A examines the components that make up a cost control system and explains how management uses this information in their decision-making process. Guillermo Furniture Store can use the following three systems to help achieve the store’s organizational goal. The Quality Control System is in the manufacturing business. Quality is the number one priority concerning customer satisfaction. Thereby the quality control system is required to satisfy the customer’s needs and trends. Quality control is a system of routine technical activities, to measure and control the quality of the inventory as it is being developed (Quality Assurance and Quality Control, 2010). Once ensured that customers are satisfied with their high quality, Guillermo Furniture...
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