...Chapter 11: Cost Behavior and Cost-Volume-Profit Analysis Chapter Contents Book Title: Survey of Accounting Printed By: Jean Mette (jeanlucmette@gmail.com) © 2015, 2013 Cengage Learning, Cengage Learning Chapter 11 Cot ehavior and Cot-Volume-Profit Anali Chapter Introduction 11-1 Cost Behavior 11-1a Variable Costs 11-1b Fixed Costs 11-1c Mixed Costs 11-1d Summary of Cost Behavior Concepts 11-2 Cost-Volume-Profit Relationships 11-2a Contribution Margin 11-2b Contribution Margin Ratio 11-2c Unit Contribution Margin 11-3 Mathematical Approach to Cost-Volume-Profit Analysis 11-3a Break-Even Point 11-3b Target Profit 11-4 Graphic Approach to Cost-Volume-Profit Analysis 11-4a Cost-Volume-Profit (Break-Even) Chart 11-4b Profit-Volume Chart 11-4c Use of Computers in Cost-Volume-Profit Analysis 11-4d Assumptions of Cost-Volume-Profit Analysis 11-5 Special Cost-Volume-Profit Relationships 11-5a Sales Mix Considerations 11-5b Operating Leverage 11-5c Margin of Safety 11-6 Chapter Review 11-6a Key Points 11-6b Key Terms 11-6c Illustrative Problem 11-6d Self-Examination Questions 11-6e Class Discussion Questions 11-6f Exercises 11-6g Problems 11-6h Cases Chapter 11: Cost Behavior and Cost-Volume-Profit Analysis Chapter Introduction Book Title: Survey of Accounting Printed By: Jean Mette (jeanlucmette@gmail.com) © 2015, 2013 Cengage Learning, Cengage Learning Chapter Introduction Learning Ojective After studying this chapter, you should...
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...ANNEXURE - C “TECHNICAL ANALYSIS OF STOCKS ” This project report in the Special Studies in Finance based on the in-depth study of the project theme is submitted in February, 2014 to the Sydenham Institute of Management Studies and Research and Entrepreneurship Education (SIMSREE) , B - Road, Churchgate, Mumbai - 400 020, in partial fulfillment of the requirements for the award of the Master’s Degree, Masters in Management Studies (MMS), Submitted By NAME: VAISHALI CHANDRESH GORATELA ROLL NO. : M12020 CLASS: MMS1 BATCH: 2012-2014 Guided By MR. AMIT BOBHATE Date: Place: MUMBAI ANNEXURE – D CERTIFICATE This is to certify that this project report entitled “TECHNICAL ANALYSIS OF STOCKS” is submitted in February, 2014 to Sydenham Institute of Management Studies and Research and Entrepreneurship Education (SIMSREE) , Mumbai 400020, by Ms. Vaishali Goratela bearing Roll No. M12020, batch (2012 - 2014) in partial fulfillment of the requirements for the award of the Master’s Degree, Masters in Management Studies (MMS). This is a record of her own work carried out under my guidance. She has discussed with me adequately before compiling the above work and I am satisfied with the quality, originality and depth of the work for the above qualification. PLACE: MUMBAI. ________________ DATE: (Signature...
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...Marginal Costing Dr. Shubhra Product Costing There are mainly two techniques of product costing and income determinationAbsorption Costing: This is a total cost technique under which total cost (i.e., fixed cost as well as variable cost) is charged as production cost. In other words, in absorption costing, all manufacturing costs are absorbed in the cost of the products produced. Marginal Costing: An alternative to absorption costing is marginal costing, also known as ‘variable costing’ or direct costing. Under this technique, only variable costs are charged as product costs and included in inventory valuation. Fixed manufacturing costs are not allotted to products but are considered as period costs and thus charged directly to Profit and Loss Account of that year. Fixed costs also do not enter in stock valuation. Marginal Costing: Definition CIMA London as ‘The accounting system in which variable costs are charged to cost units and fixed costs of the period are written off in full, against the aggregate contribution. Its special value is in decision making’. Segregation of costs into fixed and variable elements • In marginal costing all costs are classified into fixed and variable. Semi-variable costs are also segregated into fixed and variable elements. Marginal costs as products costs • Only marginal (variable) costs are charged to products produced during the period. Fixed costs as period costs • Fixed costs are treated as period...
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...PROJECT REPORT ON “TECHNICAL ANALYSIS OF BANKING SECTOR AND ANALYSING MARKETPERFORMER, OUTPERFORMER AND UNDERPERFORMER” SUBMITTED TO THE UNIVERSITY OF MUMBAI IN THE PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF MASTER OF MANAGEMENT STUDIES SUBMITTED BY MANISH BANSIDHAR INGALE UNDER THE GUIDANCE OF Mr. DEWANG MEHTA SHAH AND ANCHOR KUTCHHI ENGINEERING COLLEGE DEPARTMENT OF MANAGEMNT STUDIES CHEMBUR, MUMBAI BATCH 2012-2014 Declaration I declare that the Master’s script that I hereby submit for the degree of Master of Management Studies at the Department Of Management Studies, Shah and Anchor Kutchhi Engineering College, has not previously been submitted by me for a degree at another university. Manish Bansidhar Ingale 10th feb, 2014 Chembur i ACKNOWLEDGEMENT By the grace of God who has provided me with the skills and abilities to be able to complete this report and present a clear picture of what I have been doing during the course of my internship. I would firstly like to thank the Department of Capital Market, for making this learning experience a part of our education and specifically thank PROF.DEWANG MEHTA for his advice and assistance in helping us avail this opportunity. Lastly I would like to express my deepest and utmost thanks to my parents, who have made me whatever I am today. ii ABSTRACT The field of equity research is very vast and one has to look into various aspects of the functioning...
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...GRADED DISCUSSION – ACCT2017 Question: Break-even analysis, the construction of break-even charts, and the related cost-volume- profit analysis is an area of accounting that provides management with relevant data. Discuss management’s use of this data for purposes of profit planning, policy formulation, and decision-making. It is essential to a business’s going concern that management executes proper profit planning, policy formulation and decision making. This is achieved with the help of tools such as cost-volume-profit (CVP) and break-even analysis. Break-even analysis determines the point at which revenue received equals the costs associated with receiving the revenue. Break-even analysis calculates what is known as a margin of safety, the amount that revenues exceed the break-even point. This is the amount that revenues can fall while still staying above the break-even point to ensure that profitability is maintained. The information used to determine and analyze the breakeven point includes fixed, variable and total costs and the associated sales revenues. A breakeven chart is a strategic tool used to plot the financial revenue of a business unit against time or sales to determine the point when sales output is equal to revenue generated. This is recognized as the breakeven point. It analyses the relationship between fixed and variable costs and to predict the effect on profitability of changes to those costs. The concept of CVP analysis examines the relationship...
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...SYMBIOSIS SCHOOL OF BANKING MANAGEMENT Constituent of symbiosis International University Accredited by NAAC with ‘A’ Grade Established under Section 3 of the UGC Act, 1956, vide notification No: F.9.12/2001-U-3of the Government of India. IMPORTANCE OF TECHNICAL ANALYSIS IN DETERMINING MOVEMENT OF PRICE IN EQUITY STOCK MARKET Internship Report submitted to SIU in partial completion of the requirement of MBA Banking Management at Symbiosis School of Banking Management Pune-412115. NAME OF THE STUDENT: PROJECT MENTOR (SSBM) PROJECT MENTOR / PRN: REPORTING OFFICER (AT THE BANK) ABHISHEK AGRAWAL DR. BINDYA KOHLI AMOL ATHAWALE PRN: 12020941031 APRIL 08 2013 TO MAY 25 2013 ACKNOWLEDGEMENT I sincerely and religiously devote this Research Paper to all the gem of persons who have openly or silently left an ineradicable mark on this research so that they may be brought into consideration and given their share of credit, which they genuinely and outstandingly deserve. This expedition of research...
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...Lecture 7 Cost-‐Volume-‐Profit Analysis & Managerial Decision Making Mario Fonseka FCMA(UK), CGMA (US), Dip. M (UK), FCMA(SL), MBA (USJ), CerGfied Psychometrician (BPS) Saturday, September 20, 14 Cost-Volume-Profit Analysis Saturday, September 20, 14 Cost-Volume-Profit Analysis CVP Analysis is based on the relationship between sales revenue, costs and profit in the short run, in which the output of a firm is restricted to that available from the current operating capacity Saturday, September 20, 14 Break even Chart Saturday, September 20, 14 Break even Chart Costs & Revenue (Rs.) 0 Volume (Units) Saturday, September 20, 14 Break even Chart Costs & Revenue (Rs.) Fixed Cost 0 Volume (Units) Saturday, September 20, 14 Break even Chart Costs & Revenue (Rs.) Total Costs Fixed Cost 0 Volume (Units) Saturday, September 20, 14 Break even Chart Costs & Revenue (Rs.) Total Costs Variable Cost Fixed Cost 0 Volume (Units) Saturday, September 20, 14 Break even Chart Costs & Revenue (Rs.) Total Revenue Total Costs Variable Cost Fixed Cost 0 Volume (Units) Saturday, September 20, 14 Break even Chart Costs & Revenue (Rs.) Total Revenue Total Costs Break Even Point Variable Cost Fixed Cost 0 Volume (Units) Saturday, September 20, 14 Break even Chart Costs & Revenue...
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...conversation, French concluded the call and turned to his charts for one last checkout before the meeting. French had been hired six months earlier as a staff accountant. He was directly responsible to Davidson and had been doing routine types of analytical work. French was a business school graduate and was considered by his associates to be quite capable and unusually conscientious. It was this later characteristic that had apparently caused him to “rub some of the working folks the wrong way,” as one of his coworkers put it. French was well aware of his capabilities and took advantage of every opportunity that arose to try to educate those around him. Davidson’s invitation for French to attend an informal manager’s meeting had come as a surprise to others in the accounting group. However, when French requested permission to make a presentation of some break-even data, Davidson acquiesced. Duo-Products had not been making use of this type of analysis in its planning procedures. Basically, what French had done was to determine the level at which the company must operate in order to break even. As he put it, The company must be able at least to sell a sufficient volume of goods so that it will cover all the variable costs of producing and selling the goods. Further, it will not make a profit unless it covers the fixed costs as well. The level of operation at which total costs are just covered is the break-even volume. This should be the lower limit in all our planning...
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...16-3: Bill French Note: This case is unchanged from the Eleventh Edition. Approach This case requires quite a few calculations, but it is a good case for introducing students to the uses and limitations of break-even analysis. It can be used to discuss many of the hidden assumptions involved in such an approach. Some instructors also find it a good vehicle for discussing some of the human problems arising when a young, well-educated person begins working in a business. Finally, at The University of Michigan we have found it useful to defer this case until Chapter 26, when we teach several cases on linear programming: Bill French can be used as an introductory case to raise the issue of what product mix is optimal given resource and/or sales volume constraints. Comments on Questions Question 1 There is undoubtedly a long list of assumptions that can be related to this, or any, break-even analysis. Part of the problem of dealing with analyses of this sort is that they take on the characteristic of being static even though the form of presentation might lead one to believe that here is a moving, dynamic analysis that allows for a variety of changed conditions. To an extent this is true; but there are many conditions that are assumed to be constant. It is to the assumed constants that the students must ultimately direct their attention. For instance: 1. French has had to assume that the variability of the variable costs is constant. French has thus assumed a relatively constant level...
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...recommend which method of production Shuzworld should use, in terms of equipment, for manufacturing of its sneakers I recommend Shuzworld should purchase new equipment. This is based on my analysis comparing the reconditioning of old equipment verses the purchasing of new equipment or that of outsourcing the operation. In doing this I took into account the both cost types that of fixed costs and variable costs. So that I could use the breakeven cost volume analysis tool I had to consider all variable costs as a constant with the relationship between those two costs as linear and not exponential. In my analysis I use consistent costs with differing scenarios which allow the use of POM for Windows to be used to assist in this decision. Using this I noted the inputs for all three options under consideration. The information for both fixed and variable costs was derived from information shared by Alistair Wu and Angela Down. Using further information obtain via Alistair Wu I set the volume to 1000 sneakers as a starting point. The information shared shows fixed costs for reconditioning is $50,000 with $1,000,000 spent in variable costs being that anticipated expense to 1.5 million dollars. The purchase of new equipment has a fixed expense of $200,000 but the variable costs drop to half that of reconditioning at only $500,000 giving a total cost of $700,000. With outsourcing there is no initial expense so no fixed cost but the variable costs have a dramatic increase at...
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...CHAPTER 26 Marginal Costing and Cost Volume Profit Analysis Meaning Marginal Cost: The tenn Marginal Cost refers to the amount at any given volume of output by which the aggregate costs are charged if the volume of output is changed by one unit. Accordingly, it means that the added or additional cost of an extra unit of output. Marginal cost may also be defined as the "cost of producing one additional unit of product." Thus, the concept marginal cost indicates wherever there is a change in the volume of output, certainly there will be some change in the total cost. It is concerned with the changes in variable costs. Fixed cost is treated as a period cost and is transferred to Profit and Loss Account. Marginal Costing: Marginal Costing may be defined as "the ascertainment by differentiating between fixed cost and variable cost, of marginal cost and of the effect on profit of changes in volume or type of output." With marginal costing procedure costs are separated into fixed and variable cost. According to J. Batty, Marginal costing is "a technique of cost accounting pays special attention to the behaviour of costs with changes in the volume of output." This definition lays emphasis on the ascertainment of marginal costs and also the effect of changes in volume or type of output on the company's profit. FEATURES OF MARGINAL COSTING (1) All elements of costs are classified into fixed and variable costs. Marginal costing is a technique of cost control and decision making...
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...CHAPTER 26 Marginal Costing and Cost Volume Profit Analysis Meaning Marginal Cost: The tenn Marginal Cost refers to the amount at any given volume of output by which the aggregate costs are charged if the volume of output is changed by one unit. Accordingly, it means that the added or additional cost of an extra unit of output. Marginal cost may also be defined as the "cost of producing one additional unit of product." Thus, the concept marginal cost indicates wherever there is a change in the volume of output, certainly there will be some change in the total cost. It is concerned with the changes in variable costs. Fixed cost is treated as a period cost and is transferred to Profit and Loss Account. Marginal Costing: Marginal Costing may be defined as "the ascertainment by differentiating between fixed cost and variable cost, of marginal cost and of the effect on profit of changes in volume or type of output." With marginal costing procedure costs are separated into fixed and variable cost. According to J. Batty, Marginal costing is "a technique of cost accounting pays special attention to the behaviour of costs with changes in the volume of output." This definition lays emphasis on the ascertainment of marginal costs and also the effect of changes in volume or type of output on the company's profit. FEATURES OF MARGINAL COSTING (1) All elements of costs are classified into fixed and variable costs. Marginal costing is a technique of cost control and decision making...
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...After a brief conversation about other matters, the call was concluded and French turned to his charts for one last check-out before the meeting. French had been hired six months earlier as a staff accountant. He was directly responsible to Davidson and, up to the time of this case, had been doing routine types of analysis work. French was an alumnus of a liberal arts undergraduate school and graduate business school, and was considered by his associates to be quite capable and unusually conscientious. It was this latter characteristic that had apparently caused him to “rub some of the working guys the wrong way,” as one of his co-workers put it. French was well aware of his capabilities and took advantage of every opportunity that arose to try to educate those around him. Wes Davidson invitation to French to attend an informal manager’s meeting had come as some surprise to others in the accounting group. However, when French requested permission to make a presentation of some break –even data, Davidson acquiesced. The Duo-Products Corporation had not been making use of this type of analysis in its review or planning programs. Basically, what French had done was to determine the level of operation at which the company must operate at which the company must operate in order to break even. As he phrased it,”The Company must be able to at least sell a sufficient volume of goods that it will cover all of the variable costs of producing and selling the...
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...--------------------------------------------------------------------------- BUSN 311 Unit 3 Individual Project - Possible / Earned Points --------------------------------------------------------------------------- Entertainment Survey or Poll- from Newsstand- Proquest --------------------------------------------------------------------------- Description of Survey 5/5**** Sample Size Analysis 5/5**** Business Application 5/5 **** --------------------------------------------------------------------------- Political Survey or Poll- from Pew Research or Gallup --------------------------------------------------------------------------- Description of Survey 5/5**** Sample Size Analysis 5/5**** Business Application 5/5 **** --------------------------------------------------------------------------- General Opinion Survey or Poll- from Pew Research or Gallup --------------------------------------------------------------------------- Description of Survey 5/5**** Sample Size Analysis 5/5**** Business Application 5/5 **** --------------------------------------------------------------------------- Overview of Survey Research: Text Research required 10/10**** --------------------------------------------------------------------------- This section of the paper will be 2-3 pages in length. 30% deductions for not using specified required research. 6 points will be deducted for each survey that is not taken from the required resource. ---------------------------------------------------------------------------...
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...Davidson’s invitation for Bill to attend an informal manager’s meeting had come as a surprise to others in the accounting group. However, when French requested permission to make a presentation of some breakeven data, Davidson agreed. Duo Products had not been making use of this type of analysis in its planning procedures. Basically, what Bill French had done was to determine the level at which the company must operate in order to break even. According to him, the company must be able to at least sell a sufficient volume of goods so that it will cover all the variable costs of producing and selling the goods. In addition to that, according to French, it will not make a profit unless it covers the fixed costs as well. The level of operation at which total costs are just covered is the breakeven volume. This according to Bill French should be the lower limit in all their planning. The accounting record had provided the following information that French used in constructing his chart: Plant...
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