Cost Accouning
dranfl
cost_accounting_unit_3_template.docx
A-Which of these 8 cost categories would be considered variable, and which fixed, and explain why?
B-Which costs would be considered mixed (i.e., semi-variable or semi-fixed)?Utility costs are mixed (i.e., semi-fixed or semi-variable).
C-Ignoring utility costs altogether, compute the following
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1- Contribution margin per unit |
Contribution margin in dollars = total sales – total variable cost
Calculating total sales = units sold x price per unit
Calculating total variable cost =
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Machine operators |
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Direct materials |
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Other expenses that seem to vary based on production levels |
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Total variable cost |
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2- Contribution margin in percentage |
Contribution margin percentage = Contribution margin / sales
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3-Breakeven level of sales |
Breakeven volume = fixed costs / unit contribution margin
Calculating contribution margin per unit
= Total contribution margin / units sold
Calculating total fixed cost
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Total fixed cost |
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Building depreciation |
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Management staff |
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Other expenses that don't seem to vary |
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Total fixed cost |
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4-Ignoring utility costs altogether, if instead of breaking even, the firm wants to make $10,000/month profit, how many units must be sold each month? |
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Units = (Yearly profit + fixed cost)/ unit contribution margin
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5 . To how many sales dollars is this unit volume equivalent? |
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6.In year 2, the CEO plans to add $300,000/yr. expense in added administrative salaried headcount. Ignoring utility costs altogether, how many additional units must be sold just to pay for this added expense? |
Calculating the break even on this $300,000 added cost per year =
Added cost / Contribution margin per unit
