Accy 201 Study guide (TAs) - Accy 201 New Material Review...

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Accy 201 New Material Review Total Cost = Fixed Cost + Variable Cost Variable Cost = (Number of units of output)(Variable cost per unit) Using the High-Low Method Purpose: Used to approximate your relevant range (remember that the relevant range is the range of your normal operations) To estimate the fixed and variable costs, you need to meet the following conditions: a) Past costs need to approximate future costs- the operation procedures or price haven’t changed b) Past costs at different output levels exist- if the activity is new or recently developed, you cannot analyze the past data c) ***Future output is within the range of past data*** d) The costs of each activity can be identified separately Important Formulas: VC = (cost at highest output – cost at lowest output) (highest output – lowest output) FC = TC at lowest output – (VC/unit)(Lowest output level) -or- FC = TC at highest output – (VC/unit)(Highest output level) Profit Margin = (Revenue – Expenses) -or- (Price per Unit – TC) Revenue Price per Unit Review Problems 1. Year Output Total Cost Year Output Total Cost 93 500 2000 98 905 3750 94 600 1900 99 1000 3500 95 678 2800 2000 900 4000 96 745 3100
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This test prep was uploaded on 04/13/2008 for the course ACCY 201 taught by Professor Curtis during the Spring '08 term at University of Illinois at Urbana–Champaign.

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Accy 201 Study guide (TAs) - Accy 201 New Material Review...

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