4.15 Accounting 211 - Accounting 211 Thursday April 15th...

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Accounting 211 Thursday, April 15th, 1999 Announcements: Bring book to class on Tuesday Lecture notes: Example: Budgeted 4/1/99 4/30/99 Raw Materials 15,000 units 23,000 units Finished Goods 50,000 units 41,000 units Budgeted April Sales = 75,000 units
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Each unit manufactured consumes 3 units of raw materials. FINISHED GOODS # units produced # units sold Change = 9,000 units # sold > # produced by 9,000 # produced = 66,000 units
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RAW MATERIALS # units purchases # units consumed for current period Change = 8,000 # purchased > # consumed by 8,000 consumption = 198,000 units # purchased = 206,000 units Chapter 22 External and internal factors *pages 957-959 Gross margin pricing Profit margin pricing Return on assets pricing Target costing Transfer pricing Example: Production and Selling Costs for 15,000 units
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Variable production costs 700,000 Fixed manufacturing overhead 500,000 Selling and admin. Costs 300,000 Desired profit = $300,000
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Sales X - COGS - 1,200,000 GP 600,000 - S & A - 300,000 Net Income 300,000 X = $1,800,000 Gross Margin Pricing
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Markup percentage: GP / COGS = 600,000 / 1,200,000 = 50% Profit Margin Pricing Markup percentage: desired profit / total expenses = 300,000 / 1,500,000 = 20% Transfer Pricing
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