: assets=liabilities+owners equity/ assets: cash, ar, maintainable sec., furniture, equip, invent (later can sell for money)/ liabilities: ap, bonds payable, owe someone/ owners equity: common stock, owner contrib., retained earnings. net income (income statement) = Revenue(sales)-COGS(expenses)=Gross Margin –SGA(other expenses) Product costs :1)materials 2)labor 3)overhead (indirect: rent for factory, custodians, # of nails for chair, factory utilities, depreciation on manufac. assets) SG&A: expenses paid for (secretary, tape, salaries of admin.) COGS = total products costs x (#of units sold/ #of units made) or total product cost/ total units made= cost per unit (cost per unit sold x #of Upstream & downstream costs (SGA): research, advertising, debt, transp Revenues – variable expenses= contribution margin - fixed costs=net income units sold=COGS Operating leverage = contribution margin / net income (take OL and x by % =gives you %increase in net income) Total product costs =DM+DL+OH Average Product Costs per unit= total prod costs / #of units produced COGS= Ang costs per unit x # of units sold (Alt COGS= Beg invent + prod costs (purch)= goods End invent= avg product cost per unit x (#of units produce - #of units sold) High Low Method : vc per unit= diff in tc / diff in volume available for sale – ending invent = COGS) Chpt 3 : Breakeven vol. in units=fixed costs / rev-varaiabl exp (CM per unit) (convert BE to $= BE x sales per unit) CM =revenue – VC CM per unit= CM / #units sold Target Profit: units= fixed costs + desired profit / (sales price – VC per unit) $=(fixed costs + desire prof) / CM ratio (target profit vol units x sales price) CM ratio= CM / sales (portion of sales to cover FC) Margin of Safety Ratio : budgeted sales – BE sales / budgeted sales MOS Units : budgeted sales units – BE vol. in $ MOS in $ : budg sales $ - BE vol $ (MOS units / sales price) Chpt 4 : Opportunity cost = cost of lost opportunities Sunk costs = incurred in past trans. And cant change, not relevant to future decision Ex: Tech vs. Texas tickets bought at $200 Relevant revenue : future oriented, differ for alt. under consideration / cost
This is the end of the preview. Sign up
access the rest of the document.