# ma_mod4_W08 - CMA Ontario Accelerated Program MANAGEMENT...

This preview shows pages 1–7. Sign up to view the full content.

CMA Ontario – January 2008 CMA Ontario Accelerated Program MANAGEMENT ACCOUNTING MODULE 4

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Module 4 - Management Accounting Page 2 CMA Ontario – January 2008 Table of Contents Textbook Ch* 1. Cost-Volume-Profit Analysis 3 3 2. Relevant Costs 11 14 3. Linear Programming 11 25 4. Decision Analysis under Uncertainty 3 28 5. Pricing 12 29 6. Budgeting 6 31 7. Capital Budgeting 21-22 39 8. The Lease vs. Buy decision - 50 9. Cost Variances 7-8 54 10. Revenue Variances 16 69 11. Direct and Absorption Costing 9 80 12. Transfer Pricing 23 88 13. Performance Evaluation – For Profit Organizations 24 97 14. In-Class Problems 109 15. Multiple-Choice Questions 161 16. Powerpoint Slides 191 * note that this module comprises mostly of solutions to selected problems in the textbook.
Module 4 - Management Accounting Page 3 CMA Ontario – January 2008 1. Cost-Volume-Profit Analysis Exercise 3-20 Current Situation - Revenues \$12,000,000 Variable costs 9,840,000 Contribution margin 2,160,000 Fixed costs 2,040,000 Operating Income \$120,000 1. Increase in CM = \$2,160,000 x 10% = \$216,000 New operating income = \$120,000 + 216,000 = \$336,000 2. Decrease in CM = \$2,160,000 x 10% = \$216,000 New operating income = \$120,000 - 216,000 = (\$96,000) 3. Increase in fixed costs = \$2,040,000 x 5% = \$102,000 New operating income = \$120,000 - 102,000 = \$18,000 4. Decrease in fixed costs = \$2,040,000 x 5% = \$102,000 New operating income = \$120,000 + 102,000 = \$222,000 5. Note that if units sold increase by 8%, then total contribution margin will also increase by 8%. Increase in CM = \$2,160,000 x 8% = \$172,800 New operating income = \$120,000 + 172,800 = \$292,800 6. Decrease in CM = \$2,160,000 x 8% = \$172,800 New operating income = \$120,000 – 172,800 = (\$52,800) 7. Increase in CM = \$2,160,000 x 10% = \$216,000 Increase in fixed costs = \$2,040,000 x 10% = \$204,000 New operating income = \$120,000 + 216,000 – 204,000 = \$132,000 8. New variable costs = \$9,840,000 x 0.95 = \$9,348,000 New CM = \$12,000,000 – 9,348,000 = \$2,652,000 Increase in CM = \$2,652,000 – 2,160,000 = \$492,000 Increase in fixed costs = \$2,040,000 x 5% = \$102,000 New operating income = \$120,000 + 492,000 – 102,000 = \$510,000

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Module 4 - Management Accounting Page 4 CMA Ontario – January 2008 Exercise 3-28 2. Net sales price to the publisher = \$36.00 x 70% = \$25.20 Contribution margin per unit Sales price \$25.20 Variable costs Producing and marketing \$4.80 Royalty: \$25.20 x 15% 3.78 8.58 \$16.62 Fixed costs Production and marketing \$ 600,000 Up-front payment 3,600,000 \$4,200,000 a) Breakeven point = \$4,200,000 / 16.62 = 252,708 copies b) (\$4,200,000 + 2,400,000) / 16.62 = 397,112 copies 3. a) Contribution margin per unit Sales price: \$36.00 x 80% \$28.80 Variable costs Producing and marketing \$4.80 Royalty: \$28.80 x 15% 4.32 9.12 \$19.68 Breakeven point = \$4,200,000 / 19.68 = 213,415 copies b) Contribution margin per unit Sales price: \$48.00 x 70% \$33.60 Variable costs Producing and marketing \$4.80 Royalty: \$33.60 x 15% 5.04 9.84 \$23.76 Breakeven point = \$4,200,000 / 23.76 = 176,768 copies
Module 4 - Management Accounting Page 5 CMA Ontario – January 2008 Exercise 3-33 1. CM/unit = \$54 – 36 = \$18 Operating income = (40,000 x \$18) CM – (1,000 x \$72) Shipping - \$288,000 FC = \$360,000 2. Operating income = (40,000 x \$18) CM – (800 x \$72) Shipping - \$288,000 FC = \$374,400 3. Costs to be recovered = (500 x \$72) Shipping + \$288,000 FC = \$324,000 Breakeven = \$324,000 / \$18 = 18,000 4. For example, if Susan incurred 1,500 shipments, then … Costs to be recovered = (1,500 x \$72) Shipping + \$288,000 FC = \$396,000 Breakeven = \$396,000 / \$18 = 22,000 The breakeven point is not unique because there are two cost drivers—quantity of picture frames and number of shipments. Various combinations of the two cost drivers can yield zero operating income.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Module 4 - Management Accounting Page 6 CMA Ontario – January 2008 Problem 3-35 1a. Fixed costs Advertising £ 4,800 Mailing 3,600 Administrative labour 2,400 Auditorium charge 1,200 12,000 Airfare and accommodations 3,600 Lecture fee 2,400 £18,000
This is the end of the preview. Sign up to access the rest of the document.

## This note was uploaded on 01/15/2010 for the course ACCOUNTING CMA CERTIF taught by Professor Pro-said during the Spring '09 term at Cairo University.

### Page1 / 221

ma_mod4_W08 - CMA Ontario Accelerated Program MANAGEMENT...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online