Ch.5_CVP_Inst

Ch.5_CVP_Inst - Managerial Accounting 1 CHAPTER 5...

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1 Managerial Accounting
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2 CHAPTER 5 Managerial Accounting Basics, Cost Behavior, and Profit Analysis Introduction to managerial accounting Cost classifications Cost-Volume-Profit analysis
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3 Learning Objectives Define and identify fixed versus variable costs Solve for profit and breakeven volume using the CVP equation, the graphical method, projected P&L, and the contribution margin method
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4 What do managers do? Plan and budget Control operations Organize and direct day-to-day activities Make decisions To do their jobs well, managers need cost data. Cost data is developed through managerial accounting.
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5 Managerial vs. Financial Accounting Managerial Financial Reporting Level Unit Aggregate Users Internal External Perspective Forward-looking Historical External Standards No Yes
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6 Cost Classifications Costs classified in two major ways Relationship to volume (Chapter 5) Relationship to organizational unit being analyzed (Chapter 6) In relation to volume, costs may be Fixed Variable Semi-fixed What do these cost classifications mean?
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7 Fixed Costs $ Volume TOTAL $ PER UNIT Volume What are some examples of fixed costs?
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8 Variable Costs $ Volume TOTAL $ PER UNIT Volume What are some examples of variable costs?
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9 Semi-Fixed Costs $ Volume TOTAL $ PER UNIT Volume What are some examples of semi-fixed costs?
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10 Total Costs = Fixed + Variable $ Volume TOTAL $ AVERAGE COST PER UNIT Volume Fixed Fixed + Variable Variable
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Cost Structure Mix of fixed and variable costs within an organization called its cost structure Why is it important to understand cost structure? Critical for decision-making
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This note was uploaded on 02/24/2010 for the course HPM 340 taught by Professor Reiter during the Spring '10 term at UNC.

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Ch.5_CVP_Inst - Managerial Accounting 1 CHAPTER 5...

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